The rise of video on demand
There is no doubt that our video consumption habits are changing. Internet access is becoming more widely available. The cost of connecting is decreasing and more devices are being created with wi-fi capabilities.
All of these factors are driving audiences towards over the top content – simultaneously freeing us from cables, geographic restrictions and broadcast schedules and fundamentally changing the way video is sold, produced and consumed. As consumers, our connections and experiences are increasingly seamless, but underneath the technology a range of business models limit and enable our access to content. Common terms used to describe the different business models applied to online services are SVOD, AVOD and TVOD.
All of the terms include a “VOD” aspect, which stands for video on demand. A typical VOD service allows users to play back any one of a large collection of videos at any time. Companies such as Imagen, YouTube and Netflix are examples of this. These VOD platforms enable audiences to pick and choose what you want to watch – and when. The main business models associated with VOD deal with how the content is commercialized – and a range of acronyms reflect a growing range of options available to content owners.
SVOD refers to subscription video on demand. It is similar to traditional TV packages; allowing users to consume as much content as they desire at a flat rate per month. With SVOD, there is far greater freedom to opt out as users are not tied into a long term contract. This offers greater flexibility to users. Consequently, providers of SVOD are challenged with retaining consumers.
TVOD, or transactional video on demand as it is known, is the opposite to subscription video. With TVOD, consumers purchase content on a pay per view basis. There are two sub-categories – known as Electronic Sell Through, by which consumers have permanent access to a piece of content once purchased; and download to rent where customers can access the content for a limited time upon renting. TVOD services tend to offer more recent releases, which is beneficial to rights holders for higher revenues and for consumers for getting timely access to new content. TVOD services typically retain customers by offering attractive price incentives, so they will continue to return in the future. With greater access to the internet, TVOD is quickly relabeling itself online, for instance amongst Apple and Amazon, as well as existing on traditional mediums, such as Sky.
AVOD refers to advertising, or ad based, video on demand, and is free to consumers. However, much like television, consumers will have to sit through advertisements, – for instance on YouTube and 4OD where ad revenue is used to offset production and hosting costs. AVOD is typically employed by traditional channels, and as these move into online catch up TV, it’s likely we will see more of these in the future. However, premium content owners rarely use AVOD as it generates lower amounts of revenue than SVOD and TVOD.
In practice, there are services which operate with multiple business models. Take Amazon Video for example. Audiences pay a fixed subscription per month for access to a library of films, however extra fees will be charged for new releases.
With the popularity of over the top content soaring, it is likely that business models will change as technology and consumption habits continue to evolve. For the moment enterprise video platforms like Imagen enable content owners to create sophisticated business models to generate new revenue from their content – these include B2B licensing for high value broadcast clients as well as B2C consumption by a wider audience. More and more businesses are also protecting their own brand by creating their own video on demand platform. The bigger studios are pulling their content out of Netflix to ensure their audience receives a consistent experience with their own brand.
Imagen provides an award-winning platform for cost-effectively distributing large volumes of video content through a range of business models. To find out more about Imagen’s media management and distribution solution, please get in touch.