If you’re reading this article chances are that you’re trying to figure out the best way to monetize video content that you’ve created or plan to create. We’re here to help you figure that out! There’s a lot of video content out there and a lot of different ways to sell it to your customers.
There’s no one-size-fits-all solution to VOD (video on demand) monetization, as every situation is different. That makes fully understanding your options even more important. Let’s start with some basics.
What is VOD?
This might seem like a simple question, but it’s an important one to answer clearly. VOD, or “video on demand”, is a form of video content distribution that allows consumers to decide freely what content they want to consume and when.
This is in contrast to traditional forms of video content distribution such as TV scheduling and watching movies in theaters, where the consumer doesn’t have control over what is broadcasted and when.
VOD has existed for decades in the form of businesses like Blockbuster but has increased in market share and importance with the advent of digital streaming platforms such as Netflix, Hulu, and Amazon.
There are a few different ways to make money of a VOD model – let’s dig into a few.
What is AVOD?
AVOD stands for “Advertising-based Video on Demand.” Again, as the name might suggest, AVOD models bring in revenue from advertising attached to the video content, as opposed to having customers pay any subscription or transaction fees.
It is sometimes more difficult to monetize than SVOD or TVOD models but has its benefits as well.
Why an AVOD Model Might be Right for You
There are a lot of circumstances in which AVOD might make sense, but AVOD might be right for you if you have a lot of content that is “easy watching” or “background watching”, i.e. content that is easily consumed and often watched with not much focus, especially if videos are relatively short.
Lack of focus will likely cause the user to be less bothered by ad content and be more likely to continuously use your product.
Also, content that targets demographics that might have less disposable income (e.g., college students) might be particularly good for AVOD, which requires no investment of its users except their time. Examples of this kind of content include music videos, beauty/fashion influencer content, and ASMR videos.
On the other hand, AVOD may not be the right fit for you if you create in-depth, educational content.
Perhaps the most famous example of AVOD platforms is Youtube. There are definitely people who have had success on Youtube. PewDiePie, a Swedish gamer, has had a lot of amazed over 100 million subscribers and certainly raking in the big bucks.
If you think AVOD is the best way for you to monetize your content, great! Keep in mind that you have to meet the Youtube Partner Program to start making money from ads.
What is TVOD?
TVOD stands for “Transactional Video on Demand.” In the TVOD model, customers pay one-time fees for permanent access to one piece of content or a small library of content. In other words, they pay a flat fee to be able to watch one specific thing forever, whether that “thing” is a specific movie, a full season of a show, or an educational course on Udemy. In many ways, from a monetization perspective, this is the opposite of SVOD.
Why a TVOD Model Might be Right for You
A TVOD model might be right for you if you have a lot of content that customers tend to watch repeatedly, over the course of years, as opposed to just once. Examples of this kind of content include cult TV shows with rewatch potential (think TheOffice) or instructional videos that might need to be frequently reviewed to keep skills up to scratch. It also might be right for you if you have a monopoly on high-value content, e.g. recent releases, that people might be incentivized to pay for individually.
One of the classic examples of the TVOD model is the iTunes store where you could buy movies and TV-series through one-time purchases.
What is SVOD?
SVOD stands for “Subscription Video on Demand.” As the name might suggest, it’s a form of VOD distribution wherein the customer pays a flat subscription fee in exchange for access to a full catalogue of content. This subscription fee could be paid by a company (e.g. Pluralsight) or an individual (think Netflix), and is usually paid for monthly. The core piece of this, from the consumer’s perspective, is the comprehensive access to a full library of videos for a certain time period for a single fee.
Why a SVOD Model Might be Right for You
SVOD is the most popular form of VOD distribution and monetization. SVOD might be particularly right for you if you focus on a niche that you continuously create content for.
It also might be right for you if you have a lot of content that might not be as interesting on its own as it might be together, as an integrated whole. An example of this kind of content is DOGTV, which is a SVOD platform that provides videos for — you guessed it — entertaining your dog.
Even though most people associate SVOD with the larger platforms such as Netflix there are several content creators and small businesses that grow their income everyday by offering niche VOD content.
Why SVOD is the best way to grow your business
Many people think that launching an SVOD is exclusively for the Netflixes of the world. But nearly 70% of global revenue in the VOD market comes from subscriptions. There are a ton of SVOD websites that are thriving, creating content in various niches. In fact, there are 642 million people subscribed to VOD content globally and this number is only predicted to increase in the coming years.
