SVOD vs. AVOD: The Better Subscription Model
It’s no wonder that most businesses today are switching or planning to switch to recurring revenue business models. And it is for all the right reasons: stability and predictability in cash flows, better CLV (Customer Lifetime Value), higher investor interest, to name a few.
Consumer preferences, too, are undergoing a sea change in expecting more access and less ownership. In such a scenario, adopting a subscription business model not only secures steady recurring revenue but also keeps your customers satisfied over the long term.
However, there are multiple subscription models out there, and deciding which one yields the best monetization can become a tight spot for service providers. But we are here to help you take that leap of faith.
Analyzing the paths of SVOD and AVOD-
The current fast-paced technological realm can make it hard to place complete trust in a single solution. Every model has its own merits and flaws. Based on the type of content you’re monetizing on, you can choose a model that works best.
AVOD (Advertising-based Video on Demand) is a fully and freely available ocean of content, where anyone, at any time, can take a direct plunge. But he or she has to beware of the constant waves of advertisements as on regular TV.
Simply put, time is revenue for AVOD. Based on the number of eyeballs the ads can turn and retain for the longest time, your ad-based revenue is generated. This caps with commercial content, sponsored ads, etc.
Easy example? YouTube!
What’s exclusive with AVOD?
- Free viewer access to unlimited content
- Grip over a larger audience due to the absence of a regular fee
- Promotes democratic content usage
- AVOD can offer steady revenues only when you have a broader audience outreach
- Advertisers tend to approach only those streaming services with great popularity
- Furthermore, you would have to keep tabs on working up a remunerative ad-strategy based on an analysis of your viewers’ choice preferences
All of this could quickly turn into a weary load, with no stable revenue to back your resources.
SVOD (Subscription Video on Demand) offers a wide range of exclusive content against a flat recurring monthly fee. SVOD is one of the most popular and lucrative subscription models forming the largest chunk of the OTT space, with big players like Netflix, Hotstar, Hulu, etc.
It is an excellent option for creators with a huge content base. Such platforms can fully exploit this model. The key lies in the way you monetize it. For example, Netflix boomed upon the content that was not originally theirs! Yet, they were so good at monetizing that they ultimately came up with a revenue generator to finance original content. Does sound impressive, right?
What’s Exclusive in SVOD?
- Steady recurring revenue
- Higher profit margins even with lower subscriber bases
- Option to offer freebies as a customer acquisition tool
- Loyal customer base
- Quality: Brewing up original and unique content is one of the most challenging jobs with SVOD.
- Quantity: This subscription model works best only when you have a large content repository in different formats: single part (movies) or multi-part (series).
While both these models are valuable in building a profitable business, SVOD certainly presents the strategic advantage when coupled with the option to gift freebies like freemiums and trials. You can successfully attract new customers by offering a free, no-liability trial.
For example, Spain’s Virgin Telco offered 150 free VOD movies to stream for Christmas in 2020, which easily acquired new target customers.
Whether they stick with you or not largely depends on your content quality and churn reduction strategies. And that is a discussion for another day. The bottom line is that SVOD acts as a great customer acquisition tool and gives you the chance to fund your upcoming projects by successfully leveraging your existing content.