CTV remains one of the fastest-growing revenue channels in digital media. Global CTV (connected TV) ad spend is projected to surpass $42 billion in 2025, and household streaming spend is climbing more than 12% year-over-year.
As spending, viewing hours, and advertiser budgets shift toward CTV, publishers need to choose the right monetization model.
The two dominant CTV revenue paths are:
- SVOD (subscription video on demand)
- AVOD (ad-supported video on demand).
Each offers massive scale opportunities but comes with operational challenges, retention concerns, and infrastructure requirements.
SVOD continues to expand globally, with households maintaining an average of four paid subscriptions. Markets like MENA are projected to reach $1.5B in streaming revenue by the end of this year.
AVOD is accelerating, too. 90% of European marketers plan to increase AVOD/FAST spending in 2025. Nearly 80% of consumers say they will accept ads if the content is free.
However, neither model is flawless.
SVOD faces rising acquisition friction, declining perceived value, and churn rates reaching 50% among Gen Z and millennials. AVOD deals with fragmentation, measurement gaps, and CTV fraud.
As publishers aim to balance predictable subscription revenue with scalable ad revenue, the hybrid model is becoming the new standard in streaming.
Netflix, Disney+, and Prime Video have fully integrated AVOD into their streaming experiences, expanding both revenue and user bases.
In this article, we’ll examine how publishers can blend SVOD, AVOD, and hybrid monetization strategies, compare the costs and benefits of both, and offer an actionable roadmap publishers can follow to monetize streaming services.
Why SVOD gives CTV publishers a strategic advantage
For web publishers, a shift to paywalls and subscriptions came with considerable friction. Industry surveys show that only 17% of readers pay for news media, and 83% simply move on to a free source covering the topic when they hit a paywall.
Despite the headwinds, news publishers are committed to subscriptions because the upside is much higher. Even though web publishers report online traffic decline since paywall adoption, 76% still saw higher reader revenue, and the average ARPU rose from $24 to $29.
Streaming services have it easier because subscription-based video-on-demand (SVOD) has been the default business model.
In 2025, an average American household is comfortable paying $70/month for streaming services, so SVOD publishers don’t face the same attrition as news media do.
In fact, until a publisher has a wide enough reach and content library to explore ad-supported monetization, SVOD should be the default monetization playbook for a few reasons.
1. SVOD creates stable, predictable revenue
CTV ad spend is growing, but the market is still volatile and relies heavily on macroeconomic trends.
Linear TV is a clear example of how relying purely on ad-based monetization makes publishers more vulnerable to shifts in ad spend. In December 2025, German broadcaster RTL had to lay off 600 staff members due to a dip in ad revenue and a lack of alternative, reliable income sources.
On the other hand, while both Disney and Paramount reported a decline in ad revenue in Q3 2025, both publishers run a SVOD business model, which cushioned the impact of a weaker ad quarter.
Relying on monthly subscription fees on the outset of launching a streaming service helps create a brand-loyal community of viewers that fuels recurring revenue.
Publishers can funnel SVOD returns into expanding the content library, engineering infrastructure, and supply chains on a stable basis before they are ready to layer AVOD as an additional revenue stream.
2. SVOD is the strongest source of first-party data
A SVOD offering encourages publishers to build direct connections with their audiences. These relationships are account-based and authenticated, with viewers logging in, sharing emails and payment details, and building long-term viewing histories tied to a persistent ID.
Over time, SVOD publishers can build a long trail of data on viewing habits, session length, devices, and genre affinity.
Considering that AdTech has been on the edge about cookie deprecation for the last three years, having a robust first-party data library as a backup plan differentiates SVOD publishers from media that rely solely on third-party trackers.
3. SVOD still makes room for branded deals and advertising integrations
Subscription-only platforms typically avoid interruptive advertising, but they can still monetize brand partnerships through:
- product placement
- branded content
- native integrations
- co-marketing campaigns
These formats allow publishers to capture high-value brand deals without sacrificing user experience, requiring an in-house AdTech stack or sharing ad revenue (in some cases, up to 50%) with advertising partners.
A well-known example is the Eggo waffles product placement in the Netflix show “Stranger Things”, which brought a 14% sales increase in 2017 and a 9.4% sales uplift in 2018.
The limitations and risks of SVOD
The SVOD industry faces a mounting credibility crisis as consumers increasingly question whether their subscriptions deliver real value.
While 53% of consumers rely on streaming services as their primary paid entertainment source, satisfaction is plummeting.
Now that more SVOD platforms are hitting the market, an average household in the US has to maintain four active streaming services. Having to pay a separate monthly subscription for each of those makes one in two viewers feel like they are spending too much on CTV content.
As a result, SVOD publishers are now facing a harder time acquiring new subscribers and retaining their audiences.
1. Growing customer acquisition costs
In the last three years, SVOD publishers have had a harder time retaining viewers whose attention is dispersed on short-form social media content.
With high-quality video generation models like Sora and Nano Banana, the sheer volume of available video content is growing exponentially, making it harder to cut through the noise.
