In 2025, streaming platforms find themselves at a pivotal crossroads. Gone are the days when a single subscription model – SVOD – ruled the industry. Instead, audiences are increasingly savvy and cost-conscious: nearly half of U.S. subscribers now choose ad-supported tiers, and most of those are new users – a clear sign that AVOD and FAST are becoming mainstream.
At the same time, subscription fatigue is apparent, with many reporting feeling overwhelmed by the number of services they pay for. A single SVOD subscription is not enough today for an audience looking for best-in-class content and convenience. Therefore, OTT monetization strategies have adapted to balance profitability with user engagement, responding to shifting consumer behaviors and technological advancements.
This article explores the historical context of OTT monetization models, examines current trends, and discusses technologies enhancing these strategies, providing actionable insights for OTT market players considering moving to hybrid OTT monetization.
In the following sections, we’ll unpack:
- How and why ad-supported models are gaining traction in the current tech and economic climate.
- How hybrid monetization strategies tackle subscription fatigue with price flexibility and bundle innovation.
- The role of AI-powered personalization in amplifying ad relevance.
- The strategic place for premium, on-demand content via TVOD.
- Freemium is a conversion funnel with built-in monetization.
- Localization and tiering in emerging markets, driven by mobile expansion and regional price sensitivity.
Evolution of OTT Monetization Models
In the early 2010s, Subscription video on demand (SVOD) emerged as the flagship OTT monetization model, and it didn’t just change how platforms made money; it changed how people watched TV. Picture the moment: families ditching late fees at the video store, teens bingeing entire seasons in one weekend, and viewers everywhere relishing the luxury of watching what they wanted, when they wanted, without ads.
This wasn’t just technological progress; it was a cultural turning point. Platforms like Netflix and Amazon Prime Video offered vast content libraries at a flat monthly rate, eliminating the friction of rentals or pay-per-title decisions. The appeal was clear: ad-free viewing, binge-ready formats, predictable pricing, and original content that rivaled Hollywood. SVOD became the new normal – its rise turbocharged by the rapid expansion of broadband (the global average speed more than doubled between 2010 and 2020) and the introduction of smart TVs that brought streaming into the living room with one click.
As more platforms entered the field and subscription costs began to stack up, the once-simple decision of “what to watch” was complicated by “what to pay for.” This opened the door for Advertising-Based Video on demand (AVOD) to gain serious traction. Services like Hulu and YouTube proved that ad-supported content could satisfy viewers who were eager for flexibility, especially during moments of economic uncertainty. Hulu’s early experiments with hybrid ad-supported SVOD tiers, starting in 2011, laid the groundwork for today’s multibillion-dollar AVOD market. Meanwhile, YouTube’s long-standing free model became a case study in just how valuable user attention could be when monetized with ads.
At the same time, Transactional VOD (TVOD) quietly carved out a niche. For those uninterested in ongoing subscriptions but eager for timely access – be it a major sporting event, blockbuster premiere, or live concert – TVOD and pay-per-view offered one-off flexibility. Apple, Google Play, and Amazon Prime Video rentals became popular among viewers willing to pay a premium for exclusive or event-based content, especially as windowing strategies shifted.
Then came the freemium evolution – a mix of free access and premium upsells, blending reach with revenue. Huge market players in their respective regions, like Peacock, Disney+, or Hotstar, offered ad-based and ad-free tiers. Twitch allowed anyone to watch for free, but reserved perks like ad-free viewing and custom emotes for paying subscribers. Spotify’s model – stream music for free, upgrade for better quality, and no ads – set the blueprint for OTT services straddling user growth and monetization.
The following snapshot captures a broader shift in the OTT landscape. What about today?
Current Trends: Monetization Models in 2025
1. Ad-Supported Models (AVOD and FAST) Gain Momentum
In 2025, AVOD and FAST services continue to attract cost-conscious viewers. According to Antenna’s Q2 report, 46% of U.S. streaming subscribers use ad-supported tiers, and 65% of them are new customers, underscoring AVOD’s power in user acquisition. With the global market projected to reach $75.22 billion by 2030, AVOD has matured into a core revenue model for OTT platforms.
Services like Tubi and UVOtv offer free content supported by advertisements, attracting a broad audience base. This model allows for revenue generation through targeted advertising while providing viewers with free access to content.
Why it’s happening:
- Economic pressures: Inflation and the cost-of-living crisis have led consumers to trim discretionary expenses, including multiple subscriptions.
- Cord-cutting inertia: As linear TV declines, ad-supported services provide a no-cost or low-cost alternative with similar benefits.
- Ad tech maturity: Advanced ad targeting and server-side ad insertion (SSAI) allow more efficient ad placement and monetization without disrupting the viewing experience.
