Video on demand (VOD) is the future of television. A recent report found that video on demand viewing is up 155%, with an average viewing time of 17.1 minutes per session.
According to Forbes, 82% of US broadband homes are subscribed to at least one VOD service, and 46% of broadband homes are subscribed to four or more streaming services.
While the average demand for VOD is on the rise, there are lots of unanswered questions around video streaming: What is video on demand? How can businesses and content creators benefit from VOD streaming? What do we need to get started?
Good news! We’ve answered all your questions in this post and, luckily, VOD is a lot simpler than it looks.
Let’s get started.
What does VOD stand for?
VOD stands for “video on demand”, and it is a way for people to consume video through subscriptions, rentals, and/or purchases. While traditional television made consumers view content on a set schedule, VOD gives people the freedom to access video on their own time and platform.
As a result, VOD is growing in popularity. The number of internet-connected devices is expected to triple the global population by 2023, and demand for content will double.
Over-the-top (OTT) video, which is the next generation of digital streaming, allows content to be distributed easily. OTT allows the freedom to stream directly online, on any device, so your viewers can cut the cables with traditional cable and satellite television.
The accessible (all you need is a device and an internet connection!), the possibilities for monetizing VOD are endless.
Different types of VOD monetization models.
VOD comes in many forms.
You can use it to create a video subscription channel, free videos (that have ads), or one-off videos for special events and premium videos. These are known as:
- Subscription video on demand (SVOD)
- Advertising-based video on demand (AVOD)
- Transactional video on demand (TVOD)
For businesses, VOD is a way to earn regular revenue, scale up video content, and build an audience.
Let’s take a closer look at the different VOD types.
Subscription video on demand (SVOD)
SVOD is the bread and butter of VOD—this is where streaming platforms like Netflix and Disney+ live.
It has exploded in popularity over the last decade, and they are expected to acquire over 300 million subscribers by 2025 in the United States alone.
SVOD is possibly the best example of a VOD platform that can create recurring revenue.
As consumers purchase subscriptions to access content (either monthly or annually), it’s essential for businesses to build a steady revenue stream while consistently producing content for their audience.
SVOD allows subscribers to:
- Access classes or ongoing content that can be streamed over time.
- Join or opt-out without the long-term contracts that traditional cable or satellite services require.
- Pick content to watch from a library that can be streamed over and over again.
When Covid-19 hit, fitness studio System of Strength had to find a way to convert their in-person, brick-and-mortar fitness studio into an online experience while maintaining the energy that came with in-person classes.
So, the studio switched up its business model to include Vimeo’s OTT and launched their digital studio: The System Works.
Once subscribed, users have access to over 800 fitness videos offered by System of Strength. Even with the world starting to open back up, the studio’s digital lead, Annette Grant, says System of Strength will continue to build on its SVOD offering.
Everyone else was trying to find this Band-Aid to patch together a temporary solution. Instead of a Band-Aid approach, we were future-focused with OTT — not just as a temporary solution, but a long-term vision.Annette Grant / The System Works
Advertising video on demand (AVOD)
AVOD is different from the other types of VOD on our list because it’s either free or offers viewers affordable ways to consume content.
It works like this. Businesses create content that people can view whenever they like, but the videos feature ads to gain revenue from advertisers. AVOD is a good entry-level way to get into VOD because it:
- Has less barrier to entry for people who want to watch your content because it’s free!
- Can be watched without a traditional satellite or cable subscription.
- Is easy to scale once your audience grows.
The most prominent platform that utilizes AVOD for revenue is YouTube. AVOD is a quick and easy way to get revenue flowing. However, when analyzing one million Vimeo OTT subscribers, we found that this monetization model is most optimal for creators with a large customer base. If you are just getting started, SVOD is the best monetization model for you.
Another way of using AVOD is by offering different pricing tiers to your consumers. For example, Hulu offers a multi-tiered subscription that escalates with more benefits – one of the benefit includes no ads while streaming.
The good news is that there are now other ways businesses can make money through AVOD, thanks to the rise of influencer marketing and paid sponsorships.
Transactional video on demand (TVOD)
The TVOD model is favored by creators who want to sell or rent out premium videos, and those who don’t want to get locked into a subscription.
Content creators can promote specific “one-off” releases or events that subscribers can buy on top of their existing subscription. TVOD products work where SVOD doesn’t as it:
- Allows you to release exclusive, timely content for extra revenue
- Gives you the freedom to offer single videos, series, or feature films
As it gives viewers a way to rent or purchase videos, it’s a great way for creators to expand their audiences without having to sell a monthly or annual subscription.
This was the exact path ISC Sports took when they decided to blend its traditional SVOD revenue model with a transactional pay-per-view strategy. President Greg Maish says the pandemic changed things, opening up the door for potential partnerships with other organizations ISC sports work with through a revenue-share model.
Mr. Maish says offering TVOD and live pay-per-view to its customers has become a bargaining chip for the company.
The transactional rev share model has become part of our business proposal, and we can still roll the content back into the subscription side of our strategy, bringing an added benefit to our subscribers.Greg Maish / ISC Sports
TVOD also has another category: live pay-per-view. These are often events like large conferences or UFC fights, where people pay a one-off fee to stream an event live.
What is OTT?
