If you’ve recently begun building a “VOD” or Video on Demand business, you might have encountered a few unusual terms. To master monetization in this landscape, you’ll need to research things like “AVOD meaning”, “SVOD meaning” and “TVOD meaning”.
Each of these acronyms refers to a specific kind of monetization method, used to drive value to your “video on demand” business. Choosing the right strategy for your needs is the first step in ensuring your new venture is as successful as possible.
Today, we’re going to explore the concepts behind SVOD, TVOD, and AVOD, to help you make the right choice for your future company.
What is VOD? An Introduction to VOD Monetization
VOD stands for “video on demand”. It’s a form of distribution method for companies selling video content to subscribers or purchases around the globe. Instead of live streaming video to your customers at a specific time, or hosting a webinar, you create video content in advance, and distribute according to the needs of your target audience.
VOD gives viewers the option to choose when, where, and how they view the media you produce. In many cases, all they need to do is click on a link, make a payment, and start watching a video.
Fundamentally, VOD has a few core advantages, it allows viewers to:
- Watch pre-recorded content whenever they choose. Unlike linear programming, VOD isn’t delivered on a set schedule. Customers can access videos whenever they want.
- Control what they watch. VOD gives consumers more opportunities to pick exactly what they want to watch. This leads to a better user experience.
- Leverage media controls. Most VOD platforms give customers the options to play, pause, fast forward, rewind, and even choose the playback speed of their content.
Some VOD solutions are streamed for free. Technically, YouTube offers a host of “Video on Demand” content to consumers. However, it’s also possible to charge customers to access your content. This is where “video on demand monetization” comes in.
An Introduction to VOD Monetization Models
Choosing a method to monetize VOD content can be a little tricky at first. With video on demand, there’s no traditional “physical product” pricing model. In other words, you can’t use the “cost-plus” pricing model most people use when selling standard products.
However, you can turn a loyal audience into a VOD business, with a variety of different pricing models. Fundamentally, there are three core options to choose from: SVOD, TVOD, and AVOD.
SVOD is perhaps the most popular pricing model, as it offers a fantastic way for companies to generate loyal customers and ongoing revenue. However, let’s take a closer look at each option in detail, to help you understand your choices.
SVOD Meaning: What is SVOD?
Starting with one of the most highly recommended VOD models, SVOD stands for Subscription Video on Demand. This model gives viewers complete access to a video library, in exchange for a specific monthly, weekly, or annual recurring fee.
The great thing about SVOD is it ensures paid subscribers can access a wide range of content options, without having to worry about annoying ads or pop-ups.
Many VOD users already spend money on subscription plans to access their favorite content. Around 86% of Americans watch content from at least 2 or more well-known SVOD companies. This makes SVOD an excellent source of potential income for business owners. Some of the best-known subscription services or SVOD platforms you might be familiar with include:
- Amazon Prime
- Netflix
- Disney+
- Hulu
- HBO Max
- Roku
These streaming giants have fundamentally changed the way most people consume video content. Although there are many well-known big companies out there, the SVOD model can work for virtually any sized video business. Rather than selling content on a pay-per-view basis (PPV), or looking for a streaming platform with ad options, you can create powerful relationships with your customers that last for years.
SVOD is one of the best revenue models for any video service provider, and it’s quickly becoming an excellent alternative to traditional TV for many customers. Just make sure you get your subscription fee right, so you can engage and convert more customers.
TVOD Meaning: What is TVOD?
TVOD stands for Transactional Video On Demand. It uses the “pay-per-view” video format. Customers make a purchase once to access the specific content they’re most interested in. For instance, if you’ve ever bought an individual episode of a show from Amazon Prime, or downloaded a video from Apple iTunes, you’ve probably used the TVOD landscape before. Examples of TVOD include one-time purchases on Amazon Prime, Apple TV, and Google Play.
TVOD gives companies an opportunity to make a decent amount of cash up front, by charging a heftier per-video pricing fee. Most consumers don’t mind paying a slightly higher price for the specific content they want, which can allow companies to access more cash.
However, with this model, businesses need to make sure the quantity of sales they’re making stays high enough to allow them to make a consistent profit. This can be easier said than done, as it’s easy to lose consumers to other competing brands. In some cases, companies may choose to use TVOD and SVOD together to help boost their earning potential.
Most of the time, a VOD service solution will allow you to combine various different monetization methods if you’re struggling to make the decision between TVOD vs AVOD vs SVOD.
AVOD Meaning: What is AVOD?
The third option for video monetization is AVOD, or “Advertising-based Video on Demand”. Essentially, this allows consumers to access “free” content, with no single purchase price or subscription requirement. However, because there’s no fee included, video creators need to make money another way, often by including “ads” in their content.
AVOD revenue comes from external businesses that partner with the content creator to advertise with short videos placed throughout each video. For viewers, accessing AVOD content is similar to watching cable TV. There’s no price to watch the television, but they are exposed to regular advertisements.
YouTube is perhaps the platform most successful in this area. There are video ads included in the content before, during, and after each video. In the past, the AVOD model was the most common way to make money using video on demand. While some content creators do make an excellent living this way, using YouTube and ad-based business models. However, the strategy doesn’t work for everyone.
Advertising means video creators are exposed to strict rules and regulations around their content. They also have very little control over the ads they show in their video, and their income is completely reliant on advertisers, rather than the quality of the video.
