When Netflix started in 1997, it disrupted the video rental industry by selling and renting DVDs through postal service. Now, not many people remember buying VHS tapes and DVDs from video renting stores.
In 2007, Netflix again disrupted the video industry by introducing Video on demand as one of their core services. As Internet speed increased coupled with people’s habit of binge-watching, Netflix’s VOD service grew exponentially while its DVD sales declined.
Last year, video streaming services generated $20.1 Billion in revenue from the US alone and grew at a rate of 15.2%. There has never been a better time for content creators to start and grow their business. Most of the content creators have already launched or are planning to launch their video streaming service to join the bandwagon.
As a content creator, what are your options to monetize your video streaming service? Let’s take a look.
Subscription-based Video on Demand aka SVOD
The viewer agrees to pay a recurring fee to gain access to your video service. It’s generally a monthly, quarterly or annual fee. This means viewers can watch all that they want, any time they want with no restrictions. Netflix, Amazon Prime, and Hulu follow this model.
SVOD model offers plenty of flexibility to the viewers. They can choose subscription of any duration and opt-out anytime. Viewers don’t need to pay different price for viewing different content as everything is covered under the same recurring fee.
SVOD is a great model for content creators to monetize their service. As an SVOD service provider, you get consistent revenue from your subscribers which is fairly predictable. For example, if you have 100 paying subscribers and charge them $5/ month, you generate a revenue of $500/ month. Predicting your future revenue is easy once you know your Net MRR Growth Rate i.e the month over month percentage increase in your monthly revenue.
To be successful in the SVOD model, your focus should be both to retain subscribers and add new ones. If you produce premium content frequently and in longer formats i.e. greater than 30 minutes, like online courses, training material or originals, this model suits you. Learn how you can setup SVOD for your video business with Ventuno here.
Transaction-based Video on Demand aka TVOD
While SVOD is like all-you-can-eat-buffet, TVOD is like ordering à la carte. Viewers get to pick and choose what they want to watch and only pay for that particular content.
Movies, series and sporting events choose this model to get higher revenue per view. TVOD model does not have the same retention as the SVOD service as, unlike SVOD model, viewers pay only when they want to watch a particular content. Examples of TVOD services are YouTube Movies and Google Play.
As a content creator, if you want to venture into TVOD, you need to have a marketing effort to go along with production. You also need to have a huge dedicated audience to make this profitable. Keep in mind that your growth depends directly on the number of new customers.
Advertising based Video on Demand aka AVOD
Think of YouTube. Users watch content for free and creators earn revenue from advertisements. It is a powerful model and works well for creators who generate a lot of views.
As a content creator, AVOD is a great model if your videos generate a lot of views and if people are not ready to pay for viewing them. In general, the AVOD model suits News, Lifestyle and Entertainment categories.
With AVOD, you need to have direct relationships with advertisers who are willing to run ads on your content. You also need to have a constant tab on CPM rates and fill rates to ensure that you generate a significant revenue from ads.
Hybrid model that combines SVOD, TVOD and AVOD
If you have the bandwidth, you can combine two or three models to maximize your returns. Consider Hotstar, India’s largest OTT service. Viewers watch non-premium content for free (AVOD) and pay a subscription fee for watching premium content (SVOD). Viewers also have the option to watch live sports by paying a one-time fee (TVOD).
Which model is best for your video business? There are no hard and fast rules and it all depends on the video type, quality, frequency of uploads and user’s willingness to pay for it.
If you are a Yoga or fitness instructor, SVOD works best for you. You can create high-quality training videos for which users are ready to pay.
If you are a News or Entertainment content creator and if your users are not willing to pay to watch your videos, then probably AVOD works best for you.
If you are Sports content creator and regularly broadcast live events, you can go ahead with the TVOD model and charge your users a one-time fee to watch the event. TVOD also works well for creators who have a huge library of premium content like movies and TV series.
If you produce both medium and high-quality videos and want to attract users to your service before asking them to pay, then a combination of AVOD and SVOD would work best for you. You can attract users by giving your non-premium content for free and charging your users for premium content.
All these models work well if chosen and utilized correctly. Each model has its own parameters for effortless percolation into revenue and growth. You have to take a hard look at what works best for you and start using technology to your favor to not just grow but retain eyeballs.
We at Ventuno are keen to help you maximize your revenue from OTT. With Ventuno’s OTT SaaS platform for content creators, you can launch your branded video streaming service for web, mobile and connected TV within 24 hours. You have full control over how you want to monetize (AVOD, SVOD, TVOD) and keep 100% of the revenue. Once your service is launched, you use a single platform to manage, monetize and grow your video business.
Get in touch with us to at firstname.lastname@example.org to find out more.