Are you a video content creator looking to start making money with your videos?
One way to do that is by choosing the right video-on-demand (VOD) model for your business.
To help you understand more about the VOD business, we’ll go in depth on:
- Advertising video-on-demand (AVOD).
- Subscription video-on-demand (SVOD).
- Transaction video-on-demand (TVOD).
And we’ll show you how you can pick the best model for your content creation business.
Let’s jump right in.
What Is AVOD?
You can define AVOD, or ad-based video-on-demand, as a video monetization model that is free for users to watch and that generates revenue through advertising.
You take part in it when you tune into your favorite YouTube channel to watch those cute kitty compilations! (You, not me, I say.)
All of that kitty content is free because most of the time you’ll see ads through the videos, which is the main way YouTube creators monetize their videos.
Beyond YouTube, AVOD is now the backbone of many free streaming platforms, like Vudu and Tubi, that host a variety of free on-demand content.
So, if you, as a content creator, want to host content for free on an AVOD platform, you’ll likely be running ads on your content in order to make money.
Benefits of AVOD
The good thing about AVOD is that it offers content creators a low-risk way to monetize their videos.
It also offers instant access to millions of potential viewers. If you hit a big enough audience, you can drive some serious income numbers without ever having to sell a product.
It’s a major win for audiences, too, as they get instant access to endless hours of free content.
The user setup for AVOD is simple, and gives audiences:
- What they want: great content.
- When they want it: on demand.
- How they want it: for free.
This simplicity makes the model enticing to creators, audiences, and major media companies alike. It’s technically an easy way for anyone to monetize their videos.
Because of this, AVOD is currently on its way to take over the TV experience as we know it.
That’s right — the paid cable TV you grew up watching has been seriously upgraded, all thanks to free digital video networks with endless hours of on-demand content.
Okay, so those are the benefits of AVOD. Surely something this easy to use can’t have any drawbacks, right?
Disadvantages of AVOD
If you’re looking to pursue it as a content creator, you should know there are also some disadvantages of using the AVOD model.
First of all, since the main source of income for AVOD creators is advertisements, sometimes it can be unreliable.
Take YouTube, for example. Many creators are seeing a decrease in ad revenue coming from the platform.
That’s because with AVOD you might face:
- Difficult entry barriers since you have to be eligible for ad revenue programs in most platforms.
- Demonetization since many platforms might flag your content as unsuitable for ad revenue or brands will cut their advertising funds.
- Ad revenue cuts since most platforms will take part of your ad revenue.
Plus, viewers may use ad blockers to prevent them from seeing ads on your content, which means less money in your pocket.
Your revenue from the platform will also depend on your audience’s location, since there are areas with lower CPMs that could make you even less money in the end.
All this is to say that AVOD can be unpredictable and unreliable.
But there are other options. Enter: SVOD.
What Is SVOD?
SVOD, or subscription video-on-demand, lets people watch content by paying a recurring flat fee, usually monthly.
You’re already using an SVOD platform if you like to binge TV shows on Netflix or Hulu.
Some SVOD platforms will be ad-free, but others will include ads on lower-tier pricing packages.
These platforms let people consume as much content as they want for a fee, and this content is usually more exclusive.
SVOD platforms have become extremely popular, and sometimes it feels like you see a new one coming out every day. But that’s because of the benefits they offer.
Benefits of SVOD
Many streaming services now use the SVOD monetization model because it comes with some great benefits for them and their customers.
That’s because subscription services provide the predictability customers are looking for, especially when comparing SVOD vs. AVOD.
AVOD could result in unreliable revenue since it is based on ads only. With SVOD, you know how much to expect at the end of the month, and you can price your content at whatever you want.
With SVOD, you’ll be able to:
- Have a reliable income since your viewers pay a monthly subscription.
- Give customers more freedom since they can choose when to cancel their service.
- Foster a more exclusive and loyal customer base that feels like a community — after all, they enjoy your content and are paying for it.
But what are the downsides?
Disadvantages of SVOD
SVOD does come with some disadvantages.
Although a subscription fee affords your customers more flexibility to cancel their service, that means if you choose the SVOD model you might have to work a bit harder to keep your subscribers.
