Chances are, you’re probably already watching video on demand in one form or another. If you’re a U.S consumer, the chances are actually 80%. The generation of “cord cutters” prefers streaming services to cable TV, opting to pick and choose the exact channels, topics, and content they want to pay for, when they want to watch it, and how they want to watch it. (Watching "Community" on a smartphone as a distraction from the dentist? Very cool.)
When it comes to the world of streaming content, after seeing acronyms like VOD, OTT, SVOD, AVOD, and others, you’re probably asking yourself, What does VOD mean? What does VOD stand for? What’s the difference between AVOD vs. SVOD? OMG, is this TMI?
Have no fear, we’ll get there.
By the end of this post, you’ll be an expert on VOD platforms, how to monetize them, and which monetization strategy is right for you.
Video on demand is the best way to create or expand your community, monetize your hard work, and reach audiences you never imagined. VOD, meaning video on demand, works well for:
- Fitness instructors
- Faith-based organizations
- Entertainment content
- Educators/Instructors
- Virtual events
BoxUnion, a popular boxing fitness class, went digital and now has subscribers to their streaming channel from five continents around the world.
Many others have turned to social media as they stay at home to keep themselves and their communities safe. Yoga studios have pivoted to digital sessions, dancers are turning their living rooms into studios, and educators have created entire libraries of videos and content for kids’ entertainment and education.
Whether you already have some videos filmed and ready to go, a popular channel and a posse of loyal followers, or finally bought your first ring light and are ready to make your first video, we’ll walk you through different ways to monetize your video on demand channel and help you choose the pricing strategy that’s best for you.
What is VOD (video on demand)?
Starting out with acronym number one, what is a VOD? VOD stands for video on demand. Buckle up, because there are lots more acronyms coming.
VOD is a way to consume video that falls under the larger umbrella of the distribution method of OTT video, the next generation of digital streaming. (It’s also acronym number two.) OTT means that the video content is streamed directly online, “over-the-top” of the cable box, without requiring satellite or cable access.
What is VOD?
Choosing a VOD platform
When you are seeking out a VOD platform, there are a few important things to consider:
- Does this platform host your content and allow for monetization?
- Can it offer streaming across device types (Apple TV, Roku, iOS, Chromecast, Android, and more)?
- Does it offer high quality streaming? Low quality video can make or break a subscriber’s experience and can contribute to churn.
Once you’ve chosen a VOD platform, it’s time to think about how you can start earning revenue from your content.
Monetize on-demand video with SVOD, TVOD, and AVOD
It’s clear that the people want niche video content, and they are willing to pay for quality subscriptions. There are a few different options when it comes to how you can charge people for your content, then how you can price once you decide.
We're seeing five times more OTT channels being created now than this time last year, and those channels are seeing 20 times more subscribers.
The major buckets of monetization strategies for VOD are:
- Subscription video on demand (SVOD)
- Advertising-based video on demand (AVOD)
- Transactional video on demand (TVOD).
Each model has a different value and depends on your business, audience, and goals. Let’s take a look at each VOD streaming monetization model and how they can help your business grow (and make some green!).
VOD monetization models
1. Subscription video on demand (SVOD)
SVOD subscribers are predicted to explode from 199 million to 307 million by 2025.
So, what is SVOD? It’s is a great way to monetize your videos if you:
- Offer classes or ongoing content that can be streamed over time (Pro tip: successful SVOD producers create a cadence with their audience so they know when to expect new videos)
- Want to give your audience the flexibility to join or opt-out without a long-term contract (like traditional cable or satellite contracts)
- Have a library of content that can be streamed over and over again
- Release limited content regularly to a dedicated audience
What does SVOD stand for?
The main things to keep in mind when monetizing your video content via SVOD are:
- Tailor your content to your specific audience. SVOD content is successful when created for a niche group. Subscribers are more likely to sign up if it’s content that isn’t available anywhere else. These subscribers will also stick around and provide more lifetime value.
- Release content on a regular basis and notify your subscribers when new content is added. If you release your content sporadically, subscribers are more likely to unsubscribe and stop paying for your channel.
Benefits of SVOD
- Offers flexible subscription options
- Creates an ongoing revenue stream
- Engages your audience and creates loyal subscribers
- Gives you the ability to publish exclusive content
2. Transactional video on demand (TVOD)
Next acronym coming in hot! TVOD is short for transactional video on demand and refers to the process of buying or renting a piece of content. In the case of live events, TVOD can also be known as Pay-Per-View (PPV).
What does TVOD stand for?
