Top online services like YouTube, Netflix, and Hulu have essentially changed the way we view our TV shows, videos, and sporting events so much so that 70% of consumers now accept streaming subscriptions offer better services than traditional TV.
Streaming goes mainstream behavior in many parts of the world, with VOD households growing by more than 25 percent in the past two years. The term coined to show this stage in entertainment and media is video-on-demand or VOD.
The fast shift toward VOD is radically changing the way content is consumed, but also how it is sold. When starting your VOD platform, one of the most important decisions you need to make is choosing the right monetization model.
Choosing a model to monetize your content delivery
Three main monetization models are commonly employed by VOD businesses:
SVOD –Subscription Video On Demand
TVOD –Transactional Video On Demand
AVOD – Advertisement-Based Video On Demand
We’ll detail each of those below.
Lets consumers access an entire catalogue of content for a flat rate, typically paid monthly, like traditional pay-TV packages. Generally terms, it’s an “all-you-can-eat” buffet. Users can consume the maximum amount of ad-free content as they desire – as long as they still pay their subscription. With no lock-in contracts and a high perceived value for the cash, SVOD is currently the foremost lucrative monetization model and represents the most important segment of the OTT market. The Monetization Models can be weekly, monthly or yearly as it depends on the service
The most important players within the streaming industry utilize SVOD, including Netflix, Hulu, and Amazon Prime Video, also as newer entrants like Apple TV+, Disney+, and HBO. Consistent with Forbes, a staggering 55% of USA citizens have a subscription to Netflix, where over 1 billion hours of video are consumed per week, and 52% use Amazon Prime Video. with market experts estimating the globally OTT market is about to increase from $97 billion in 2017 to $332 billion by 2025. However, the absence of long-term
The other SVOD platforms, TVOD permits consumers to buy content on a pay-per-view basis. You will examine it as an online Blockbuster. Consumers generally have the solution to either rent or buy. In VOD terms, there are two subcategories are referred to as ‘electronic sell-through’ (EST), where consumers make a single payment for a bit of content to have indefinitely; and DTR(download to rent), where distributors impose consumers a little fee to access content for a limited period. TVOD platforms manage to deliver higher profits per viewer by offering consumers timely access to the foremost recent releases and main sporting events in real time. Attractive prices and promotions induce customers to do repeat purchases. Instances of TVOD platforms comprises Apple iTunes, Sky Box Office and Amazon’s Rent or Buy video store.
Unlike SVOD and TVOD services, consumers can access AVOD free of charge. AVOD is like traditional television where ads are played in between videos. You might have experienced ad-supported video activity on YouTube, Tubi, Hulu, or The Roku Channel. It works in two ways where video creators can directly approach other companies for placing their ads on VOD platforms in return video creators get paid on a pay per click basis on ads. The Other way is approaching advertising networks where they connect video creators with the company searching for ads space
AVOD is typically overlooked by premium content providers, who are confident consumers can pay with their own content without disruptions. However, various media companies are jumping back into the AVOD model. Roku, For example, is initiating a huge portion of its profits from AVOD on The Roku Channel. It is approximate they will profit close to $1 billion from the mix of ad sales on third-party apps as well as on their own AVOD app, with the mass of the sales alleged to come from AVOD.
Hybrid revenue models:
In practice, many platforms utilize a hybrid approach by implementing a mix of Monetization models. Take Amazon Prime, for example – audiences pay a subscription to approach a library of content but also have the choice to buy new releases or specific sporting events for a further fee (e.g.combination of SVOD and TVOD). YouTube, on the other hand, provides audiences with free, ad-supported content with an option to pay a subscription for access to premium videos. Practicing a combination of AVOD and SVOD allows users to experience your content before converting them into paying subscribers. However, it’s is worth mentioning that the undisputed king of free content has struggled to convert its billions of users into paid subscribers – with just 1% of YouTube users globally worrying to subscribe to its premium offering.
However, endorsing one of these Monetization models can cause a different revenue stream. It is by providing modern consumers with the freedom to select a package that best suits their needs and budget. In reality, you can win a wider audience and eventually maximize your profits.
Start a discussion with an Expert from our Team today, if you’d like help upgrading your VOD Business. We’re here to help you.