The growth in video consumption has increased multiple folds over the past few years. The global Coronavirus pandemic has further escalated consumption as more people are switching to alternative entertainment sources amidst lockdowns. You will be amazed to learn that the revenue for the video-on-demand segment is expected to reach USD 85887 million in 2021. A compounded annual growth rate of 10.17% is expected between 2021 to 2025.
There are several video streaming platforms in the contemporary world, catering to different types of users by presenting varied content. The online video streaming revenue-generating platforms use different ways to monetize their content. Some of the commonly used monetization methods include the subscription model, advertisement model, pay-per-view model, etc. The streaming video-on-demand segment is the largest one among these with a market volume of around USD 71,237 million in 2021.
The growing popularity of the video-on-demand segment can be assessed by the predicted number of users, which is expected to reach 2218.2 million by 2025. The average revenue generated from each user in this segment is projected to reach USD 47.86 in 2021. The user penetration percentage is projected to cross 28% by the year 2025. These stats are enough to prove the growing popularity of video on demand platforms. Let’s take a quick peep into the two most popular video monetization methods.
What is the AVOD monetization method?
The OTT platforms that use the Advertisement Video on Demand (AVOD) monetization method don’t directly charge any fee from their users. They have an ad-based revenue model and generate income from advertisements being shown on the portal. The users have to watch the advertisement being shown in between their screen timings. They can skip some of the advertisements but for most of it, they have to sit through and watch them.
Platforms using the AVOD revenue model offer free content to the users and are easily able to amass a high number of viewers. AVOD platforms don’t require the users to have a cable or satellite subscription, all they need is an internet connection. The AVOD business model provides a scalable revenue solution for a large number of audiences which is growing even further. The competition in the video streaming space is increasing and having the best AVOD platform gives you an edge in the game.
What does the SVOD model entail?
Let’s take a quick look into what the SVOD monetization method is. The Subscription Video on Demand (SVOD) model is the most popular monetization method used by OTT video platform owners to generate revenue. It is predicted that the SVOD subscribers will grow to over 199 million by 2025. Platforms using the SVOD business model to generate revenue, charge a fee from the users for accessing their video library. There are various types of subscriptions available to cater to the needs of varied users. The audience has access to the pool of videos until they are subscribed to the platform.
SVOD model is used by all leading OTT platforms including Netflix, Prime Video, etc. It provides users with the flexibility to access content for a given period and doesn’t require a long-term commitment. They also provide users with new and diverse content frequently to keep them entertained for long. Many VOD streaming platforms have also introduced a mobile-based subscription package to provide budget-friendly deals to users.
AVOD vs. SVOD: Which one should you choose?
The video-on-demand segment is growing widely popular among the audience given the convenience it provides to the users. From being able to watch the content of their liking at a preferred time to paying a nominal fee to access a pool of videos, the VOD business model provides numerous benefits to the users. When it comes to making your OTT platform successful in a competitive landscape, your revenue model plays a crucial role. So which monetization method is best suited for your needs? Let’s delve deeper into the pros and cons of AVOD Vs SVOD models to understand better.
· SVOD
The best thing about the SVOD monetization method is that users have to pay only a flat fee to access a wide range of content available on the portal. They can access it at any time as long as they are subscribed to the portal.
When compared with the AVOD model where users can access content for free, even the best SVOD streaming platforms need some convincing to make users pay for the services being offered. Also, there are plenty of subscription-based platforms which has led to subscription fatigue among the audience.
· AVOD
The AVOD model doesn’t charge any fee from the users and it is free for everyone. This helps these platforms to gain a wider audience base in a short period which helps to increase their revenue from advertisements.
One of the major disadvantages of the AVOD monetization method is its delayed profitability. Managing the bandwidth can be challenging for AVOD platforms, optimizing advertisement parameters can take a long time which can impact the short-run revenue and profitability.
Finding the right revenue model
Choosing the right monetization model can be challenging and tricky at times. It needs a detailed analysis of your target audience, niche, and the type of content that you will put up on your online video streaming portal.
· Know your audience
Researching your target audience will help you find the right revenue source for your video-on-demand portal. Will your audience be able to afford your subscription? Do they want an ad-free experience? Answering these questions will help you find the best video on demand software monetization model.
· Reliable revenue source
Choosing the right revenue channel will help you generate steady revenue from your business. It will help you cover the maintenance and operational costs that are needed to run your business smoothly.
· Content security
When you monetize your platforms using advertisements or paywalls, it reduces the probability of piracy. It helps to strengthen the overall content security.
· Privacy and personalization
The subscription model allows you to deliver a personalized experience to the users. It also helps to ensure exclusivity and a high degree of privacy for the users.
· Flexibility in terms of monetization
Choosing the right VOD platform providers will help you to benefit from multiple monetization methods at once. It will help you provide more flexibility in monetizing your content. Finding the right revenue model also requires assessing the need for flexibility.
Conclusion
Choosing the right monetization method can be a game-changer for your video-on-demand business. It helps to maximize your revenue by optimizing your monetization channels. SVOD and AVOD are two popular types of monetization methods used frequently by video-on-demand service providers. Finding the most suitable one among these two requires an assessment of your audience, niche, and the type of content that you will be offering.
Author Bio:
Blogger and OTT Expert & interested in digging deep into video on demand streaming platform media business tools and Love to discuss and share views on the latest technologies tips, and tricks.
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