A Deloitte survey on digital media trends noted that SVOD publishers are falling behind on personalization expectations of younger audiences and are losing viewers to social media, where algorithmic recommendations reflect user interests more accurately.
To continue acquiring new subscribers, SVOD streaming services invest more in:
- sophisticated recommendation engines
- social media campaigns promoting new releases
- bundles, discounts, or extended free trials
These tactics help with acquisition but drive CAC higher every year.
2. Rising customer churn
Even when platforms succeed in attracting new subscribers, retaining them has become significantly harder.
Throughout 2025, subscriber churn has been rising. Deloitte reports that 40% of consumers have cancelled at least one paid streaming service every six months.
The average churn rate among large SVOD publishers, Netflix, Hulu, and Disney+, is at 5.5%, a two-fold rise from 2.9% in 2019.
Churned viewers are not lost forever. 24% of them resubscribe within six months. However, chasing these audiences requires publishers to keep running costly re-acquisition campaigns that erode the bottom line.
The new monetization playbook: adding AVOD to an SVOD service
Viewers reaching the tipping point about the top price they are willing to pay for a streaming service is both a challenge for SVOD providers and an opportunity to explore adding a cheaper ad-supported video on-demand (AVOD) tier.
Before Netflix rolled out ad-supported subscriptions, many industry analysts thought that ads would increase subscriber churn by making streaming more similar to linear TV, which it originally branched away from.
However, according to industry signals, viewers no longer mind ads if they can save on subscriptions.
- A Marketing Brew survey reported that 80% of consumers would accept ads if video content were completely free.
- Two-thirds of consumers surveyed by PwC say they’ll tolerate ads to lower subscription costs
- Ad acceptance is rising even among self-proclaimed ‘ad-haters’: 42% of them are now tolerant of ads in streaming platforms.
Audiences primarily want access to more content at lower prices. As households juggle multiple subscriptions, adding AVOD tiers becomes an acceptable, even welcomed, trade-off.
Benefits of expanding SVOD capabilities with AVOD offerings
AdTech is ready for the growth of AVOD inventory
Besides becoming widely accepted by customers, in-streaming ads are heavily sought out by advertisers.
68% marketers now view AVOD CTV channels as “must-buy” items, and demand will likely go up as the programmatic ecosystem for CTV matures.
For now, this growth has been slow; most AdOps teams don’t have dedicated CTV advertising teams, and only 34% of the total CTV inventory is biddable.
But the ecosystem is picking up pace. By early 2026, nearly half of CTV inventory is estimated to be biddable, and 75% of marketers plan to set up internal teams for CTV campaign management by the end of next year.
Both advertiser interest and the rate at which tech capabilities grow are looking good for AVOD publishers.
AVOD is a way to monetize the first-party data SVOD publishers collect
SVOD subscriptions generate high-quality, authenticated first-party data, but the data becomes significantly more valuable when publishers add AVOD capabilities. With both models in place, publishers can use viewer behavior, device usage, genre affinity, and title-level interaction data to create premium audience segments, higher CPMs, direct deals with global brands, and more accurate frequency and reach models.
Real-life example: Disney+ centered its AVOD offering around high-quality first-party data
Disney Advertising has built a suite of high-value ad products on top of its first-party data to attract high-budget advertisers. The publisher’s Audience Graph and Disney Select tools aggregate streaming and other Disney touchpoints into more than 1,000–2,000 first-party behavioural and psychographic segments.
Global advertisers like Chipotle, United Airlines, and T-Mobile tapped into Disney’s metadata and audience graph to insert ads in key emotional moments of Disney content and drive more user attention to their campaigns.
Fueled by growing viewer acceptance, AdTech capabilities, and brand demand, AVOD is becoming the industry standard. Amazon, Disney, Netflix, Paramount, and many other leading streaming services are effectively running ad-supported monetization on top of monthly subscriptions.
Why new publishers should not choose AVOD as their only monetization model
The rise of AVOD may tempt new entrants to skip SVOD entirely and launch as a free, ad-supported service.
In our experience, this is a riskier strategy because building or buying an AdTech stack requires considerable upfront investment, both in engineering capabilities and internal sales teams.
Need for a proprietary AdTech stack
To successfully support AVOD streaming, publishers have to run an ad server in a channel that’s still fragmented and lacks robust AdTech standards.
To appeal to advertisers, publishers also need to circumvent inconsistent CTV measurement, disparate reporting, and a lack of data standardization with custom data pipelines, clean IDs, and cross-screen attribution.
Building a competitive AdTech stack for AVOD will stretch time-to-market and require a considerably higher budget. For a new CTV market entrant, setting up a simple subscription pipeline first and investing all remaining funding into the content library makes more sense in the long term.
Difficulty building engaged audiences
Major SVOD providers who have been experimenting with ad-supported streaming report that ad-supported users watch 22–23 minutes less per day than ad-free homes and churn faster than ad-free tier subscribers.
Not having the support of a more engaged SVOD audience and scaling a streaming service built on less committed viewers exposes publishers to risks in viewership fluctuations and will likely make them less attractive to advertisers compared to services with combined SVOD and AVOD monetization.
