Chances are, you’re one of the millions of people across the world using video-on-demand (VOD) every day. It’s one of the easiest ways to watch video, and it can be found everywhere from entertainment to online learning.
But if you’re wondering how VOD works and why you should care about it as a content creator, we’re here to get you up to speed.
In this guide, we’ll explain everything you need to know about VOD, including what it is, why it matters, and why you need to be using it in your business.
So, What Does VOD Mean?
VOD, or video-on-demand, is any content distribution that gives viewers the ability to choose when, where, and how they view media.
In other words: they can simply click on a link and start watching a video.
For example, if you click the embedded YouTube video below and it starts playing, that is video-on-demand at its purest:
Because VOD is streamed via the internet, it doesn’t rely on cable or satellite connections like traditional broadcast television. If you have enough bandwidth, you can watch!
This allows users to find and watch pre-recorded streaming content using any internet-enabled device.
Video-on-demand has 3 core advantages. It allows viewers to:
- Watch at any time: users can play content whenever they want. Unlike “linear” TV programming, which only broadcasts in real time, VOD doesn’t rely on a set schedule.
- Control what they watch: users have more opportunities to pick and choose what they watch, compared to traditional TV scheduling.
- Use media controls: users can play, pause, rewind, fast forward, and completely control how they watch content. This way, they’ll never miss anything important.
When you combine all of this, VOD gives audiences the freedom to view content in a convenient and accessible way.
And there’s so much out there to watch! You can find video-on-demand content at the core of many different types of content, including fitness programs, online classes, and even corporate team-building.
Now that you know the VOD meaning, we’ll take you through the 3 top VOD business models so you can see how people are using it to monetize their video content.
And What Are the VOD Business Models?
Any video content creator can turn a loyal audience into a successful VOD business. To get you started, here are the 3 most popular ways to monetize your videos:
Subscription Video-on-Demand (SVOD)
The SVOD, or subscription video-on-demand, model gives viewers full access to a video library for a recurring monthly or annual fee.
These paid subscriptions give viewers all their favorite content on one platform with no ads or pop-ups.
This makes SVOD a reliable source of income for business owners. Some subscription services you probably recognize include:
- Amazon Prime.
- HBO Max.
These streaming giants are great examples of SVOD. However, subscription models can work for any sized video business!
Transactional Video-on-Demand (TVOD)
TVOD, or transactional video-on-demand, uses a pay-per-view format. Customers make one-time purchases to access specific content.
For example, you’re using TVOD when buying full seasons or individual episodes of your favorite TV shows through Amazon Prime or iTunes.
TVOD-based businesses can make more money upfront by charging a slightly higher fee per purchase.
This is because they’re usually focused on one-time transactions, and customers looking for these videos will pay a higher price for the specific video they want.
However, with this model, businesses have to make sure the quantity of purchases stays high enough to earn a steady profit — and that can be hard work.
Our suggestion: use SVOD and TVOD together. Offering subscriptions and individual transactions give you an even higher earning potential.
Advertising Video-on-Demand (AVOD)
AVOD, or advertising video-on-demand, is essentially “free” for viewers because there’s no upfront cost to watch, but they will include advertisements.
AVOD revenue comes from businesses paying to advertise with short commercials throughout your videos.
For viewers, this is a familiar setup because it feels like cable TV, where they tune in to watch shows for the “price” of watching ads.
The platform that’s been the most successful with this has been YouTube. You’ve probably noticed the ads that pop up before, during, and after videos.
This was the default way to make money with video-on-demand, and while some content creators make a good living, 96.5% struggle to monetize content using YouTube and other ad-based business models.
It’s a tough deal. Advertising means:
- Strict rules and regulations on your content.
- No control over ads associated with your content.
- Income is completely reliant on advertisers, not the quality of your content.
- Less viewer traffic, because most AVOD platforms aren’t well known by consumers.
AVOD models can be rewarding, but might not fit your business needs in the long run.
But, What Are the Benefits of VOD?
People are embracing online video like never before, with the number of video-on-demand viewers estimated to grow to 164.9 million by 2025.
This also means video is becoming an important part of every business, especially for content creators.
And there are several key reasons VOD has become such a necessity — let’s break them down.
1. People Are Actively Seeking Out Video Over Other Forms of Content
More people than ever are searching for video. This is because people actually find videos more engaging and informative than other types of content. In fact, a 2022 study by Wyzowl found:
- 94% of marketers say video helped them increase their understanding of a product or service.
- 88% of people say that they’ve been convinced to buy a product or service by watching the brand’s video.
- 96% of people have watched an explainer video to learn more about a product or service.
Other forms of content are also important (like blog posts!), but video continues to grow in importance for audiences everywhere.
2. People Want More Choices and Control Over What They Watch
Many people are cutting ties with cable service providers and signing up for streaming services instead. This is known as “cord-cutting,” and people are doing it in millions!
This is because VOD gives audiences the flexibility to watch exactly what they want, when they want.
VOD simply offers more for customers, especially now that they can watch content previously only available with cable, like live sporting events.
That’s why the number of streaming video memberships surpassed cable memberships for the first time back in 2018 — and why more people are continuing to get rid of their set-top box and move to video streaming.
3. Video Creators Can Bypass “Gatekeepers” and Deliver Their Content Straight to Engaged Audiences
Video-focused businesses can now operate on their own terms.
Video entrepreneurs used to be ruled by “gatekeepers,” or people and companies who control how (and even if!) your content gets created. For example, a TV network executive who decides whether or not they’ll film your idea for a show.
Now, anyone with an internet connection, a camera, and a good idea can make money on video by creating and distributing content on their own.
