Video on demand (VOD)
What is VOD?
Video on Demand (VOD) is a video content distribution model where film and television content is stored in digital libraries, made accessible over the Internet by an over-the-top (OTT) media service, and where users can browse, select, and view content of their choosing on their own schedules.
How Does VOD Work?
VOD Content Disrupts Traditional Broadcasting
Traditional mediums like broadcasting, cable, and satellite television distribute content in a linear format, where each channel continuously streams a predetermined schedule of programs with no input from the viewer. The growth of the Internet and cloud services led to the development of OTT media services that offered viewers more control of the viewing experience.
Revenue in the American VOD market segment is expected to reach nearly $100B in 2022 – up from $37B just five years ago.
VOD Content Goes Over The Top
Traditional broadcast, cable, and satellite television providers rely on legacy technologies and infrastructure (e.g. radio transmitters, coaxial cables, satellite dishes, antennae, etc.) to distribute content to their viewers.
In contrast, VOD content is distributed over the public Internet, often leveraging public cloud infrastructure rented by OTT media service providers. While traditional mediums follow a “one-to-many” broadcasting paradigm, the Internet facilitates the personalized, one-to-one viewing experience that characterizes VOD.
VOD Platforms Leverage Multiple Revenue Streams
Traditional broadcast, cable, and satellite television providers earn revenue by monetizing their channels with advertisements, charging monthly subscription fees to viewers, and selling access to special events on a Pay-Per-View (PPV) basis.
Similarly, VOD platforms and service providers can monetize their digital media content by charging a monthly subscription, renting or selling access to content on a transactional basis, or by showing advertisements as part of the viewing experience.
VOD Platforms Use Data Intelligence to Optimize User Experiences
A built-in advantage of distributing video content over the Internet is that VOD service providers can collect, aggregate, and analyze accurate data on content performance, viewer behaviors and preferences, and revenue.
The most successful VOD service providers capture data from everything that happens on their platforms, then use behavioral analytics to deliver exceptional experiences to viewers that maximize customer retention and long-term customer value.
Why is VOD Important?
Since the first VOD platforms appeared in the early and mid-2000s, audiences have been shifting away from traditional linear media distribution, canceling their MVPD subscriptions, and choosing to watch VOD content online.
The trend known as “cord-cutting” was first observed in 2010, when Pay TV subscriptions in America started to noticeably decline in each quarter. More than a decade later, the rate of Americans canceling their traditional TV subscriptions for online content has increased to 5 million subscribers per year.
And while traditional TV subscriptions are in decline, the global market for VOD is expected to grow at a rate of 17.6% over the next 7 years, reaching a total of USD $257 billion by 2029.
Live Streaming vs. Video on Demand – What’s the Difference?
Both live streaming and VOD involve the distribution of video content over the Internet (also known as streaming) – but they aren’t quite the same thing.
Live streaming uses the Internet to distribute a live video feed from an event. Viewers can access and watch the live stream online, either for free or on a transactional/subscription basis. VOD also distributes content over the Internet, but that content generally consists of pre-recorded films and television shows stored on a digital server.
4 VOD Streaming Monetization Models
Let’s take a closer look at how VOD service providers are monetizing their platforms:
1) Subscription Video on Demand (SVOD)
SVOD is a distribution model where viewers pay a monthly subscription fee for unlimited access to a service provider’s digital library of video content. Consumers find value in subscription-based VOD platforms that can offer access to thousands of movie and television titles for just a small monthly fee.
2) Advertising Video on Demand (AVOD)
AVOD is a distribution model where content is offered for free and viewers are presented with paid advertisements as part of the viewing experience. This allows AVOD platform providers to earn money from advertisers instead of viewers.
3) Transactional Video on Demand (TVOD)
TVOD is a monetization model where viewers can pay a one-time fee to either rent or purchase access to a piece of digital content. These two types of TVOD transactions are also known as Download to Rent (DTR) and Electronic Sell Through (EST).
A DTR transaction gives the viewer unlimited access to watch the content during a 48-hour period, while an EST transaction grants the viewer permanent access to a piece of content on the platform.
4) Hybrid Monetization Models
Many of the most successful VOD platforms are leveraging more than one of SVOD, TVOD, and AVOD to monetize their content assets. In the next section, you’ll find multiple examples of VOD platforms that earn revenue with more than one type of monetization model.
3 VOD Platform Examples
Disney Plus is among the world’s most popular SVOD streaming services, with over 130 million subscribers.
Disney charges a monthly subscription fee for unlimited access to stream its library of content. It has also experimented with TVOD monetization for its premium original content assets, including high-budget films like Black Widow (2021), Jungle Cruise (2021), and Shang-Chi (2021).
Amazon Prime Video
Amazon Prime Video is a highly popular VOD platform that relies mainly on a subscription-based monetization model. Amazon’s 175+ million subscribers pay a monthly fee for streaming access to Amazon’s content library. Viewers can also subscribe to specialty channels and view them on Amazon Prime with the Amazon Prime Video Channels feature.
There’s also the Amazon Video Store, where viewers can rent/purchase content on a transactional basis (TVOD).
Our third example, YouTube, is a VOD platform that monetizes its content primarily through advertising (AVOD). However, YouTube also offers an ad-free version of its platform with special features for a low monthly subscription fee (SVOD). And there’s YouTube Movies & Shows, which allows viewers to pay a one-time fee for access to exclusive content (TVOD).
YouTube is the world’s most popular VOD platform, with over 2 billion monthly active users.
Optimize VOD Revenue with Revedia
Symphony Media AI helps content owners and VOD streaming service providers harness their data to successfully monetize content assets in the competitive OTT video streaming market.
Revedia Digital, our solution for OTT video monetization, gives content owners the ability to efficiently manage license agreements with OTT distributors, track content performance, calculate complex royalties, and streamline compliance management to maximize the value of their assets.