SVOD
Subscription video-on-demand (SVOD) permits the usage of an entire library of content at a fixed subscription rate, typically on a monthly basis. This model falls under the “all-you-can-eat” buffet where viewers can consume unlimited ad-free content if they have subscribed to the service. SVOD currently ranks as the most successful monetization model, representing OTT market’s largest segment. As a matter of fact, the top players of the OTT market such as Netflix, Amazon Prime Video, Hulu etc., as well as new entrants like Disney+, Apple TV+, HBO Max etc utilize the SVOD model.
According to Forbes, almost half of the population of America (55%) has Netflix subscription contributing to more than 1 billion hours of consumption of video content per week, while subscribers of Amazon Prime Video stand at 52%. The upward growth trend of these OTT platforms isn’t halting anytime soon. According to a study by ResearchAndMarkets by 2025 the global OTT market is expected to reach $332.52 billion. However, few of the constant challenges that SVOD providers face due to absence of long-term subscriptions and freedom to choose another service at any time, keeps the service providers on their toes, making them deliver new and unique content constantly.
According to Statista, paid SVOD users in the US reached 125 million in 2019. This number is predicted to increase to 342 million by 2025.
TVOD
This model is the absolute opposite of SVOD. TVOD (Transactional video-on-demand) permits viewers to pay for specific content they wish to watch. This pay-per-view system is similar to an online blockbuster platform where consumers have an option to buy or rent content. The two subcategories – ‘electronic sell-through’ (EST), where viewers make a one-time-payment to own the content for an indefinite period or ‘download to rent’ (DTR), where viewers pay a minimal fee to the distributors for accessing the content for a specific time period.
TVOD platforms generally deliver higher revenues as it offers customers with the latest video/movie releases/sporting events. Lucrative pricing offers and promotions entice customers to make repeated purchases. Some examples of TVOD platform are Sky Sports Box Office, Apple iTunes, Amazon video rent/buy store, Google Play.
Several TVOD players have been operating via set top boxes and not as full-fledged OTT service since many years. This is now changing.
AVOD
AVOD (Advertisement-based video-on-demand) is nothing like SVOD or TVOD. One can access AVOD for free. AVOD is more like traditional TV where advertisements are interspersed with the content. Platforms such as YouTube, Tubi, The Roku Channel are examples of AVOD platform. AVOD is generally not a preferred platform for premium content consumers who are willing to pay to watch content without any ad-interruptions. However, many companies in the Media & Entertainment sector are bouncing back to this type of model. During the pandemic, 47% consumers in the US agreed to have used at least one free ad-supported video streaming service, as they searched for budget-friendly entertainment. (Deloitte)