Understanding VOD business models. Which one fits your business needs?

Advertisement powered, subscription based, or simply transactional. VOD offers flexible possibilities for content monetization and consumption.

Aug 01, 2017

We've come a long way since our first video centric weapon of choice - the VCR, which won the war of formats against Betamax in the 70s and ruled the 80s. 

Flash forward to nowadays breezing through a wave of technological advance that brought us cable TV, the internet, digital video, smartphones, streaming services, social media, and so much more. The choice is wider and, most importantly, it's easier, as you don't longer need to run to the video rental place.

Video On Demand (VOD) has come to stay. Whether it's advertisement, subscription, or transaction based, VOD offers flexible possibilities for content monetization in a service provider's or content owner's perspective and consumption from a user's perspective.

If you own content and are considering releasing your own streaming service, think that there are three different VOD flavors.

Users pay a fee (usually monthly) to stream an unlimited amount of content. Buy to own or rent specific content whether it's a movie or a show. Users don't usually need to pay as content is ad-supported and monetized


When looking at the market, this is what the major streaming companies are doing.

SVOD -  This is beyond doubt the most popular business model within the realm of video on demand. Users are required to pay a fee of any duration, monthly, quarterly, or annually, which gives them access to a particular's service catalog of content. As long as the subscription is active, there's no limit to the amount of content one can enjoy. Users can freely browse through a huge selection of entertainment video such as movies, drama series, tv shows and whatever is offered. 

Popular services: Netflix, Amazon Prime Video, HBO GO, Hulu Plus.

TVOD - Most likely, TVOD has been your first experience with video on demand as this model still is a very popular offering among traditional multichannel video programming distributors (MVPD). Tvod works like a video rental place translated to the digital scenery, meaning that users need to pay to watch specific content - sports (in Pay-Per-View), TV series, movies, and more. You can divide TVOD into two segments: DTO (Download To Own), which allows you to the keep the content like if would buy a blu-ray at Walmart, and DTR (Download To Rent), which makes the content available for a certain number of hours at a lesser cost.

Popular services:  iTunes, Google Play, Amazon Instant Video.

AVOD - Pretty much like live TV, this model is supported by the revenue generated by advertisements, thus, ideally, allowing users to enjoy content for free. However, ads don't' necessarily need to be displayed as in regular live TV, where they are considered to be disruptive, in fact, they can be as subtle as the occasional banner (which can be skip, or not) still allowing users to enjoy whatever content they're watching. Paired with excellent Business Intelligence insights and Multi-Providers Ad Insertion, like offered by WeCast, AVOD can be a very powerful monetization tool.

Popular services: YouTube, Hulu, Aol, Yahoo Screen, Crackle.