4. VOD Costs Less Than Cable and Satellite, While Giving You More of the Content You Want To See
The average price for cable is about $217 a month — that’s over $2,600 a year! Plus, it comes with pricey extra fees, such as equipment rental.
By comparison, VOD services are a bargain.
Viewers don’t have to pay for expensive cable bundles that include tons of shows they don’t want. Instead, they can pay less per month for subscription plans they’re actually interested in.
Some of these cost-effective services include:
These prices mean that even if you’re paying for multiple VOD subscriptions, it can still add up to less than a monthly cable package — and get everything you want to watch.
Seems like a win-win to us!
So, What’s the Difference Between Live Streaming and VOD?
The difference between live streaming and VOD content is how users interact with them.
VOD content is all pre-recorded and pre-uploaded, so the user can choose to pause, rewind, fast forward, and control how they watch it.
Live streaming is broadcasted in real time, so viewers have to be there right on schedule. (However, they could watch a “live stream replay” on-demand at a later date.)
While live streaming content can be included as part of a bigger VOD service, it’s not technically video-on-demand because the user can’t control playback. (You can’t fast-forward real life! Trust us. We’ve tried.)
Both VOD and live streaming serve important purposes:
- VOD offers viewers their favorite way to watch their desired content.
- Live streaming engages your audience and makes you more relatable.
Together, they’re the whole business package: live streams and video content help viewers get the most out of your service by giving them different ways to interact with it.
What About OTT Apps?
You can’t talk about VOD without talking about OTT apps.
An OTT app, or over-the-top application, is an app that broadcasts content to any smartphone, tablet, or smart TV.
OTT apps allow businesses to bring their VOD content and live streaming to mobile devices and TVs. They’re most commonly used on iOS and Android devices.
Any VOD business can operate with just a website, but the ability to also watch via phone, tablet, or TV means users always have access to your content, no matter where they are.
Your business needs OTT apps for one simple reason: paying customers expect to get the most for their money. This means being able to watch content everywhere.
Viewers are constantly switching between devices, and OTT apps give them easy access to your content on each one.
Any Tips for Starting a Successful VOD Business?
Whether you’re a professional content creator considering a video-based business or you’re transitioning your company online to keep up with the times, streaming video can work for you.
Here are our best starter tips, followed by some inspiring ideas for using video in your business.
1. Build a Strong Video Library
Have a solid library of video content established before you start promoting your service, especially if you’re planning on using a subscription model.
There should be enough content that people feel it’s worthwhile to invest in.
2. Create Your Own VOD Website and Apps
Set up a VOD streaming site and apps that are easy to monetize and without relying on ads. Upload your full content library and start monetizing!
While OTT apps are incredibly useful, they can be difficult (and expensive) to develop on your own. Unless you’ve got serious street cred in tech development, you’ll likely find it more difficult to create a professional-grade mobile or TV app than a website.
You could hire a developer or save time and money by investing in a distribution platform that can create customized apps for you.
There’s plenty of options — and no matter which format you decide to use, VOD and OTT services can open up a whole new world of monetization possibilities.
3. Keep Up With Your Content
Consistently work on adding new material, and let users know as soon as it’s ready to view!
Sourcing feedback from your audience is a great way to develop new content ideas — it’ll help you give them exactly what they want.
If you want to hold on to subscribers and/or keep previous visitors coming back to your site, you need to continue to upload great content on a consistent basis.
Letting viewers know upfront before they even subscribe that there will be plenty of frequent new additions is an excellent selling point, especially for SVOD subscriptions.
4. Promote Your VOD Platform
If your video content is locked behind a subscription wall, make sure that you offer just enough to entice users to sign up.
Consider offering complimentary videos that will encourage them to sign up for more.
You’ll also want to rely on more than just SEO to get users to your site. It helps to…
- run ads
- post short snippets of content
- spread links to your service
…in other virtual communities where your subscribers spend time (like Facebook or Instagram.) This part requires getting to know your audience and their viewing habits.
Wrapping It Up
You made it through! We’re glad you stuck with us.
We know there’s a lot of information to cover, but VOD can change your business for the better, so we think it’s worth the read.
To explore more options, get in touch with any of our awesome VOD specialists. We’ll answer all your questions and even walk you through a free demo.
It’s a good time to re-introduce yourself to your audience — with video-on-demand.
What Is VOD FAQ
Still have questions about VOD? We’ve got the answers.
VOD stands for video-on-demand and is a way of consuming video content stored in online libraries.
Unlike traditional broadcast television, videos are pre-recorded and uploaded to an online catalog so audiences can access them at any time from any compatible device.
VOD also allows users to control playback with features like “pause” and “rewind.”
Over-the-top (OTT) refers to streaming services and content (like Netflix) that stream to users through the internet, instead of a traditional broadcast system.
OTT can be streamed on any digital device. The term “over-the-top” means that the platform can bypass (or “go above”) a traditional cable box.
If your TV doesn’t support apps on its own, you can use a media player such as Roku, Apple TV, or Amazon Fire to watch over-the-top content.
These devices plug directly into your TV and connect to the internet, allowing you to access all your favorite OTT apps and services.
Yes, HBO Max and Netflix are both SVOD (subscription video-on-demand) services. They charge a monthly subscription fee for audiences to log in and access an entire library of video content, including movies and TV shows.
HBO Max and Netflix have different price structures and different content available, but they are the same type of service.
Over-the-top changed the way people consume media because it gives the viewer freedom over how and when they watch.
Instead of being tied to linear television programming and expensive cable packages, OTT services let users choose exactly what they want to watch on any compatible device at any time.
This means people can view content on their schedule using smartphones, laptops, and tablets, in addition to an internet-connected television at home.