Ad-supported platforms look to international growth

As ad-supported video-on-demand (AVoD) platforms become increasingly established in the US, they are now looking internationally to bolster their customer base and support further revenue growth. Samsung TV Plus and Pluto TV lead the way in international advertising revenue, each generating just over $260m in 2022. Though international revenues remain a minority of all streamers’ income, a growing global footprint reflects the platforms’ desire to engage users beyond the domestic marketplace.

Although the pattern of international rollout varies by player there are key commonalities in the countries targeted for initial expansion by US-based AVoD services. The first port of call is typically Canada and Mexico, with remaining English-speaking markets being the next stop. Here content often requires minimal localisation, so there is little barrier to viewer acquisition. Roku and Tubi currently sit at this stage of international expansion. Both platforms would likely have to invest in non-English language content to support new growth markets, and further rollout of The Roku Channel to new markets is contingent upon selling Roku devices. Similarly, as a consequence of Amazon Freevee’s part-integration into Amazon Prime Video, Freevee is currently limited to just the USA, UK, and Germany, three key markets where Amazon Prime has an established presence.

Once these primary launch markets have been established, the typical avenues for additional growth are Western Europe and Latin America. Though both regions offer further potential revenue, where Western Europe offers higher CPMs but lower engagement, Latin America typically has lower CPMs but higher engagement. Only Pluto TV has tapped into Latin America at scale, its large library of Spanish language content giving it a platform for growth.

The launch of an ad-supported product in a new market is more complicated than flicking a switch. For the viewing numbers to be converted to revenue, advertisers have to engage with the platform. This could involve establishing a sales team, forming data-sharing partnerships, product localisation, and developing ad tech in line with local regulations. This represents an upfront cost in each new market, so for the launch of an ad-supported streaming platform to make financial sense key criteria must be met. High potential launch markets will offer:

– Sufficient Internet infrastructure

– High connected device uptake

– Disposable income able to support strong CPM

– A weak free-to-air TV offering and/or expensive pay TV

– A Developed advertising sector

The limited number of markets currently meeting these criteria will shape the international rollout of AVoD services in the near future. But as the AVoD model gains traction with audiences and advertisers in the US, platforms will continue to focus on international growth as a way to scale their businesses. Ampere Analysis