Deloitte predicts further growth for AVOD and VR in 2023

Consultancy Deloitte has shared its TMT predictions for 2023, among which it expects there to be advertising supported tiers on all streaming services by mid-2023.

Paul Lee

By the end of 2024, Deloitte predicts that half of these providers will also have launched a free ad-supported streaming TV (FAST) service. Additionally, around two-thirds of consumers will use at least one AVOD service monthly, 5% up on 2022.

Paul Lee, global head of technology, media and telecommunications research at Deloitte, said: “AVOD is growing in popularity as video streaming platforms adjust their offerings to attract and retain viewers on household budgets that have been diminished by inflation. We know that consumers are often willing to trade ads for discounted or free content, and AVOD offers a way to keep watching, while also saving. In the UK, consumers average 2.46 subscriptions, meaning that ad-funded tiers may become even more attractive for those aiming to cut costs.”

Among other predictions, Deloitte reckons global spending on goods and services via social media platforms will surpass $1 trillion (£820 billion) in 2023. It also forecasts that the virtual reality market will generate global revenues of $7 billion in 2023, up 50% from $4.7 billion in 2022; Headsets will generate almost all (90%) of next year’s revenue, with around 14 million units, averaging $450 each, expected to sell.

Lee said: “The success of virtual reality relies heavily on content, and the way it can differentiate from everything else in a busy entertainment market. Compared with mobile phones, tablets, laptops, and games consoles, which boast billions of users every day, VR headsets still tend to be used relatively infrequently. The growth of VR will be dependent on the industry creating engaging content that cannot be found elsewhere, which might include an accessible and immersive ‘metaverse’ experience, at a competitive price. Only then will the reality of VR be realised.”