Nowadays, Video on Demand (VOD) is one of the most preferred ways to watch video content. The growing popularity of platforms such as Netflix, Amazon Prime, and Disney Plus has increased the demand for VOD content. Such platforms use VOD platforms’ revenue model to monetize content.
Are you a video content creator who wants to make money from your videos? One way to do so is to select the best video-on-demand (VOD) model for your business. If you scan the market, you’ll find countless ways for brands and creators to make money streaming, but there are three primary video monetization models for video on demand (VOD). These methods are commonly used to monetize video streaming services, allowing media companies and creators to monetize their content libraries. In this blog, we will compare the top video business models for on-demand streaming, including SVOD, AVOD, and TVOD, and also discuss how each of these revenue models works.
Without much delay, let’s dive in!
What is TVOD?
Transactional video on demand (TVOD), commonly referred to as Pay-Per-View (PPV), is a business model where viewers pay to watch videos. Viewers on this TVOD platform generally have two options. They can either rent or buy the video they want to watch. TVOD transactions can take the form of a short-term rental or a long-term license. However, in most cases, the customer does not own the content they buy. It simply doesn’t expire unless the consumer violates the terms and conditions of the service.
Pros of TVOD
Convenience:
TVOD platforms offer a high degree of convenience, allowing users to purchase and watch content with just a few clicks. Unlike subscription-based streaming services, users don’t have to sign up for a monthly plan – they can simply purchase the content they want to watch when they want to watch it. This makes it ideal for those who don’t want to commit to a longer-term subscription plan.
Variety:
TVOD platforms enable users to access a wide variety of content. This includes newly released movies, classic films, documentaries, TV shows, and more. This makes it easy to find something to watch on any given night, regardless of the user’s preferences.
Cost Savings:
TVOD platforms are typically more cost-effective than subscription-based streaming services. This is because users only pay for the content they watch, rather than a monthly fee. This can help users save money in the long run, as they won’t be paying for content they don’t want to watch.
Control:
TVOD platforms give users more control over their viewing experience. They can choose which content they want to watch, when they want to watch it, and how much they want to pay. This makes it easier for users to tailor their streaming experience to their preferences.
What is SVOD?
The SVOD platform or subscription-based model works in the same way that traditional pay-TV packages do. Like traditional cable or satellite TV packages, SVOD packages frequently bind the consumer to a short-term contract or no contract at all, allowing them to cancel whenever they want. The SVOD model allows users to pay a monthly or yearly subscription fee in exchange for unlimited access to a vast library of series, movies, TV shows, and even live channels and podcasts. SVOD services include Netflix, Disney+, Hulu, Apple TV, and HBO Max.
Pros of SVOD
- Cost-Effective:
The most obvious advantage of SVOD platforms is that they are a cost-effective way to access content. Most SVOD services offer lower monthly subscription fees than cable companies, making them the more affordable option. Additionally, many SVOD services offer a free trial period, allowing users to try out the service before committing to a monthly subscription. - Convenience:
Another advantage of SVOD platforms is that they are incredibly convenient. Most services offer apps that are available on a variety of devices, making it easy to access content from any location. Additionally, many services allow users to download content for offline viewing, allowing them to watch their favorite shows and movies without an internet connection. - Variety of Content:
SVOD platforms also offer a variety of content for users to enjoy. Most services offer a wide selection of movies, TV shows, documentaries, and original content. Additionally, many services offer exclusive content, giving users access to movies and TV shows that are not available on other streaming services. - Parental Controls:
SVOD services also offer parental controls, allowing parents to restrict access to certain types of content. This feature is especially helpful for parents who want to ensure that their children are only watching age-appropriate content.
What is AVOD?
AVOD (Advertising video-on-demand) is an ad-based revenue model that allows users to watch videos intermixed with commercial advertisements without purchasing subscriptions. The main idea behind this AVOD revenue model is that users must watch ads to view the content. Hulu and YouTube are the best AVOD platforms, though there are many more. On television channel applications and user-generated video platforms, AVOD monetization is common. This type of VOD service offers free content that is interrupted by commercials. AVOD providers include YouTube, Facebook Watch, Peacock, IMDb TV, and Pluto TV, to name a few.
