OTT television is developing by leaps and bounds as more and more users prefer watching video on demand instead of linear TV. The possibility to watch whatever you want, whenever you want, on any device you want, with only an Internet connection required has changed viewing habits significantly. It’s also effected the way marketers and content creators profit from video content – with new formats and new technologies, new monetization models have also appeared. Three of these models have come to the forefront of video monetization – SVOD, TVOD, and AVOD. What are they and how do they differ? Let’s find out!
Types of video monetization models
What is SVOD, TVOD, AVOD? The meaning hidden behind these acronyms will help explain how particular monetization methods work, the type of content they are used for, and what benefits they bring as a result. Let’s examine the nuances of every model in more detail.
SVOD stands for ‘subscription video on demand’. This is a pretty straightforward system- viewers pay a fixed fee and receive access to videos for a certain period of time. As a result, the SVOD meaning pretty much encapsulates how it works: users buy a subscription to a service, and pay for it weekly, monthly, or annually, depending on the service. Amazon Prime Video, Hulu, Netflix, and HBO are examples of an SVOD service, so if you already use one of those, then you already know how it works.
You are likely to gain subscribers with SVOD monetization models if the content you share is exclusive and cannot be accessed anywhere else. Additionally, viewer retention rates will most likely be high, as viewers will continue using the service as long as new content is published regularly, and on a consistent schedule. This turns ordinary users into loyal viewers. In other words, SVOD is good for any ongoing content.
Offering videos on the SVOD platform implies using different pricing models:
- Free trial: you can allow limited-time access for viewers to try the service for free and then decide whether they want to pay to continue using it. Of course, not every user will prolong their subscriptions, but services that offer free trials are more likely to generate loyal customers and greater revenue than those that forgo them.
- Freemium: this pricing model implies free access for as long as the viewer wants, with the possibility of switching to a premium, paid version of the service. You simply offer some content free of charge, and some for a fee, allowing viewers to decide if they want to access more someday. However, if you go with this option and want to increase your revenue, you’ll need to engage users to buy premium content. You’ll have to invest heavily in promoting the ‘premium’ version of your service.
When viewers buy videos on a pay-per-view basis, this is called transactional video on demand. In TVOD, users aren’t buying access to a full library of videos (much of which they won’t even watch). Instead, they’re only buying access to the content buying access only to the content they do want to watch. The best examples of TVOD services are iTunes, Amazon Store, and Google Play. There are two terms you may hear when talking about this model.
- EST (electronic sell-through): Used when viewers purchase a piece of content and have lifetime access to it, not unlike purchasing a physical DVD or Blu-ray
- DTR (download to rent): Used when users pay a certain fee to get access to content, but this access is limited in time. Often used for sports programs, such as professional wrestling.
This is the type of service that is usually free of charge. It stands for advertising-based video on demand, so users may watch whatever they want at no cost, but they will have to watch ads as well. It is something like commercials on linear TV, though typically OTT services allow viewers to skip the ad after some time. YouTube monetization works this way – videos are available for free but are interrupted by advertisements.
As one can understand from AVOD meaning, ads can bring revenue to publishers, but this model works best if your audience is large and the displayed ads are relevant. Once we define AVOD, we understand that the point is you need to generate a huge number of views to make a good income. In case you’re aiming at an existing community, and you’re sure your ad strategy will work for your target audience, you may launch a streaming platform with your own advertising system and AVOD advertising rights to earn higher CPM and have more control over your monetization.
Which model to choose?
All three methods can bring you good revenue, but on one condition – if they are used properly. This means tailoring your monetization model to fit your particular case. For example, where SVOD works great, AVOD may fail. What should you consider when choosing the right model for your OTT content?
1. Type of content
If your content is published on a regular basis and you’re trying to build a loyal viewer base, then you’d better use a subscription-based model. Online courses and classes are some examples of content that are suited to AVOD monetization. However, in case your content is just entertaining and is a “one-time thing”, a transaction-based model will work better, as it comes out of TVOD meaning. Apart from that, you should take into account the age and preferences of your audience – while adults can follow a schedule, kids access content less systematically and will less frequently use all the benefits of a subscription.
Evaluate how many people follow you and their consumer behavior. For instance, you may have fewer followers with an SVOD model, but they will be more loyal while using OTT AVOD service implies involving a wider audience as the success of monetization depends on ad views.
If you are a beginner, it is better to start with ad-based videos to dig around and test how your content will convert and how in-demand it is. If your video catalog is large and you know that your target audience will pay for it, then you can start involving paywalls.
Every video monetization model can result in good revenue as long as you implement it in the right way. If you are going to provide exclusive content for a niche audience, you’d better do it with the help of the SVOD model, if you feel that the content you offer could be purchased on a pay-per-view basis chose TVOD platforms, and if your aim is to reach a wide audience then it would be more effective to allow viewers access your content for free and just have them watch quick ads from time to time, and that means AVOD video on demand will fit best.