The internet has revolutionized how we access video and audio content. Gone are the days of switching between TV channels; now, we’re able to choose what we want to watch from a catalogued list. The umbrella term for this is VOD (video on demand) and there are multiple revenue models for businesses to choose from if they go down this route. AVOD (Advertising Video on Demand) and SVOD (Subscription Video on Demand) are the top two.
2020 was the year of growth for AVOD in particular, as the market became more competitive, monthly costs per user dropped lower and lower, and more avenues for revenue generation were sought out. For SVOD advertising, on the other hand, the market still remains ripe as ever, with its size projected to reach USD 32.3 billion by 2025.
Here’s all you need to know about these popular VOD platform and what to choose for your platform.
What is SVOD (Subscription Video On Demand)?
Subscription video on demand allows users to pay a regular fee and, in return, receive unlimited access to a massive catalogue of audio or video content for that duration. This OTT video monetization model is quite similar to traditional TV packages, but the content is much more curated and can be categorized for niche industries or general audiences.
Benefits of Subscription Video On Demand Model
1. Predictable and Recurring Revenue
Having fixed rates per user per month or year allows OTT platforms to maintain a stable and predictable amount of revenue each month.
2. Better Profit Margins
Compared to other OTT video monetization models, SVOD allows for higher profit margins with just a few thousand subscribers.
3. Better Customer Base
By create a subscriptions video platforms are able to maintain a better and more curated audience base than if they were to present content for free or using other OTT platform revenue models.
Choose The SVOD Platform Route if…
You want a curated customer base with predictable revenue, and would prefer to keep your platform ad-free and completely in your control.
Why is SVOD the most profitable VOD model?
Businesses choosing SVOD make money by offering packaged content in monthly, quarterly or annual subscriptions charging their customers a recurring fee.
When we compare the difference between AVOD vs SVOD, businesses mostly work on membership plans with varied conceptualization. Giant media business video preneurs include Netflix, HBO Max, Disney +, Hulu, etc.
Stats indicate, some of the top video entrepreneurs implement subscription-based models as it helps to generate income of an average of $5,800 each month.
How does SVOD attract users, and how can they watch it on any device without paying extra?
The really best part that catches attention in SVOD is, viewers choosing this package can watch premium material at their leisure anywhere, anytime. They are no longer restricted by programmed schedules or waiting for a show to record to their smart box.
Since these unique content pieces can be accessed with wireless internet connectivity, the user is not at all restricted to a particular device.
And, most importantly, the best plus factor is, there is no extra fee for your audience to watch on any type of device.
All of these play a major role in cost factors for your viewers as subscription VODs can be viewed at your own convenience, much cheaper than cable or satellite TV packages.
SVOD Pricing Model
Once you decide to use an SVOD monetization approach for your video streaming business, the next step is to figure out what pricing plans you’ll use.
There are a number of different subscription-based video on demand pricing structures available. There are many but you can settle on one of the three options below:
- Explore options with Free trial
A free trial is a short period of time during which a user can view your full video library for free. A good percentage of users will decide to sign up after checking your VOD content and experience it to decide on how fascinating it is!
- Lure Customers with Freemium
Freemium, on the other hand, refers to availability of your VOD assets that consumers can access for as long as they desire for no charge using this model. Despite having minimal rise of profitability, this can also serve to gather an increased user-base.
- Capitalize on Selective Access Model
This model can be an advantage to you once your business crosses the budding stage. You can apply it in varied combinations like offer particular views or downloads a month, particular episode access, etc. For the start you can keep it simple.
What is AVOD (Advertising Video On Demand)?
AVOD refers to ad-based video on demand. In this OTT monetization method, video content can be accessed by users for free. However, like broadcast television, they will need to sit through targeted ads to be able to access that content, and this becomes the revenue stream for the platform owner. YouTube is by far the best known example of AVOD advertising, where the revenue from ads are used to offset the costs of production, hosting and delivery.
Benefits of Ad-supported Video On Demand Monetization Model
1. Unlimited Videos For Free
Users can watch as many videos as they want at a stretch without a fee, as long as they sit through the ads.
2. Vast Reach
Video viewing platforms have vast and diverse audiences that companies can tap into with targeted ads.
3. Democratic Viewership
The absence of a regular fee ensures that all video content can be accessed by anyone anywhere, and this increases the reach and popularity of your platform exponentially.
Opt For an AVOD Platform if..
You’d like to promise free video and audio content to your users without creating OTT subscription models, but also want to make steady revenues off the back of such content.
Choosing Between AVOD and SVOD
Both SVOD and advertising-supported video on demand are positive avenues for revenue generation. That said, your choice between the two would depend on your VOD business model, and the following factors:
- Type of content
- Advertising landscape
- Audience demographics
- Content fees and licenses
- Investments in platform and content management systems
- Financial goals per month and year
The Importance of Choosing The Right VOD Revenue Model
Revenue models also need to work perfectly with a multi-device, web-powered ecosystem that will be accessed by thousands of people all at once. As a result, they need to be secure and confidential and immediately unlock access for users upon payment. Delays and lags in subscription video on demand platform providers can lead to a high customer churn rate.
The perks of choosing monetization
Regardless of whether you’re finally choosing advertising video on demand or SVOD advertising, there are multiple perks that choosing monetization in general offer:
- Steady Revenue: Monetization plans ensure steady revenue streams for operational and maintenance costs along with profits
- Secure Content: Adding paywalls or ads ensure content is securely watched and can’t be pirated
- Privacy: Subscriptions ensure exclusivity and privacy for users, who can customize their watchlist as per their discretion
- Flexible Monetization: OTT platform providers can vary their monetization plans depending on the type of content, to keep generic content free and premium content secure.
How VOD Helps in Generating Revenues?
Firstly, the demand for video on demand is all-time high! So you’d be stepping into a very lucrative industry with the help of world’s best video on demand solution providers. Many businesses have built their brands as a top successful VOD platform, using steady revenues also learn what is vod. This is achieved by incorporating various monetization models to fund their operations. It is flexible and scalable enough to support thousands of content pieces with millions of users at the same time.
Building or creating the ideal video monetization platform ensures you’re able to provide quality content to a curated set of users while also maintaining steady revenue and building your successes.
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Frequently Asked Questions(FAQ)
AVOD streaming services are all about free ad-supported content which gives another alternative to upscale revenue ladder. These are usually available free of charge to end-users. Even though this model generates lower amounts of profitability than SVOD & others, ad revenues help to offset content preparation & hosting cost factors.
At present, businesses implement a combination of monetization models leveraging on both sides of the coin! Take an example of an audience paying a subscription package of an array of collective prime content pieces. This is given along with additional fee of non-skippable ads, minting good money from both.
SVOD stands for subscription VOD or subscription video on-demand. This video service allows users to access the entire collection of videos in the library for a limited period of time. This flexible model is gained with recurring payments where your consumers can be allowed to watch videos with any device having strong internet connectivity.
When we look into the Ad-based video-on-demand model or AVOD, you can increase your revenue based on the number of views collected via instream ads. On the contrary, SVOD provides recurring money time & again with added benefits. If both are in versus to each other, this is the major difference to count, even though having many factors.
When it comes to the video streaming business, these are the crucial monetization models that have been supportive throughout. Content providers can provide their consumers with monthly, quarterly or annual subscriptions with popular streaming model. At the same time, get your numerous content libraries supported with instream ads, companion ads, skippable/ non skippable ads to double your streaming revenue.