The popularity of online streaming services continues to grow, and millions of viewers globally are switching to these platforms for the sake of entertainment and convenience. For unleashing the full potential of this demand, it is vital to choose the right monetization model for your video streaming business.
OTT platforms can provide the following revenue-generating models: SVOD, TVOD, HVOD, and AVOD monetization. Each model brings its set of pros and cons, serving diverse business needs and user preferences. This doesn’t simplify the choice. In this article, we are exploring the SVOD and TVOD business models in detail. Let’s begin.
Table of Contents
What is TVOD?
TVOD (transactional-based video-on-demand) refers to one-time payments for access to a particular on-demand video available on the platform. Typically, customers purchase a fixed fee for a piece of content without recurring payments.
One-time payments are also associated with the pay-per-view model, where users purchase a “ticket” to a live event. They can make a purchase beforehand or right during the event.
Content providers can allow viewers to access a video unlimitedly or rent it for a set period.
What is SVOD?
SVOD (subscription-based video-on-demand) refers to charging a recurring monthly or yearly payment for access to content provided by a streaming company. Viewers get unlimited access to all videos available on the platform as long as they continue purchasing the subscription.
Multiple streaming services start with a subscription-supported monetization model as it ensures a steady revenue stream.
TVOD vs. SVOD: Comparison
Choosing the right video on demand solution for monetization is crucial for a video streaming business. Let’s compare two approaches.
The TVOD monetization model implies users paying for access to the video content for an unlimited or set period of time. With one-time purchases, providers might generate immediate revenue.
Content creators define a fixed price for each video, receiving money for each purchase. They get immediate revenue that might cover marketing expenses and production quickly. This can be advantageous for smaller streaming businesses with a limited budget.
As users make a one-time payment for access to video content, the opportunity for ongoing revenue from the same customer is limited. Providers will need to invest in reaching and attracting new customers for income growth. This may include expenses on advertising, promotions, and technology as well.
To compare, subscriptions mean charging viewing at regular intervals so that they might continue watching your content. In this case, customers pay a smaller amount at the beginning. But the SVOD model can provide predictable revenue since you have a consistent stream of active subscribers.
This also allows a provider to plan finance expenses and allocate a budget for marketing, content production, and platform growth.
The TVOD approach can be beneficial for services with a vast content library since viewers will have a lot to explore then. In turn, the subscription-based model offers a stable revenue stream, allowing businesses to forecast their income and expenses.
From the user’s point of view, they gain instant access to a video once the transaction is made. With TVOD, people don’t encounter unexpected subscription charges. This is the model for those who know what they want to watch.
But this cannot suit regular content consumers and those viewers who want continuous access to fresh content. The SVOD model may give them what they want since users can watch as much content as they want as long as their subscription is active.
Each model provides its advantages and disadvantages to businesses and consumers. TVOD is beneficial for platforms with large content libraries but requires continuous service growth. Moreover, providers can assign any price to their videos with TVOD, while the subscription-based monetization model charges a smaller fee. But SVOD ensures a predictable revenue stream.