- What is AVOD? Advertising Video On Demand
- Advantages and Disadvantages of AVOD
- What is TVOD? Transactional Video On Demand
- Advantages and Disadvantages of TVOD
- What is SVOD? Subscription Video On Demand
- Advantages and Disadvantages of SVOD
- AVOD, TVOD, SVOD: The Hybrid Model
- Advantages and Disadvantages of Hybrid Models
- FAQs About Monetization Models
- Now That You Know the Three Big OTT Revenue Models (And Their Combinations) — What’s Next?
We’ve said it once, and we’ll say it a million times more: Over-the-top (OTT) revenue is how the content creators of the future are going to dominate the industry and make their mark.
OTT is changing viewing habits, giving viewers more control over when and where they tap into content, and also fundamentally shaking up the pricing structure for consuming video content. Forget things like channel bundles and satellite dishes—OTT streaming services are next-level offerings that rely on the new digital nature of the video content industry to provide viewers different experiences based on their sources of revenue.
First, a little refresher on OTT: Over-the-top streaming goes “over the top” of traditional cable, broadcast, or satellite television by simply allowing viewers to access content via internet providers. Read more about OTT in this article here.
What the advent of this type of streaming service means for content creators is really quite extraordinary: You have more control over how you build OTT revenue than ever before.
But what exactly are these options, how can you utilize them, and which one is best for your goals as a content creator? There are three big avenues for getting the money you need to create bigger, better, and more: AVOD, TVOD, and SVOD, and hybrid mixes of two or three.
Let’s start with a simple first question: What is AVOD, and how can it help you generate revenue?
What is AVOD? Advertising Video On Demand
As OTT itself is quite new in the realm of video streaming, so are its subsections. Therefore, you are most likely wondering, “What is AVOD?” and more importantly, “How can it help me generate revenue?”
AVOD, or Advertising Video On Demand, is the version of OTT streaming that’s “free” for viewers—free in the sense that you don’t pay any money for access to content. Instead of charging viewers a rate to access content, streaming services offer up advertising space to companies before and during content to turn a profit.
Thus, the only thing viewers are giving these platforms is their time, seeing as they are shown minutes of ads in the middle of content, and that’s why AVOD works when a consumer base would rather trade their time than their money for content. Regardless, your time is worth something, and that’s why AVOD works—the content creators or platforms are selling time (or eyeballs, depending on how you look at it). This time can be spent watching ads, sponsored content, commercials, etc., throughout the viewers’ “free” content.
Examples of AVOD: Facebook, YouTube, Instagram, Vimeo, and other platforms that prompt you to create an account if you’re a regular viewer — although it’s not necessarily required since the content is free
Advantages and Disadvantages of AVOD
AVOD, like pretty much anything besides a fresh loaf of bread, isn’t perfect.
AVOD can be a beneficial way for creators and platforms to monetize videos because it is very low-risk. An AVOD model does not require the creation or outright selling of a product in order to profit; space in your content is merely offered up to a company or organization during which they can run an advertisement. A very simple, relatively hands-off way to make money off content.
AVOD is a very easy way to give viewers what they want: content that is instantly accessible and free. In fact, around 62% of viewers say they would watch ads if their content stays free.
However, there is a possibility that ads could decrease viewer retention rates because they interrupt the flow of content. These interruptions could cause people to jump and stop watching.
Even worse than this potential phenomenon is the fact that most YouTube creators won’t make anything more than $12,000 a year on their content, which pales in comparison to the revenue their hosting platforms make running ads over the videos they worked hard to create. Essentially, big companies poach the audience content creators worked hard to build, and then make more money on momentum that isn’t theirs to an nth degree comparative to creators.
Furthermore, advertisements often change their ad guidelines and can pull their funding whenever, which drastically affects the revenue a creator makes.
Now, the next question you should ask is: “What does AVOD mean for monetization?”
If you’re a content creator working with the available social platforms, you’re probably most familiar with the AVOD style of monetization. You post a video, you get the views, and platforms like YouTube cut you a check. This works (as long as you’re getting a fair cut, which isn’t always the case) and will continue to grow moving forward because the drive of free content is a BIG draw for viewers. If you’re not capitalizing on this opportunity, you definitely should.
However, if you’ve got a particular audience or work in a specific niche content category, this shouldn’t be the only monetization strategy you should be considering. Which leads us to…
What is TVOD? Transactional Video On Demand
Transactional Video On Demand (or TVOD) is the exact opposite of AVOD. Instead of watching content for free with a couple of ads sprinkled in, consumers pay upfront for a piece of content, and then usually have an ad-free experience thereafter.