2. Personalized Advertising Enhances Viewer Engagement
Advancements in artificial intelligence and machine learning enable OTT providers and services to deliver personalized advertising experiences. By analyzing viewer data, platforms can serve targeted ads that resonate with individual preferences, increasing engagement and ad effectiveness.
Why it’s happening:
- Data access: Streaming services can now build detailed profiles of viewer preferences, behaviors, and contexts.
- Advertiser demand: Brands are shifting budgets to CTV for better ROI and more precise audience targeting.
- Consumer tolerance: Users are more likely to tolerate ads when they are relevant and non-intrusive, particularly in free and hybrid tiers.
3. Transactional Models Monetize Premium and Live Content
Transactional video on demand (TVOD) and pay-per-view (PPV) models are effective for monetizing premium content, such as new releases and live events. These models allow viewers to pay for specific content without committing to a subscription, providing flexibility and additional revenue streams for platforms.
Why it’s happening:
- Content flexibility: Users pay only for what they want, without missing out on high-demand content.
- Exclusive content: Live events or new movie releases can command a premium, driving incremental revenue.
- Promotional leverage: Platforms can bundle, discount, or cross-sell TVOD content to increase overall monetization
Even in a subscription-dominated era, there remains a strong market willing to pay for exclusivity. TVOD thrives when consumers perceive clear, event-level value – e.g., big sports matches, concert broadcasts, or early movie releases at home.
4. Freemium Models Facilitate User Acquisition
Freemium models, which offer basic content for free with the option to upgrade to premium tiers, are effective for user acquisition. By lowering the barrier to entry, platforms can attract a larger audience and encourage conversions to paid subscriptions through value-added features and exclusive content.
Why it’s happening:
- Lowered friction: No up-front payment encourages higher trial rates.
Conversion potential: Users can be nurtured into subscriptions via premium content previews, added features, or discounted upgrades. - Advertising revenue: Free content still drives ad impressions, offering value even without direct subscription income.
5. Expansion into Emerging Markets with Localized Content
OTT content providers and platforms are expanding into emerging markets by offering localized content and pricing strategies. By tailoring content to regional preferences and economic conditions, platforms can expand new audiences and drive growth in these markets.
Why it’s happening:
- Growing connectivity: Flash-growing broadband and smartphone penetration in Asia-Pacific, Latin America, and Africa make global expansion viable.
- Content appeal: Local originals help platforms secure regional licensing and viewer loyalty.
- Economic calibration: Tiered and hybrid models allow better alignment with local purchasing power and spending habits.
6. Hybrid Monetization Models: Address Subscription Fatigue with Multiplying Revenue Opportunities
In this climate, OTT monetization has evolved into a multi-dimensional strategy. To combat subscription fatigue, OTT platforms are adopting hybrid monetization models that combine subscription-based (SVOD), ad-supported (AVOD), and transactional (TVOD) options. This approach offers flexibility, catering to diverse audience preferences and maximizing revenue potential.
The question is no longer whether to choose AVOD, SVOD, TVOD, or Freemium – but how to combine them, orchestrated by data and technology. Hybrid video on demand (HVOD) mixes SVOD, AVOD, TVOD, and FAST in modular models.
Hybrid OTT strategies reflect platforms’ need for greater monetization agility, segmenting offerings by price sensitivity, content preferences, and binge behaviors. It’s both a defensive and offensive play – as pricing elasticity flattens, flexibility becomes the competitive advantage.
Why it’s happening:
- Price sensitivity: Stacking subscriptions is becoming less common as U.S. households reduced their number of OTT services in 2024.
- Segmented offerings: Instead of “one-size-fits-all,” hybrid models align pricing and access with user preferences and willingness to pay.
- Strategic bundling: Telcos and streamers increasingly bundle their services to reduce churn and increase overall perceived value.
Strategic Implications
The 2025 monetization ecosystem is increasingly diversified and dynamic, and it’s no longer enough to choose a single model. Instead, successful platforms:
- Combine AVOD, SVOD, TVOD, and Freemium options in flexible packages.
- Use data intelligently with AI to maximize ads and retention.
- Invest in localization on local markets and tiered pricing.
- Explore interactive, shoppable, or contextually triggered ads and formats.
- Partner with telcos and aggregators to leverage bundling deals to reduce churn and boost scale.
As economic pressures level out and consumer habits solidify, we’ll continue to see consolidation and innovation within hybrid and ad-based monetization. Networks like Netflix and Disney+ will likely deepen AVOD offerings, while FAST platforms will drive ad tech advancements. Personalization, data analytics, and hybrid flexibility won’t just be innovative features.
