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 OTT monetization models 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
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.
Better Profit Margins
Compared to other OTT video monetization models, SVOD allows for higher profit margins with just a few thousand subscribers.
Better Customer Base
By offering subscriptions, 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.
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
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.
Video viewing platforms have vast and diverse audiences that companies can tap into with targeted ads.
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 SVOD and AVOD
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 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 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 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 at an all-time high, so you’d be stepping into a very lucrative industry. Many brands have built their businesses atop successful VOD platforms, but using steady revenues from monetization models to fund their operations. It is flexible and scalable enough to support thousands of content pieces with hundreds of users on 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.