In some cases, AVOD strategies also lead to less viewer traffic, because most AVOD platforms aren’t particularly well-known among consumers, and many customers prefer to avoid ads where possible. However, if you’re selling TV shows using a traditional video streaming strategy, an AVOD method might be the ideal option for you. You can earn a decent amount of ad revenue in the right circumstances.
Why is SVOD the Preferred VOD Monetization Model?
Although every form of video monetization model has its perks, and the ability to make money for content creators, SVOD is one of the most commonly chosen options. Right now, subscription-based videos are already popular among consumers worldwide. Around 55% of Americans use Netflix to stream around 1 billion hours of video per week.
Most experts also believe that subscription-based video services are projected to deliver a lot more value over time. As consumers continue looking for new ways to access more of the content they enjoy without ads or schedules, SVOD is an excellent option.
SVOD isn’t just suitable for larger businesses and giant media companies either. Amazon, Netflix, and Hulu might be popular choices, but there are many small online VOD business owners leveraging the subscription model as well. For instance, about 70% of the clients using Uscreen, a popular VOD tool, have started using a SVOD model.
There are countless tools out there which provide companies with the apps and hosting solutions they need to build their own subscription models. Some solutions even allow you to create your own OTT app for your subscription service, suitable for use on Android or iOS phones, televisions and consoles.
Perhaps the core reason SVOD works so well, is due to the “membership economy”. Let’s take a closer look at how the membership economy works.
What is the Membership Economy?
The term “membership economy” was coined by a Silicon Valley product marketer and consultant named Robbie Kellman Baxter. She explained the “membership economy” revolves around the ability of brands to find their “super users”, and establishing a long-term relationship with them.
The membership economy focuses on giving brands the ability to build recurring revenue from something they create only once. It’s much more lucrative to have a subscriber pay $10 per month for access to endless videos than it is to have them pay a single $10 fee for one video.
While TVOD and AVOD solutions still have a lot of value to offer in the right circumstances, most businesses find they can enjoy more long-lasting revenue with a SVOD strategy. Notably, the SVOD business model doesn’t just deliver phenomenal benefits to the content creator, it can also deliver a range of fantastic benefits to paying customers too.
SVOD viewers have the freedom to watch premium content whenever they choose, without being bound to specific programming schedules, or waiting for a new show to be available. Instead, they can view the content they like most across multiple devices, without having to pay too many frequent fees. Yearly subscriptions and monthly subscriptions are generally a lot more affordable than paying one-time costs for multiple pieces of content.
How to Create a SVOD Pricing Model
If you decide the SVOD monetization model is right for you, the next thing you’ll need to do is think about the kind of pricing model you’re going to adapt. There are many different ways to get started with a subscription strategy, and each has its own benefits to offer different content creators.
In most cases, video producers will experiment with a range of different pricing models, before eventually choosing the solution that generates the most value.
Here are some of your options:
Free Trials
Free Trials are a valuable way to attract new, loyal customers to your VOD offering. Typically, this strategy involves a limited offering, in which customers will be able to access the entire video library you offer without paying anything. Once they’ve tried your VOD solution and they know how great it is, they can sign up for a long-term subscription.
Apple Video, Netflix, Amazon Prime, and many other OTT SVOD providers use this method. The free trial is a very common pricing strategy for all kinds of subscription businesses. It provides customers with a no-risk way to try out the content you offer before they pay anything.
Uscreen even found that more than half of the people who take advantage of a free trial end up converting into paid customers after the trial ends. SVOD clients who offer free trials on Uscreen also make an average of around 195% more from their strategy per month.
Freemium models
Freemium models take a similar approach to the free trial strategy, but offer customers a basic, stripped down version of the content library first. The VOD users can access a selection of “free” videos for as long as they like. However, if they want to access more premium, exclusive content, they need to upgrade to a paid plan.
The great thing about the Freemium model is the customer doesn’t have to make any commitments to buy something from you. This is a great way to drive a larger number of users. However, conversion rates tend to be a lot lower than they are for the free trial strategy.
Companies using the freemium model need to focus on finding ways to convince the customer they need to upgrade. This means constantly highlighting the value the premium products have to offer, and making sure customers are aware of them.
The Varied Access Model
The Varied Access Model is a little less common than some of the other VOD solutions. However, it’s still a good choice for some business leaders. It involves providing customers with access to different subscription levels based on what they want to access.
For instance, Netflix allows customers to sign up to access their content on a single screen for one price. Alternatively, users can upgrade to add more screens to their plan and increase their overall video quality. This strategy can be applied in a multitude of different ways. Some companies might offer customers a specific number of views for content on one plan, or access to a specific number of television episodes or movies, depending on their plan.
The varied access pricing model is unlikely to be the best option companies who are starting their VOD strategy for the first time. However, as your solution grows and evolves, you can begin to consider more complex pricing models.
Which Model is Best?
If you’re looking for a convenient way to earn long-term revenue from your VOD business, a SVOD service is likely to be the best option. Some of the top companies in the world, from Amazon Prime video, to Netflix, use this over-the-top video strategy to deliver their own streaming service to customers. While ad-supported videos and one-time purchases can have their own benefits, they’re less likely to generate a consistent revenue stream than SVOD.
Of course, you could always consider combining your SVOD strategy with TVOD services and AVOD services too. Selling specialist content on a once-off basis, offering free content with the AVOD method, and creating your own subscription strategy could be a good way to increase your sales.
With any monetization strategy you choose, it’s always crucial to ensure you’re delivering high-quality content, and excellent customer service.