How streaming publishers can integrate both SVOD and AVOD monetization
The decision framework for adopting SVOD and AVOD comes from understanding their respective strengths and weaknesses in customer acquisition and content production costs, upfront investment in development, and margins.
Heavy spend on performance marketing, free trials, bundles, and device promos, Each acquisition yields a logged-in, paying account with rich 1P data, enabling predictable MRR/ARPU and strong LTV once churn is under control. | It’s easier to attract “free” viewers via app store presence, device placement, and channel line-ups. However, many viewers remain anonymous or loosely identified (device-level), so effective CAC per known user is higher than it looks once you adjust for data quality and limited monetization | |
Originals and premium rights are expensive, but subscription cash flows (monthly/annual) give finance teams a clear basis for multi-year content investment. Major streamers explicitly rely on subscriptions to fund high-budget series and films, then use viewing data to optimize future spend. | AVOD/FAST can lean more on library content and volume programming, but still faces rising content and rights costs. Because revenue is tied to ad demand and fill rates, there’s less certainty that new content will recoup costs, especially in downturns or when CTV CPMs are under pressure. | |
Once a larger scale is reached, incremental subscriptions have high contribution margins. Recurring nature and predictable churn make SVOD publishers attractive to investors as “steady cash flows. | Gross ad revenue on CTV can be attractive at high CPMs, but net margin is shaved by rev-share with platforms (e.g., Roku, Amazon, smart-TV OEMs), demand-side fees, data/verification costs, and sales overhead. When ad markets soften, yield compression can sharply erode margin, even if viewership holds. | |
No ad stack is needed beyond basic marketing analytics. The technical team can focus on product, UX, recommendations, and billing, not advertising infrastructure | AVOD/FAST publishers must invest heavily in SSAI infrastructure, identity resolution (device graphs, household IDs, clean room integrations), and IVT mitigation, because ad fraud and spoofing can directly wipe out revenue and harm demand. | |
Lower watch time harms perceived value and increases churn risk, but subscription revenue per user remains partially decoupled from hours watched in the short term. With good retention models, SVOD services can intervene (personalization, promotion, content tweaks) before churn fully hits revenue. | Lower watch time immediately reduces ad impression volume, frequency opportunities, and total sellable inventory, slashing revenue almost 1:1. Because AVOD relies on impressions, any drop in engagement directly compresses yield, and there’s no subscription buffer to smooth the hit. | |
A publisher can launch an SVOD app quickly using off-the-shelf OTT platforms. The core needs are content rights, basic apps, billing, and authentication. No ad stack, sales org, or measurement/verification integrations are required to start monetizing; the complexity grows later with scale and bundles. | A credible AVOD/FAST business needs not just content and apps but also SSAI, ad-server/SSP integrations, measurement and fraud partners, sales or programmatic deals, and reporting pipelines. Fully monetizing ad inventory with decent yield takes more time, partners and engineering. |
SVOD monetization is easier to build into a streaming platform than an AVOD stack, which is why all leading CTV publishers use it as the default model. It will help lay a strong financial foundation, more predictable retention curves, and a clear playbook for collecting first-party data.
However, in a market where consumer price sensitivity keeps rising and subscription fatigue is accelerating, SVOD is no longer sustainable on its own.
Introducing ad-supported monetization gives SVOD publishers the ability to cut subscription costs and improve user retention while maintaining positive margins and attracting new financial gains through ad revenue.
Five-step framework for SVOD launch and AVOD transition
Drawing from our experience in building CTV solutions, we developed a five-step monetization roadmap that publishers can effectively combine SVOD and AVOD capabilities.
Step 1: Launch with a tight, easy-to-understand subscription offer.
A focused content proposition, simple plans (1–3 tiers at most), and a smooth signup/billing experience across key devices.
Step 2: Instrument data from day one and build a clean first-party data flow.
Require login for all subscribers and track viewing, engagement, churn, and acquisition channels in a unified data model. This first-party data becomes the backbone for later decisions on content, pricing, and, eventually, ad targeting.
Step 3: Stabilize unit economics before touching ads.
Iterate on catalog, recommendations, UX, and pricing until you hit acceptable CAC payback, churn, and LTV/CAC ratios. Only once subscription revenue is predictable and reasonably profitable should you consider adding another monetization layer.
Step 4: Design an ad strategy that complements SVOD.
Introduce an “ad-lite” or AVOD tier as a deliberate segmentation move. Lower price or free with registration, without degrading the value of your flagship ad-free plans. Clearly define which audiences each tier is for and how you’ll move users up the value ladder.
Step 5: Phase in AVOD infrastructure and optimise with SVOD data.
Roll out SSAI, measurement, and IVT/fraud controls incrementally, starting with limited ad loads and a small set of trusted demand partners. Use your rich SVOD first-party data to power targeting, frequency management, and content/ad load optimisation, so ads are a high-yield add-on rather than a structural dependency.
By following these implementation steps, CTV publishers can tap into fast-growing ad budgets without exposing themselves to ad-market whiplash. The services that win this decade will be the ones that continually rebalance the SVOD/AVOD mix, using first-party data, unit economics, and viewer sentiment as their north stars.
