Popular online services, such as YouTube, Netflix, and Hulu, are gaining a huge number of views. At the same time, classic video programs on these platforms are already considered traditional television. According to surveys, if a page or video content loads for more than four seconds, 25% of users close the page without waiting for it to load. Users love speed. The videos they watch should load instantly. The world is changing, progressing, and the delivery of content to the consumer must be improved.
Interactive digital television is often built on OTT technology, which entails viewing audio and video content in real-time with special conditions. OTT is a technology that gives you the ability to connect the content you choose over the Internet directly. OTT services are secure and provide uninterrupted viewing of content. Guaranteed support for individual subscriber devices involves the use of set-top boxes or other gadgets, which monetizes the system as a result (pay-per-view, subscription, advertising model).
Video content distribution is done for monetization, which entails views, revenue generation, and reaching a large audience of potential content. Video on Demand or VOD is a process invented to refer to video content in entertainment and media services. There are three main methods for monetizing video content: svod, avod, tvod. Let’s analyze each method in more detail.
SVOD – video subscription on demand
SVOD is a video on demand and subscription. The process is very similar to a traditional pay-TV subscription. In it, you can watch movies, videos, and blogs that are not accounted for by your plan for an additional fee. SVOD gives you the opportunity to get content that is most often available for a fixed monthly fee. The user can use as much content as he wants under the condition that the fee is paid regularly and in full. This model is considered the most profitable in monetization and occupies the largest segment of the OTT market.
The most popular American platforms providing video-on-demand subscriptions are Netflix, Hulu, and Amazon Prime Video, as well as platforms such as Apple TV+, Disney+, and HBO. One of the biggest downsides of SVOD is the lack of long-term contracts and the ability to terminate at any time, which involves constantly providing new and exclusive content to retain a potential audience.
TVOD – transactional video on demand
TVOD is a transactional video on demand. It differs from the SVOD platform in that consumer purchase video content with a pay-per-view, where a person can rent or buy content. From the financial side, the transactional model tends to generate much higher revenue from a single consumer. It allows the client to have access to the latest releases and major sporting events in real-time. Such customers are attracted by the principle of promotions and attractive prices, which encourages the customer to make repeat purchases. The TVOD model uses the following platforms: Apple iTunes, and Sky Box Office.
AVOD – advertising video on demand
AVOD is a promotional video on demand and free ad-supported TV (FAST). It differs from SVOD and TVOD in that customers get access for free. The idea is that traditional TV and content are interspersed with advertising. Everyone has seen an elementary example, watching videos on YouTube or Hulu. This model often misses out on premium content providers who are confident unconditionally that customers will pay for their content regularly, but it doesn’t happen, and many go back to the familiar model. According to statistics, AVOD generates about one billion dollars in revenue from ad sales on third-party apps and platforms, as well as its own app.
SVOD vs. AVOD
The last ten years have been a new round for the advertising industry, as the consumption of television and media shows us. According to statistics and percentages of consumption, the SVOD platform is attractive and has remained so for many years, providing the opportunity to watch your favorite videos without advertising. At the same time, the SVOD model strongly depends on the creation of new content.
Surprisingly, AVOD is considered a highly profitable sector in the OTT space. The ads are presented intermittently and are shorter in duration than classic ads. This model allows the marketing specialist to speak directly to the potential customer rather than wasting time.
The most important factor in determining who is the king of OTT is an investment. Obviously, AVOD is more successful and profitable. Massive adoption and growth predictions allow businesses to make a good investment ahead of their competitors and have stunning success.