When Netflix launched in 1997, it transformed the video rental market by offering DVDs through the postal service. This innovation soon made the days of purchasing VHS tapes and DVDs from rental stores a distant memory. We are online video streaming platform provider & how to start own ott platform

By 2007, Netflix had once again reshaped the industry by introducing Video on Demand (VOD) as a core service. With the rise in internet speeds and the increasing popularity of binge-watching, Netflix’s VOD service saw exponential growth while its DVD sales diminished.

Choosing the Right VOD Model

Launching a successful streaming service today hinges on selecting the appropriate Video on Demand (VOD) model. Whether you’re an experienced streaming service owner or new to the market, understanding the various VOD models is vital. The three primary models—Subscription Video On Demand (SVOD), Advertising Video On Demand (AVOD), and Transactional Video On Demand (TVOD)—each have unique benefits and challenges.

In this guide, we’ll explore each VOD model, the platforms that utilize them, and the advantages and disadvantages of each. By the end, you’ll be equipped to determine which model aligns best with your content, audience, and revenue objectives.

Market Outlook

The global video streaming market, valued at USD 375.1 billion in 2021, is expected to reach USD 1,721.4 billion by 2030, growing at a CAGR of 18.45% from 2022 to 2030. Many content creators have already launched or are planning to launch their own streaming services to capitalize on this booming market. We are online video streaming platform provider & how to start own ott platform

Monetization Options for Content Creators

1. Subscription Video on Demand (SVOD)

SVOD is a model where users pay a recurring fee to access a library of video content, typically on a monthly or annual basis. This model is popular because it provides a steady revenue stream, fosters customer loyalty, and offers diverse content.

How SVOD Works:

• Subscription Payment: Users pay a recurring fee, gaining access to your entire content library.
• Content Access: Subscribers can watch unlimited content within their subscription period.
• Device Compatibility: Users can access content on various devices.
• Content Updates: Regularly updating your content library keeps subscribers engaged.

Examples: Netflix, Amazon Prime, Hulu

Pros:

• Steady and predictable revenue
• High customer retention
• Deeper customer engagement

Cons:

• High content acquisition costs
• Intense competition
• Risks of subscriber fatigue and churn

2. Transactional Video on Demand (TVOD)

TVOD allows users to pay only for the content they choose to watch. This model is often used for movies, series, and sporting events. 10 Reasons Why Video Creators Must Consider YouTube Alternatives

How TVOD Works:

• Content Selection: Users select specific content to watch.
• Payment: Users pay a one-time fee per content.
• Access Period: Depending on the platform, users may have temporary or permanent access to the content.

Examples: YouTube Movies, Google Play

Pros:

• High revenue per transaction
• Consumer flexibility
• Suitable for niche content

Cons:

• Unpredictable revenue stream
• High competition for individual titles
• Lower engagement levels

3. Advertising Video on Demand (AVOD)

AVOD offers free content supported by advertisements. This model suits content that generates high viewership but where users are unwilling to pay directly. We are online video streaming platform provider & how to start own ott platform

How AVOD Works:

• Content Availability: Users access content for free.
• Ad Integration: Ads are placed before, during, or after content.
• Revenue Generation: Revenue is earned based on ad metrics.

Examples: YouTube, Pluto TV

Pros:

• Attracts a large audience
• Monetization through ads
• Low entry barrier for users

Cons:

• Unpredictable ad revenue
• Potentially disruptive user experience
• Requires high viewer numbers

Hybrid Models

Combining SVOD, AVOD, and TVOD can maximize returns by offering flexible options to viewers. For instance, Hotstar in India provides free non-premium content (AVOD), premium content for subscribers (SVOD), and pay-per-view live sports events (TVOD). We are online video streaming platform provider & how to start own ott platform

Making the Most of Hybrid Models

1. Offer Tiered Subscription Plans:

• Basic (AVOD): Free access with ads.
• Standard (SVOD): Paid, ad-free access.
• Premium (SVOD + TVOD): Higher fee with additional benefits and pay-per-view options.

2. Content Segmentation:

• Free Content: Popular content available for free.
• Exclusive Content: Premium content behind a paywall.
• Pay-Per-View Events: New releases and special events on a transactional basis.

3. Flexible Payment Options:

• Monthly and annual subscriptions with discounts for long-term commitments.
• Bundle deals combining SVOD, AVOD, and TVOD options. VOD platform provider

4. Personalized Experience:

• Use data analytics for content recommendations.
• Customize ads for relevance and minimal intrusion.

5. Marketing and Promotions:

• Promote AVOD content to attract users and upsell SVOD or TVOD options.
• Use limited-time offers to convert AVOD users to subscribers.

Conclusion

Choosing the best model for your video business depends on your content type, quality, upload frequency, and user willingness to pay. Each model has its own set of advantages and challenges. By carefully selecting and utilizing the right model, you can optimize your revenue and growth. We are online video streaming platform provider & how to start own ott platform

At Mogi, we help content creators maximize their revenue from OTT. With our OTT SaaS platform, you can launch your branded video streaming service for web, mobile, and connected TV within 24 hours, manage and monetize your service, and retain 100% of your revenue.