As consumers skip more and more commercials, TVOD has grown in popularity because there are people who prefer an ad-free experience. Instead of paying up front, you pay for the content you consume. Think about your last movie night; did you want to watch a movie that you didn’t own, and consider buying it for a couple of bucks? In our experiences, we ALWAYS shell out for a movie that we want to watch, especially with our families, because it’s so convenient.
Examples of TVOD: Think iTunes and some Prime Video content. This is most applicable for extended content like videos or sporting events, and it gets customer buy-in by offering an attractive price relative to the content received.
Advantages and Disadvantages of TVOD
If you’ve got content that you know your viewership is willing to pay for, TVOD is an excellent option for you. This is true particularly if you don’t have the big numbers that make YouTube and the like particularly profitable, but you have people who are really invested in consuming what you make and getting it whenever they want it.
Using a TVOD model allows you to release exclusive content at different times, charging a fee for every user that watches your program. This is especially advantageous when it comes to releasing content that you know hundreds of thousands of people are going to watch, such as a streaming of an important event or a hyped-up video. An AVOD model would not give you that boost in revenue that would come from charging a per-viewer rate for a piece of content.
There’s also some evidence to suggest that people are finding AVOD streaming models less desirable, which could cause streaming platforms to rely more heavily on other methods of revenue generation. One of these options could be TVOD.
TVOD also allows for creators and platforms to have options available for renting or purchasing videos. Expanding the types of purchasing options available is beneficial because it broadens a platform’s appeal to other types of audiences.
The disadvantages of TVOD really depend on the types of viewers a content creator or platform is attempting to reach. For example, TVOD would not be an ideal revenue model if you are trying to capture viewers that consume a ton of content; the likelihood of their satisfaction paying one-time TVOD charges every time they watch something is low.
Building and maintaining a consistent relationship with viewers can also sometimes be an issue with TVOD. With TVOD services, people come for a certain video, watch the video, and leave, unwilling to browse anything else that they didn’t come explicitly looking for because it will cost them money to do so.
This leads us straight into the third option for revenue generation; an option that is great for those who may not know their audience and what exactly they watch, but do know that they do watch….
What is SVOD? Subscription Video On Demand
For creators that release large amounts of content, SVOD is an excellent option. The key to a successful SVOD streaming model is finding the platform technology to create your own service.
Subscription Video On Demand (or SVOD) is the model of OTT that took the world by storm years ago, and it stands resolutely popular today for a good reason: Who doesn’t want to be a successful subscription service like Netflix?
SVOD typically sets up a monthly or yearly subscription agreement and delivers content for a flat annual (or monthly) fee, and Netflix is the king of this model. SVOD means watching with no limits — anything that’s on the platform is fair game to watch.
Examples of SVOD: Netflix, Hulu, Disney+, Prime video, and many more. These services charge a monthly subscription fee that let you watch what you want, when you want.
Advantages and Disadvantages of SVOD
SVOD models have incredible benefits to boast. Firstly, viewers don’t have to deal with ads, and they pay a flat rate for it. Secondly, SVOD models don’t charge based on how much consumers watch, meaning consumers aren’t penalized for staying on the platform for longer and longer periods of time, consuming more and more of your content.
Most importantly, people love watching content with the SVOD streaming model, with 78% of U.S. households subscribing to at least one SVOD platform. Plus, SVOD is a great way to demonstrate the exclusivity of your content. Many subscribers want to feel like part of a tight-knit community, and going subscription-based is a great way to facilitate this.
Netflix started using this model by syndicating content that wasn’t theirs, but they were so good at monetizing other people’s content that they generated enough revenue to fund original content. That’s pretty wild, right? Shows like Stranger Things, Orange Is the New Black, Narcos, and more are all a product of the mad skills of the Netflix team at optimizing their existing content through SVOD to fund new projects.
The best part of this story? You can leverage your current content to finance your next big project, just like Netflix did.
This year, for example, the DNC created a channel for utilizing SVOD. The four-day convention was live streamed through a custom OTT app available on Roku, Apple TV, and Amazon Fire TV. The best part? It’s free to download, and no registration is needed.
AVOD, TVOD, SVOD: The Hybrid Mode
Sometimes content doesn’t lend itself perfectly to one type of monetization model. And that’s okay, if you’re working with Endavo. Unfortunately, other streaming services aren’t able to offer content creators this sort of dynamicy.
