OTTMay 18, 2022

The Apt Revenue Model for VOD Services- Single or Hybrid?

Video-on-Demand (VOD) services have become a huge thing today. The post-pandemic effect led people to crouch at home, consuming the best available content, even after rolled-back global lockdowns. Nevertheless, one must establish a strategy before diving headfirst into this OTT streaming services subscriber mine. A lousy plan will cost many likely consumers, earnings, and even reputation. To avoid this, one of the most critical decisions will be determining a revenue model that best serves your OTT platform.

The Prominent VOD Revenue Models: SVOD, TVOD, and AVOD

SVOD (Subscription Video on Demand), TVOD (Transactional Video on Demand), and AVOD (Advertising Video on Demand) are the three major types of VOD revenue models for OTT. Each one has its own set of aces and rip-offs, which have to be understood in detail to see what rightly suits your OTT service platform.

At this point, one might already have implemented any of the above models or might be seeking to hybridize and see what unfurls. It is no surprise that we have no ‘ one-size-fits-all ‘ model for amplifying and boosting revenue returns. And as said earlier, it is important to mix, match and figure out the best-performing revenue model that goes well with the audience type.

  • Subscription Video on Demand (SVOD): This model earns revenue via the customers’ subscriptions. The users get limitless access to the platform’s content for a precise time. Examples of SVODs are Amazon Prime, Hotstar, Netflix, etc.
  • Transactional Video on Demand (TVOD): In this model, the users spend on a single piece of content rather than accessing a colossal medley of content, such as a single episode or season. Examples of TVODs are Google Play and iTunes.
  • Advertising Video on Demand (AVOD): Set apart from SVOD and TVOD, AVOD-using platforms accumulate revenue via advertisers positioning ads before or during the content. Examples of AVODs include YouTube and Crackle.

The Hybrid Revenue Model:

The hybrid revenue model imbues monetization features from all three revenue models. For instance, a service can embrace an AVOD model, with ads positioned at various phases of the content. At the same time, an opportunity can be given to users to buy a premium to avoid all ads using an SVOD model.

Many OTT services are beginning to take up this revenue model where they offer three tiers of service. Firstly, premium content with targeted user advertising. This provides the entire array of content with advertising, and the next one is Premium Plus, which delivers the whole content cluster but without the ads.

The hybrid model, mainly when containing AVOD, enables faster user acquisition (Example: YouTube) by offering them a “trial before purchase” experience.

It’s a beneficial forum for all. Marketers can acquire a big audience while users get to access a broad scope of entertaining content. The OTT subscription billing platform can then earn from both the advertisers and the subscribers. On the other hand, since this model combines revenue-earning streams, maximizing its earnings from every stream can be problematic.

The Choice: Single or Hybrid Revenue Model?

In choosing a revenue model, one needs to consider the size of the subscriber base. Understanding your platform’s restrictions, based on this size will define how much revenue you will earn. Hybrid models are ideal for OTT subscription billing platforms with a vast diversity of content that incentivizes users to elevate from free to premium plans. Besides, you also have to guarantee that your content is worth paying money for.

For more recent OTTs, the single revenue model will be an uncontroversial bet. It enables your just venturing-out team to concentrate on enhancing and yielding revenue optimization from a single model before growing. So, summing it all up, it makes sense to choose the right-fitting revenue model based on where one is currently placed in their OTT journey.