Over-the-top (OTT) media is when content is streamed over the internet without the need for a cable or satellite subscription.
The best-known examples of OTT are companies like Hulu, Netflix, Amazon Video, and Disney+, but there are other providers like Vimeo that don’t require cable TV—just an internet connection.
While OTT may be the norm now, it’s important to think back only a decade ago to how we consumed media, when platforms like Netflix hadn’t made their mark. OTT has transformed how we consume content because we can:
- Access it anywhere with an internet connection.
- View it not only on our TV, but our laptops, iPads, phones…. Even our watches!
- Choose when we want to watch it thanks to on-demand libraries.
OTT has become a lucrative tool for brands, small businesses, and influencers looking to build their businesses, expand their audiences, and increase revenue. And now you know what all these acronyms mean, it’s time to look at how you can implement VOD into your own business to create a revenue stream.
How to implement VOD in your business.
It’s clear that people want niche video content, and they are willing to pay for subscriptions to get it.
Our own CEO, Anjali Sud, says we’re seeing five times more OTT channels being created now than this time last year. And those channels are getting 20 times more subscribers than in the past.
The question is, how can your business get in on the action?
The first step is investing in the right equipment, and the most important piece is a VOD platform. When searching for a VOD platform, ask yourself some key questions:
- Does this platform host your content and allow for monetization?
- Can it offer streaming across different device types?
- Does it offer high-quality streaming?
Once you’ve chosen a VOD platform to host your videos on, you then need to decide which strategy you’re going to use to earn revenue:
- SVOD: Customers pay for a recurring subscription (either weekly, monthly or annually) to access your entire content library.
- AVOD: Customers can watch your content for free (like on YouTube), and your business earns revenue through paid ads
- TVOD: Customers purchase specific content from your library, like an episode or series, and pay a fixed price to watch it whenever they want. Businesses can also use TVOD to host one-off events and sell them through pay-per-view
Then, it’s time to create the content. Here are three tips to get you started.
1. Start building your content library
Content libraries are essential parts of any VOD business model, especially if you offer monthly or annual subscriptions to viewers.
To make your library appealing, you’ve got to start building up content. Think about what makes platforms like Hulu and Netflix appealing.It’s because there is tons of content to watch for the price of a monthly subscription!
Before you start advertising subscriptions, your library must have enough content in it to justify the subscription price.
In early 2020, yoga studio Y7 was busy.
The company had just launched 15 studios across three cities. And then, the pandemic hit—forcing the studio to go digital overnight. The team quickly started piecing together videos: their CFO turned into an editor, and their Ops Coordinator turned into a production manager.
Within a few weeks, the team had created a backlog of content, and they were ready to start offering subscriptions to people who previously came to in-studio classes. People now have access to 200+ classes and 16,000 hours worth of content, and Y7 has picked up thousands of subscribers—even new folks who never even went to the studios in person.
People who have never had the chance to really experience Y7 in the studio are loving it, and just so appreciative that they’re able to get these kinds of flows.Larson Levey / Y7
2. Stream from your own VOD homepage
Creating a sustainable revenue model for VOD is easier if you host your content library rather than depend on third parties like YouTube.
This means setting up your own VOD library where you have control over what content you show and what prices you’ll charge for subscriptions. In most situations, the most challenging part of running an OTT business is maintaining the website. You would need a developer on deck 24/7 to keep the channel running smoothly.
Luckily, with the right toolkit, you don’t need to know how to code to host your own VOD homepage.
When New York City’s historic Apollo Theater took its shows online so they could still hold their fall season shows, they created a virtual stage. Apollo could then customize the digital experience for their viewers and live stream concerts to a larger audience.
When Wyclef Jean kicked off Apollo’s Fall 2020 catalog, the event drew a virtual crowd equal to 140% of the venue’s capacity and racked up nearly 40,000 minutes of viewing time. Executive producer Kamilah Forbes says the virtual stage has helped Apollo adapt to reach newer audiences beyond in-person programming.
3. Keep your content library fresh
Keeping content fresh and consistent is essential to VOD strategies, especially if your customers are paying for subscriptions.
Uploading great content regularly is not only a great way to build a content library that attracts new customers, but it helps keep your existing subscribers happy. Platforms like Netflix consistently add new content to their library and replace older, license content with newer, original videos.
What’s interesting about Netflix’s content library is that it hasn’t grown at a rapid pace. Instead, the platform keeps swapping out content so that subscribers always have something new to watch and ditches the content that is just taking up space in its library.
What makes an enterprise-grade video platform?
To make professional-grade videos that are worthy of a subscription—you need the right platform.
With over 1,000 OTT apps launched, creators are using Vimeo OTT to build VOD content libraries and scale their digital experiences through subscriptions. Vimeo has everything a business needs to get started with VOD streamlining, like:
- Live streaming to supported apps across iOS, Android, tvOS, Amazon Fire, or desktop.
- A custom branded app and homepage so you don’t have to rely on third-party platforms.
- Analytics so you can see what content is popular, how long viewers watch for, and where they’re watching from.
- API and SDK support.
And the best part about investing in an enterprise-grade video platform like Vimeo is that you can do everything under one roof without having to piece together third-party tools or streaming platforms to show content to your audience.
Want to learn more about VOD streaming? Check out Vimeo OTT today.