There are several advantages of having a subscription instead of having ads or selling through one-time sales – for you and your customer.
Why consumer prefer subscription model:
Convenience: Your content is accessible 24/7 on desktop and mobile across several different devices. There is no schedule to look after. Everything is on demand, wherever and whenever you want it.
Cost: The average cable television company charges $85 per subscriber. That’s a lot of money for TV channels and shows you are not watching. With VOD platforms you can pay as little as $4.99 instead. That’s money you could be spending on other things!
Video library: Many VOD services have extensive video libraries so that you can choose what you want to watch. Not only that but customers look forward to logging in to see what new content that has been released.
Variety: There are SVOD services for a variety of niches out there, no matter if you are foodie, fitness enthusiast or like binge watching your favorite shows. MasterClass is a great example of an SVOD focused creating content for those interested in different hobbies.
Control: Don’t underestimate the simplicity of being able to cancel subscriptions with a single click directly through the website. SVOD services eliminates lengthy conversions with customer support trying to convince you to stay on as a customer.
Advantages of SVOD for business owners
So, SVOD benefits your subscribers. Why should you be using SVOD to monetize your content? There are several reasons, but we have boiled it down to the following.
Steady revenue: Arguably the biggest benefit of offering a subscription is having a predictable revenue stream each month. The calculation is simple. Your monthly price multiplied by the number of subscribers you have. Not only does this provide you with a sense of security but it also helps you to invest in more content for your viewers.
Price restrictions: The price of your monthly subscription is based entirely on the value that you bring to customers. This is one of the reasons why SVOD is a great way to boost profitability of your existing business.
Exclusivity: By having a subscription service you will be bringing like-minded people together and creating a community with people that share similar interests. This in turn makes the website more valuable and engaging for your viewers.
Loyalty: By creating valuable and relevant content, your viewers can become committed followers. Not only will they recommend your videos to other people but paying for your content will be viewed as a way of supporting your content creating – just like Patreon has proved.
How do I price my SVOD?
Although not having price restrictions is a benefit for your business there may also be some confusion about how much to charge for your SVOD. Unsurprisingly this is one of our most asked questions and one we discuss with clients every week.
It’s understandable. Most companies use their cost of manufacturing, personnel costs, rent, marketing to determine what price they have to charge in order to make a profit. When it comes to video it’s not as straight forward. That’s why we foremost recommend that you set a price based on the value that you are bringing your customers. However, there are a few factors to consider beforehand.
The type of content you are producing may be the most important factor to setting your price.
A great starting point is to look at companies that are producing content similar to yours. This way you will get an idea of what customers are comfortable paying for your service. Keep in mind that it’s important to evaluate their content and what value they are bringing to their customers.
Remember, price is what you pay; value is what you get. If you are creating higher quality content, don’t be afraid to charge a higher price.
With that said, the type of industry you are operating does affect the price you will be able to charge for your SVOD. For instance, Real Vision which focuses on in-depth interviews within finance, charges up to $49.99 a month for a subscription. On the other hand, you have services such as CuriosityStream, a documentary SVOD, that start as low as $2.99 a month
We’ve taken the liberty to create three main categories to give you a frame of reference.
Entertainment focused SVOD services are usually the cheapest, ranging between $4.99 to $14.99 a month depending on the type of content. This is primarily because giants such as Disney and Netflix have set a $9.99 standard that customers are now used to. Charging a lower price doesn’t necessarily mean that you will earn less. If you can offer an attractive price you may in fact earn more since there may be more people willing to subscribe.
If you are offering videos in the fitness space such as workouts, yoga, meditation and well-being you will be able to charge between $9.99to $19.99. Customers are willing to spend a bit more for fitness content as it's seen as an investment in themselves but also because it can help them save money on gym memberships. Being able to workout at the comfort of your home is definitely an added bonus!
eLearning has the widest pricing range, from $9.99 to $49.99. eLearning is a broad term and includes many types of video content. We’ve seen that the more niche your eLearning content is, the higher the price will be able to charge.
These price ranges are a great starting point, but there is no replacement for testing and speaking to customers. Many of our clients found it helpful to send out surveys to their customers a few months after launching their SVOD.
How do I get started?
If you are getting ready to launch your own video service, we would gladly help you set-up your own VOD platform. Streampal offers an all-in-one video monetization platform where you can build your own VOD platform. With our custom themes and zero-coding website builder you will be able to launch in no time!