Pros of AVOD
- Cost Efficiency:
One of the main advantages of AVOD is it’s cost efficiency. It is a free service, so the users do not have to pay to access the content. This can be beneficial for those who cannot afford to pay for premium content. Furthermore, the cost of setting up and maintaining an AVOD platform is relatively low compared to other streaming services. This makes it an attractive option for content creators and distributors. - Wider Audience:
AVOD platforms can also attract a wider audience than other streaming services. This is because it does not require users to pay for content, so more people are likely to view the content. Additionally, it is more accessible to those who do not have access to premium streaming services. - Ad-based Monetization:
Another advantage of AVOD is that it allows for ad-based monetization. This means that content creators and distributors can generate revenue from advertisements placed on their platform. This can be beneficial for those who are looking for a way to monetize their content without relying on subscriptions or pay-per-view models. - More Content Options:
AVOD also allows for more content options than other streaming services. This is because it does not require users to pay for content, so more content can be offered for free. Additionally, content creators can create more varied and creative content, as there is no need to conform to subscription models or pay-per-view models. - Greater Reach:
Finally, AVOD platforms can also have a greater reach than other streaming services. This is because it is not limited to just one platform. Content can be distributed across multiple platforms, allowing for greater exposure. Additionally, it can be accessed from different devices, making it more accessible to users.
SVOD vs. TVOD vs. AVOD: Which is best for the video streaming industry?
As technological advancements cause content distribution systems to change, businesses can use a wide range of monetization strategies. It is vital to look into all options before launching a product. It’s due to the fact that some existing VOD providers have a larger and more committed user base than others.
Before we compare AVOD, SVOD, and TVOD, let’s define each term individually.
As traditional ways of viewing and engaging content evolve, media companies must be creative in their platform monetization strategies. How do they choose between AVOD, SVOD, and TVOD? In general, it is determined by the platform and the content collection made available to customers. Here are some examples of when each type of VOD service monetization strategy should be used. SVOD is an appealing option for media companies because it provides a consistent cash flow. Media companies prefer recurring revenue, and SVOD was a popular model for cord-cutters in the early days. However, when compared to AVOD vs TVOD vs SVOD models, client retention may suffer because providers must constantly attract users with content or price discounts to renew.
AVOD provides a revenue stream for content that would not otherwise generate direct or recurring client revenue. The AVOD business model is commonly used by companies that create or amass a large content library. There are times, however, when free content has a catch. Media companies that use the AVOD and SVOD models may find it difficult to retain subscribers, either because the perceived quality of the content is lower than that of SVOD or TVOD providers, or because users are irritated by ad interruptions.
Compared to SVOD and AVOD, TVOD has the most transparent expectations for both providers and consumers. When you rent or license content, you know the exact operating costs and overhead for each piece of content, which allows for more precise pricing and profitability. Similarly, buyers know exactly what they are purchasing. Even if you provide free content, there is no guarantee that a customer will use a TVOD platform more than once. To encourage client loyalty, TVOD providers must frequently match or beat competitors’ pricing. Due to the benefits of SVOD, AVOD, and TVOD, many media companies use various techniques. Larger corporations may even provide product-specific VOD service variations. For example, YouTube provides free user-generated content (AVOD), as well as premium content for rent or purchase (TVOD), and specific subscription-based entertainment services, such as live TV (SVOD). Similarly, Hulu’s platform takes a hybrid approach.
Wrapping Up
Are you all set to AVOD? Or maybe you prefer SVOD or TVOD. No matter what you pick, we are confident you’ll make the right decision for your video streaming business. Also, we hope you found this guide helpful and have chosen the best VOD business model for your business. But, if you’re still looking for a platform to help you get started with an SVOD business, we can help.