Some other disadvantages of SVOD include:
- Having to keep up with price changes, ensuring you’re releasing good content and that you have good customer service.
- Consistently providing your customers value, since they are likely paying for more content than they are watching, and could cancel their subscription.
- Investing more time and money in creating high-quality content that both keeps your current subscribers and attracts new ones.
But wait! We have one other model.
What Is TVOD?
TVOD, or transaction video-on-demand, is based on a pay-per-view system, so viewers can buy the content they choose to watch on a one-time basis.
If you ever purchase content on iTunes or Google Play, you’re taking advantage of TVOD. And maybe this was when you found the perfect cute kitty video you had to pay to watch. (We would too)
Unlike a subscription model, with TVOD you’ll only pay a one-time fee and get to either rent or keep the content you want to watch.
For example, this model is seen in action when you pay to watch a movie for a one-time fee versus paying a subscription for access to hundreds of movies every month.
Benefits of TVOD
One of the main benefits of TVOD is that it caters to customers who only want to pay for the piece of content they will watch.
This means that with TVOD you can:
- Easily bring more value since each piece of content would have its own price, allowing people to get exactly what they are paying for.
- Offer less expensive content since you can set a lower price instead of charging more for a subscription fee and losing potential customers.
- Have more flexibility with your pricing and offer content that’s available for a limited time or let your customers keep it forever.
Plus, it’s also a great way to host one-time paid events such as a concert live stream or a game match.
Disadvantages of TVOD
You guessed it — TVOD also comes with some disadvantages.
Since the TVOD model is pay-per-view, it makes it a more “disposable” service. This means that:
- People will likely only use your service when they need something from it, and once they get it, they are done.
- They’ll likely miss any offerings, promotions, and unique content since they’ll only go to your platform to find exactly what they need.
- You’ll miss out on creating an exclusive and loyal community.
Plus, you will have to spend more time pricing every piece of your content, especially if you want to release a lot of it.
Combining AVOD, SVOD, and TVOD Models
If you’re looking for the best way to release your content and start making money as a content creator, you could combine these monetization models.
Yes, it’s true: you can offer your audience both a subscription fee option (SVOD) and let them pay a one-time fee for certain content (TVOD), all while releasing free content with ads (AVOD).
Take Amazon Prime as an example. They charge a subscription fee to access their content, however, they also have exclusive content that you can pay a one-time fee to access.
Or you can combine AVOD and SVOD, just like Peacock does. They allow you to watch content for free with ads, but if you want to unlock all of their content you can pay a subscription fee.
But is it worth it?
Mixing up your monetization strategies can be a good way to reach different types of consumers and diversify your income.
On the other hand, it can be hard to manage so many platforms at once. That’s why finding the right VOD platform is key, since some will offer all of these options in one place.
Combining these methods will allow you to target different audiences and demographics, but could take more work and effort in the long run.
How To Find the Best VOD Model To Use as a Content Creator
So, how do you find the best one for your content?
Picking the best model or models for you will depend on several factors:
- The kind of content you create: is it exclusive content that people would pay for? Can you create enough content to charge for a subscription?
- Your target audience: what are their watching habits? Do they prefer free content or paying a one-time fee?
- Your preferred platform: do you already have a VOD platform? Do you prefer a simple-to-use platform or one with more bells and whistles?
- Your business goals: do you want to build a tight-knit community? How much revenue do you want to generate?
By evaluating and answering these questions, you’ll be able to decide on the best monetization model for your business.
You can find out more about what your current audience likes by asking and engaging with them.
It’s also a good idea to look at what your competitors in your niche are doing, so you can know which monetization models they are using and how you should approach it.
So, if you’re looking to build a sense of community with your customers and you know they would pay a subscription fee, you could try the SVOD model.
Now, if your audience prefers to watch more exclusive content and they want to pay only for what they watch, then go for TVOD.
But if you know your audience already loves watching your free content and you want a platform that is simple to use, then AVOD is probably best for you.
Wrapping It Up
There you go! Are you ready to AVOD? Or maybe you want to SVOD or TVOD.
Whatever you pick, we know you’ll choose the right one.
We hope you found this guide informative and helped you pick the best VOD model for your business.
But if you are still looking for a platform that lets you hit the ground running with an SVOD business, we got you!