SVOD Upsurge: What, When, and How?
Video on demand allows users to watch videos as and when they desire. With a range of options to choose from, VOD, as the name suggests, gives users access to a wide variety of content as they demand it.
One would think that VOD is the same thing as OTT. But that really isn’t the case. While there may be some overlap, they’re still distinguishable from one another. OTT specifically deals with providing content over the internet. VOD, on the other hand, in addition to providing content on the internet, also includes videos requested via satellite television and cable TV, as well as pre-recorded videos.
Would you then say that VOD is similar to PPV (pay per view)? Not exactly. In pay per view, you have to pay every time you watch a particular content. Whereas in VOD, you can view your purchased content as many times as you like.
Types of VOD
There are three types of VOD.
Advertisement Based Video on Demand (AVOD)
AVOD is a service that is offered free of cost to users. The revenue comes from advertisements that are shown every time a video is requested. While users do have to bear the inconvenience of having to sit through advertisements, it’s easier on the pocket as compared to other types of VOD. Some examples of platforms using AVOD are YouTube, Dailymotion, and Pluto TV.
Subscription Video on Demand (SVOD)
This is probably the most well-known type of VOD, used by platforms like Netflix, Hulu, and Hotstar. Users can subscribe to the platform for a recurring fee that can either be paid weekly, monthly, or annually, and access all the content available on these platforms, at their own will.
Transactional Video on Demand (TVOD)
This is a pay per view model where users can either purchase some content permanently or rent it for a fixed duration. The prices that platforms offering TVOD are lucrative enough for customers to retain, as they only have to pay for what they watch, as opposed to a subscription-based model where they have to pay for all the available content, whether or not they watch it. Some examples of platforms using TVOD are Apple iTunes and Google Play.
The Origins and Upsurge of SVOD
Satellite TV started out as a medium of entertainment for the common man. But advertisers realized the reach it had and began paying premiums for prime time slots to air their advertisements and reach the masses.
Innovation happened and technology operators came up with content far superior to what the users were accustomed to on their television sets. Content consumption no longer remained simply a source of entertainment. Users started finding meaning and responded to better story-telling in the kind of content they consumed.
This premium content came to be distributed in the form of subscriptions and enabled binge-watching, which today is popularly referred to as ‘Netflix and chill’. Along with the audiences, advertisers too shifted their focus to SVOD platforms and led to further cord-cutting.
Latin America has proved to be a key contributor to the rise of SVOD, with players like Globo TV and DirectTV Go launching affordable packages for the public. In Chile, the launch of ‘La U Play’ by the sports club Universidad de Chile gives access to anecdotes from football players and is available at reasonable costs for people to subscribe to.
Covid Impact on SVOD
Covid 19 led to a tough 2020 for everyone. While businesses suffered losses, SVOD flourished. People were holed up in their houses and SVOD proved to be the major source of entertainment as well as an escape from reality.
The number of subscriptions increased by almost 100-120 million in 2020, up from 49 million in 2018. This rise of 55-60 percent benefitted the SVOD platforms at a time when the rest of the world was struggling with crumbling economies and job losses.
How SVOD Is Making It to the Top Rung
Latin America is one of the largest consumers of SVOD content, with Brazil having a share of around 34% of the entire SVOD customer base, and Mexico is one of the biggest markets for SVOD in the region. With an estimated growth of around 110.7 million subscribers, and revenue of about $2.86 billion in the next few years, Latin America is the second-fastest-growing market for SVOD.
Some of the most popular regional platforms in this region are Claro Video, Blim TV, and Globoplay.
What is the reason behind this upsurge of SVOD in Latin America? For a very long time, the countries in the region were dependent on Pay TV, due to low internet penetration. But with increasing internet adoption, this market is growing, although not without challenges. Piracy and lack of reliable and sustainable payment methods remain a major blocker, although political groups like Alianza are fighting to control piracy and protect copyrighted content.
The governments of countries like Brazil are also supporting the SVOD platforms, passing bills aimed at increasing internet connectivity and investments. Two major bills passed in the favor of Telcos are:
- Exempted equipment for IoT communication from paying telecom levies for a period of five years
- Amended the legislation governing the fund for the universalization of telecommunications services so its resources can be used to expand broadband
Life’s plans have changed for the post-pandemic world. Uncertainty looms over humankind and its realization has now dawned upon everyone. In such a world, what then is the future of SVOD?
Global SVOD revenues are expected to climb to $98 billion by 2025, and convenience is a primary reason. Content is now available on smartphones, and not just on laptops and televisions and it is easier than ever to binge-watch from anywhere.
Since more users are shifting to SVOD, content makers are also producing more quality content for these platforms, which in turn, is helping acquire more subscribers. The future seems bright for the subscription video on demand industry, but one thing that Covid has taught is to expect the unexpected and be prepared for the worst. And SVOD is ready to come up with new solutions whenever they face challenges in the future.