For those amongst you who can’t decide on a single monetization model for your content, Endavo offers options to build your own hybrid platform. Combine SVOD and TVOD; offer a general subscription service and charge extra for gated content. Or try an SVOD and AVOD model; have less advertising for viewers who pay a subscription fee. Interested in utilizing all three? Have it your way and charge a general subscription fee, utilize TVOD for livestreams, and throw ads in here and there for good measure.
Advantages and Disadvantages of Hybrid Models
Hybridization of OTT monetization models allows content creators to experience the best of every world. The ability to utilize any of these models is hugely advantageous for anyone looking to profit off of video content.
Unfortunately, it is not common for streaming platforms to offer this sort of flexibility to their users. Thus, a disadvantage to a hybrid model is the fact that it is difficult for creators to find tools that allow them to do this.
Fortunately, there is a platform that allows creators to try out any monetization model they want for free for 30 days. Endavo is offering a trial period so content creators and hosts can try out a hybrid model of streaming to see how it would benefit them. Head over to our sign-up page to get started!
FAQs About Monetization Models
What is Video Monetization?
Video monetization is when content creators and platforms make a profit somehow when people view their content. They can make money off of these viewers in several different ways, from showing them ads, to charging a fee to watch certain videos.
What is a VOD?
‘Video on Demand’ is a way to distribute media that doesn’t require a traditional playback device. The simplest and short way to put it: it’s clicking ‘play’ on a video and being able to watch it.
How Do I Monetize my OTT Platform?
Platforms like Endavo provide easy ways for individuals to monetize their content on an OTT-style platform. By offering various customizable ways to show ads during content, charge subscription fees, or separate video prices, Endavo is the best option for individuals looking for ways to profit off of their content creation.
AVOD vs SVOD vs TVOD: Which One is Right for Me?
One reason companies love to utilize SVOD is that it provides a more consistent revenue stream than other services. SVOD might be for you if you don’t want a more up-and-down revenue stream.
AVOD is good for those who know their viewer base would rather not pay a cent and instead spend time watching ads in exchange for free content. TVOD is good for large audiences that have a strong desire to watch certain content, and will do so for a ‘price of admission’.
Overall, the type of monetization model you utilize is up to content creators and platforms, and is dependent on what they want from their work and services.
How Do I Monetize with Endavo?
Monetizing with Endavo starts with signing up for our trial. After setting up an account and a white-labeled home for your content, you can choose which model of monetization you want to use. Here is our guide to our monetization tools, or click here to immediately start making money the way you want with Endavo.
What are Examples of SVOD?
What Does VOD Stand for on Twitch?
VOD stands for ‘video on demand’, but on Twitch, it specifically refers to a live stream that has been archived and can be watched after the fact.
What is the SVOD Business Model?
SVOD is the streaming business model where users pay an up-front fee for access to video content. In addition to being a profitable model, SVOD allows for control and customization over a pricing model.
There are no price restrictions on the subscription fees that companies can charge with a SVOD-style OTT service. Services and creators are free to charge whatever they want for their content—while taking into consideration how much viewers will be willing to pay.
Now that you know the three big OTT revenue models — what’s next?
The best next step is to figure out which strategy— SVOD, TVOD, AVOD, or a mix—will work best for you. The next step is to then find a platform that will deliver the features that most fit your goals. You can go through platform after platform looking for the one that offers the one thing you need, or you can cut to the chase and look for a platform that delivers all of these options in one simple package.
Working with relevant platforms — from Roku and Amazon Fire TV to YouTube and Facebook — Endavo is just that kind of total solution, offering all of the monetization strategies from a single convenient place.
Built specifically for creators, Endavo’s video distribution automation (VDA) platform excels at providing monetization opportunities, allowing any option, or combination of options, for your overall content strategy. From sponsored live-streaming capabilities to traditional commercial advertising, we’re here to help make your content-hosting community uniquely yours with the resources you need to really succeed.
And we’re not stopping there—new monetization options, such as direct sponsorship and fan donations, are coming soon, all on our VDA platform.
If you’re curious and want to learn more about how Endavo works, check out our monetization opportunities. You can also learn more about the diversity of streaming platforms in our complete guide. Or, if you’re already psyched to try out Endavo, sign up for free and try it out for 30 days. We’re excited to see you excel in the world of OTT.