When monetizing your VOD using TVOD, you can promote a specific release for purchase or rent, like a new movie. TVOD is designed for larger audiences who may not be consistent since there’s no fee to join, anyone can buy your content. Promote exclusive or brand new content using TVOD and offer multiple pricing options.
Benefits of TVOD
- Allows you to release exclusive, timely content
- Gives you the freedom to offer single videos, series, or feature films
- Provides options for videos to be rented or purchased, expanding your audience
3. Advertising-based video on demand (AVOD)
We’ve come to our final acronym: AVOD, or advertising-based video on demand. (Remember them all?)
The most popular example of AVOD is YouTube. AVOD is most beneficial for those who have a large audience or following, since individual ad views pay small amounts of money and require large volumes for real revenue. Many smaller OTT creators find they can earn more reliable revenue through a SVOD, or a combination of SVOD and TVOD models.
Benefits of AVOD
- Gives your audience the opportunity to watch your content for free, creating a low barrier to entry
- Doesn’t require a cable or satellite subscription
- Available to a wider audience
- Provides a scalable revenue solution for very large or growing audiences
What’s the definition of AVOD?
Pricing your VOD streaming content
- SVOD pricing: Priced per month or per year as a recurring subscription with the option for a free trial where you choose how many days, weeks, or months you want to offer as a trial period. Alternatively, you can offer a freemium version, where sample content is available for free forever, with less access than a full paid membership.
- AVOD pricing: Free (like YouTube) for viewers, or a reduced monthly membership price for users (like Hulu with ads).
- TVOD pricing: For purchase (available for download or lifetime access) or for rent. TVOD videos can be packaged as episodes, seasons, or series. Charge a fixed price per video, season, or series, or allow your audience to pay what they want.
Whether you decide to create a subscription model with a freemium option or charge per video, you’ll need to think through your target audience and content creation plans.
Wondering how genre affects pricing? Watch this. →
Now, let’s get into which monetization model for VOD is right for you.
Choosing a monetization strategy for your video content: AVOD vs. SVOD vs. TVOD
When Vimeo analyzed one million Vimeo OTT subscribers, we found that when you compare AVOD vs. SVOD, you need far greater viewers on an AVOD video to achieve the same monthly revenue as SVOD subscribers. The good thing is, you can explore what’s best for your audience to choose the OTT video revenue program that works for you.
Evaluate and build your audience.
How many followers do you have? Where, how, and in what ways does your target audience consume video content?
Niche audiences have loyal followers and may be interested in a longer-term relationship with you, like SVOD. They are more likely to want to return to videos and watch on their own time on a regular basis. Broad entertainment audiences aren’t as likely to stick around for month after month. These users like to choose what video they are interested in and only commit to that.
What does your existing video content and video content strategy look like?
If you already have a large content database of videos and want to monetize, you can take your pick of strategy, but if you are just starting out and haven’t yet acquired an audience or content, it may make sense to start with AVOD and test out your content before placing it behind a paywall.
What industry or niche are you in?
Some audiences are more likely to benefit from a flexible solution than others. Parents tend to hang on to subscriptions since their kids find the content they like and don’t want to change things up. Kids are also a good audience for the freedom of a subscription, rather than the constraints of a 48-hour rental or having to sit through advertisements. Have you ever tried to get a kid to do anything on a schedule? Trust me, it’s not easy. Depending on your audience, different VOD monetization strategies work for different groups.
Wrap-up: How to sell video on demand
There are quite a few options for you to choose from when it comes to selling your video content online. Let’s review the different models (SVOD vs. AVOD vs. TVOD) and best practices for monetization.
- SVOD: Subscription video on demand. Offer a subscription to your video channel and release new content on a regular basis.
- TVOD: Transactional video on demand. Offer individual videos for purchase like new releases or exclusive content. TVOD works best when you promote launches of your content and build up to releasing new videos.
- AVOD: Advertising-based video on demand. In this model, you can offer free content and get paid by advertisers for showing ads to your audience. This works best when you have a large, engaged audience and are able to offer relevant ads.
For those who might want to try multiple monetization models, the most common combination is offering SVOD as well as TVOD for viewers who aren’t quite ready to commit to the full subscription. Video on demand is audience-driven, so listen to your network to find out what they want.
Now that you’re an acronym pro, you’re ready to tackle video on demand and monetize your own rock star channel (or fitness channel or kids entertainment channel or whatever your personal stage looks like).
Get to know Vimeo OTT →
If you are a creator yourself looking to monetize content, you may also want to explore how Vimeo can help you make, share, and manage videos. Learn more about features like content hosting, our text-based video editor, timeline editing suite, visual graphic tools, photo-to-video converter, and more.
