SVOD, AVOD, TVOD – Monetization Types For Your VOD Business
The internet becoming mainstream was probably the biggest change in the 21th century, and it shaped the way we view news, entertainment and any type of content in general. Technical advances in the field of wired and wireless telecom networks paved the way for online services which seemed incredible only a few decades ago: Hulu, Netflix, Twitch, Vimeo and other innovators in the field of online video.
Since we are getting more content than we are able to consume on a daily basis, we have also changed our perception and expectations: gone are the days when we had access to only a couple dozen TV channels or when we had to buy or rent a DVD for the latest blockbuster.
Nowadays, we can watch just about any programme whenever and wherever we may desire or we can simply download it for later viewing. We don’t have to wait for Friday night to see the recent sports highlights, we can simply look up internet clips ourselves by pressing a couple of buttons.
This new wave of on-hand entertainment falls under the umbrella-term “Video On Demand” or VOD for short. Viewers are able to get the content they want when they want it, not when a content owner decides to broadcast it. Let’s see some of the new terms and monetization types are available for VOD businesses.
OTT – Going Over The Top
Going over the top or OTT for short, refers to distributing content directly to viewers over the internet. Since the industry is shifting towards OTT, more and more content can be viewed directly over the internet, thereby disregarding broadcast schedules, geographic restrictions and the need for wired viewing devices – this also changes the way content is being planned, produced and sold to the market.
For the end user, all this seems pretty simple but there are a few noteworthy business models which we need to mention in this article. These business models can be defined by their different acronyms, such as SVOD, AVOD and TVOD – which stand for subscription video on demand, advertisement based video on demand and transactional based video on demand.
SVOD or Subscription Video On Demand
SVOD is somewhat similar to the traditional packages offered by cable companies – with this system the user has access to as much content as he or she wants, for a monthly fee. Popular examples of this type of service include Netflix, Hulu, Amazon Prime Video and a few newer services from Apple, HBO and Disney. SVOD provides customers with a great deal of flexibility, since they are not tied down by a long term contract for the service. Since they can quit at any time, content providers are pressured to continuously provide exclusive fresh content at a low price.
TVOD or Transactional Video On Demand
TVOD is another interesting business model, where customers will have access to content on a pay-per-view basis. There are two main types of TVOD, EST or electronic sell through and DTR or download to rent. With EST, users will only have to pay once and they will have access to a piece of content indefinitely. With DTR, users will pay a smaller fee but only have access to the content for a limited period of time.
Most TVOD companies offer more in terms of recent releases and newer content. This is also because these companies provide the rights holders to the content more revenue. TVOD services also tend to offer price incentives to maintain their customers. TVOD examples include Imagen, Amazon’s Video Store, Sky Box Office and Apple’s iTunes.
AVOD or Advertising-Based Video On Demand
AVOD services are different from TVOD and SVOD, in the sense that they are free to consumers, but with a catch. Just like with traditional broadcast television, users will have to sit through ads when viewing the content. Good AVOD services examples include 4OD, DailyMotion and the ever popular YouTube. These companies use the revenue from ads to pay for hosting their user’s content for free.
It’s also important to note that AVOD generally produces much lower revenue than other business models such as TVOD and SVOD. So much so, that even YouTube started offering premium accounts with no advertisement to interrupt user viewing.
Hybrid Business Models
The good thing about these monetization options is that you don’t have to stick to just one business model, you can go with a hybrid model to suit your needs. Other services use the same model: Sky and Amazon Video charge their users a monthly fee for access to their video libraries but new movies are charged separately, as is the case with certain sporting events.
Since OTT content is booming and definitely here to stay, it’s more than likely that it will also have an effect over different business models, especially since user viewing habits continue to change.