AVOD vs SVOD vs TVOD: The Right Monetization Model For Your Business

With more people going online every day and the ever-increasing Internet speeds, FUP limits and lower costs, the thirst for more video content has only gone up and will continue rising at an unprecedented rate. To cater to this increasing demand for more video content, media houses and broadcasters are competing with each other to produce the best shows, documentaries, and movies to attract more viewers. 

Content producers now have a much greater choice for showcasing their content online like Netflix, Amazon Prime, and Hulu to name a few. But more companies are realizing the advantage of having their own OTT platform rather than depending on a third-party platform. OTT platforms, such as GIZMOTT, enables most content providers to create their own VOD/Live Streaming Apps in just a few weeks!

When you decide to launch your own OTT platform, one of the first and probably the most important question you need to answer is:

Which monetization model should you use?

Monetization Models

There are broadly three types of Monetization models, namely: AVOD, SVOD, and TVOD. AVOD is Advertisement based Video-On-Demand where revenue is generated by displaying Advertisements to your viewers. SVOD is Subscription-based Video-On-Demand where the viewers are asked to pay a small recurring fee to view your content. And finally, we have TVOD which is Transactional Video-On-Deman where the viewers can buy content on a Pay-Per-View basis. Each has its own advantages and disadvantages. So let’s look at each one of them in a bit more detail.

AVOD

As mentioned earlier, AVOD is Ad based monetization model which will allow your viewers to watch your content for free but at the cost of viewing some advertisements. Apart from broadcast and cable TV, most organizations today are keen on advertising online as well. Similar to advertisements in traditional televisions, VOD advertisements can be categorized into 3 categories:

  1. Pre-Roll – Ads are inserted before the video starts playing
  2. Mid-Roll – Ads are inserted while the video is being played
  3. Post-Roll – Ads are inserted once the video has finished playing

The main advantages of using an AVOD based model is that you can attract many users as the content is free and the only sacrifice your viewers have to make is to watch a few Ads. 

SVOD

SVOD is a subscription-based revenue model where viewers pay a small subscription fee for viewing your content. Payments can be collected monthly, half-yearly or yearly based on your specific business strategy. You can also decide the subscription amount based on your offerings, where premium content will demand higher subscription charges. There are mainly two ways through which you can take subscription payments from your viewers.

  1. In-App purchases – Where the money is collected through the respective store from where the App was downloaded.
  2. Third-Party payment – Here you can integrate the Apps with third-party payment providers like Paypal and receive payments through them.

The main advantage of SVOD is that it will give you a very steady and predictable revenue stream as most viewers tend to retain the service once they have started subscribing for the same. 

TVOD

TVOD or Transactional Video-on-Demand is a revenue model where the viewers buy/rent content on a Pay-Per-View (PPV) basis. This model also employs either in-app purchases or third-party payments to collect payments from viewers. In this model, you can give your viewers two options:

  1. Rent: The content can be viewed for a predetermined number of times or is kept available to the users for a specific amount of time.
  2. Buy: Your viewers pay to buy a copy of the content so that they can watch it however and whenever they want it. 

TVOD generally gives you much higher revenues as the content is either new or of premium quality. Movies and Concert event are a good example of contents that can be provided on a TVOD basis.

Which should you choose?

AVOD revenue model is ideal for content that is of a shorter format. An ad-based model is also a good option in regions with a larger number of viewers and where Revenue-per-Ad are high. Based on the quality of your content, you can rake up high viewership rather quickly. However, in this model, you will also need significant viewership for your content to generate any money. With the right OTT platform like GIZMOTT, your content can generate much higher revenues compared to other platforms.

SVOD revenue model is considered by many premium VOD Apps as the best monetization model as it generates a higher and more consistent revenue when compared to AVOD. But here it’s equally important to attract viewers to your content as most viewers may not be willing to pay a subscription amount without being confident of the content that you offer. Even though viewer retention is high in this model, a lack of consistency in both content quality and quantity can lead to your viewers canceling their subscriptions.

As mentioned above, TVOD is recommended for a certain type of content like Movies, Music, Concerts, etc and may not work for some contents. The higher price of TVOD also means that only a few viewers would opt for this option. 

When you look at the advantages and disadvantages of the various monetization models, the one we recommend is actually a Hybrid model which will take advantage of the three models and lower the risks associated with them. You can mix and match the options to give you the best result. We have listed a few options below:

  1. Give viewers a free trial after which they can subscribe to your content
  2. If your content is a series, you can offer your viewers the first episode as free and your viewers can then subscribe to watch the entire content
  3. You can offer your viewers most of the content on an AVOD model and then charge a subscription for your premium content.
  4. You can also use the same method as above, but ad a TVOD element to it by charging PPV for your super-premium or brand New content.

GIZMOTT is a true End-to-End Platform that has all the modules that you would need to start your OTT-business. It supports various devices like iOS & Android Apps, Android TV, Amazon Fire TV, and Roku. Apart from your videos, you could also add live channels in just a few minutes through our comprehensive and user-friendly dashboard. You can also create a playlist of videos and live-stream it too. It has a built-in Ad exchange and connects with various DSP’s so that you can concentrate on producing more content while we take care of the rest. It also has a comprehensive subscription module that can be customized to suit your specific requirement. GIZMOTT also has the capability to encrypt and DRM protects your videos so that such risks are averted. With GIZMOTT you can launch your OTT business in just weeks! 

So contact us today for a free consultation.

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