What does SVOD, TVOD and AVOD mean? Their meaning and which one is right for you
VOD, Video on Demand refers to premium video distributed over the internet and made immediately accessible for users on mobile devices, laptops, and monitors. VOD differs from traditional viewing as users no longer need a cable TV package, nor do viewers experience the constraints of static broadcast viewing schedules.
There are 3 major VOD fee-based models including: AVOD (Advertising Video on Demand), TVOD (Transactional Video on Demand), and SVOD (Subscription Video on Demand). In this article we will dive into each model, provide examples, and discuss the revenue potential of each.
There is no denying that VOD is growing exponentially, both in consumer viewing behaviors, and in creator production and distribution. According to Statista, global VOD revenue grew to $60 billion in 2020 and is expected to reach $96 billion by 2025 growing at a compound annual growth rate of 9.5%.
Video is the most powerful and engaging medium today. In the US alone, adults spend 6 hrs per day watching video and on average pay for 3 different subscription services per household. In today’s VOD landscape, viewers enjoy an unparalleled viewing experience with the freedom to watch on any screen, anywhere, and at any time. Creators are delivering more and more content to meet this demand.
SVOD (Subscription Video on Demand)
With SVOD, viewers pay a flat-fee monthly or annual subscription to creators to gain access to exclusive, gated content. Netflix, Hulu, and Disney+ are all great examples of SVOD platforms that are leading the market.
These brands offer a catalog of video and continue to add new titles to their subscription bundle. Although, the major SVOD streaming services are now beginning to reach a peak as new, independent creators begin to enter the SVOD marketplace and distribute their media to niche audiences.
As the VOD industry's fastest growing segment, SVOD has exceeded $50 billion in global revenue in 2020, accounting for over 80% of global VOD revenues alone. The SVOD market currently boasts 880 million viewers and is expected to reach 1.3 billion viewers by 2025.
With SVOD leading the VOD industry in both revenue and viewer consumption, SVOD is the ideal business model for video creators looking to establish their content business.
Acquire 1,000 subscribers at $10 per month and earn $120,000 in revenue annually.
SVOD creators are able to launch their own streaming service while retaining ownership of their video content, brand, and audience. SVOD creators also create sustainable and consistent recurring revenue to enable continued content production.
TVOD (Transactional Video on Demand)
In TVOD, “transactional” refers to a one time payment, or not recurring. TVOD is synonymous with “pay-per-view.” iTunes, Vimeo, and Amazon Prime Direct are all great examples of TVOD platforms.
Creators use TVOD platforms to upload their content and then set a single, one time purchase price to view the video. Pay-per-view pricing can exist in the form of a “purchase,” where viewers retain viewing ownership of the video and can watch it as many times as they’d like, or a “rental,” where viewers get viewing rights for 24 hrs after payment.
At 480 million total TVOD viewers in 2020, TVOD falls behind SVOD consumption of 880 million viewers.
It is also important to consider that TVOD viewers are “transaction” based, where SVOD viewers are retained month over month.
Sell 1,000 rentals at $10 each and earn $10,000.
TVOD platforms are great for selling single video titles, although they do not enable creators to establish a brand, market a catalog of content, nor grow and retain a paying audience.
AVOD (Advertising Video on Demand)
AVOD platforms are supported by advertisers, opposed to viewers themselves. With AVOD models, viewers can view all content for free, but experience advertising interruptions throughout their experience.
Advertisers buy space on AVOD platforms in the form of video bumpers, midroll placements, and page banners. YouTube, Twitch, and Facebook are all great examples of AVOD platforms leading the AVOD charge.
Most creators use these platforms as means to promote themselves, be discovered, and build an audience of followers.
On average, creators earn $0.004 per view on YouTube. Reach 1 million video views and you’ll earn $4,000.
How do creators earn money? On AVOD platforms, creators get a small percentage of advertising revenue based on viewership.
While free libraries of video and unlimited access to content was demanded by consumers initially, AVOD platforms are now becoming saturated with advertisers.
AVOD platforms have also begun to curate their winners with recommendation engines demonetizing some and shadow banning others to build a community of creators that align with the biggest advertisers on their platforms.
The VOD industry is here to stay. Video production continues to become more cost effective, and enterprise distribution and monetization has become accessible to independent creators and studios.
After capturing screen time and living rooms of households worldwide, major streaming services like Netflix and Hulu are now beginning to face an unbundling of subscription media.
Subscription media is unbundling.
New entrants are beginning to launch their own SVOD service, and viewers are beginning to subscribe to more niche offerings specifically tailored to them.
Furthermore, creators who have found success on AVOD platforms are beginning to get pushed out, seeking ownership over their revenue, brand, and audience.
We see the market moving towards true unbundling - a direct-to-consumer SVOD model enabling both creators and viewers to stream independent.