How does the VOD streaming platform make money?

Are you one of those people who want to know how VoD streaming platforms make money? Well you are not alone. Lucky you, because this post will answer some of your persistent questions on the subject.

More and more people have cut the cable and switched from traditional television to live and on-demand video. The reason for this is relatively simple: Internet-based video delivery is more accessible, affordable, and of better quality.

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Thanks to the advancement of VOD technology and the booming VOD market, many consumers have many providers to choose from. In fact, you can find hundreds of streaming services available, each with unique ad content features and benefits.

With a massive increase in VOD viewership, more and more streaming providers and publishers are entering the competition by bringing and monetizing VOD apps. Remember that over a quarter of American households use OTT applications every day and have a subscription to at least five OTT apps. Despite the high competition, there is enough space in the market.

But how do publishers monetize with VOD services? What are the best VOD monetization models out there? How do you know you’re ready to launch a VOD app? These are some of the questions we’ll be answering in this post.

What is a VOD streaming platform?

VOD refers to video on demand, a video that can be streamed whenever the viewer wants to. This can be done either by the viewer downloading the video to their devices for later viewing, or by streaming it directly from an online source.

This is in contrast to standard broadcasting, in which the viewer can only watch their video for a set period of time and only on a device with satellite or cable connection.

Video-on-demand began with pay-per-view broadcasts of films and live events over satellite and cable connections. Nonetheless, it has since moved to the digital world with mobile devices and the rapid spread of the internet.

Video-on-Demand Platform (VOD)
Photo credit: Pixabay

How does the VOD streaming platform make money?

You can find three main classifications of video monetization models based on how the rights holder gets their share of the revenue compared to the methods used to deliver content to consumers. These models include the following:

1. Transaction VOD (TVOD)

The transaction model is a rental in which the consumer pays a certain amount to access a unit of content for a certain period of time. The price could range from $ 1.99 to $ 15.99, and the time period can vary from 48 hours to 30 days. The delivery method within the transaction model is EST (Electronic Sell-Through), also known as DTO (Download to Own) and offers a digital sale with perpetual, unlimited display.

Companies using this model include Amazon, Vimeo, and iTunes, as well as CinemaNow, Blinkbox, and Vudu.

2. Ad-based VOD (AVOD)

The AVOD monetization model is constantly expanding, offering options such as skippable or not, full screen or bucket, pre-roll, mid-roll or post-roll, and many other formats. Video advertising services like Google AdSense, AOL One, YuMe, Videology, AdoTube, Auditude, SpotExchange and Brightroll offer media buying or ad exchange without a sales force.

The advertising revenue is split or distributed between the platform, the rights holder and an aggregator if one is used. Most of the deals are 70/30 or 50/50, with YouTube offering an extreme 45/55 (not in favor of the producer) and Vimeo 90/10 (in favor of the producer).

3. Subscription VOD (SVOD)

Netflix has made this subscription model widespread. It’s legendary as the company started out with a DVD-like transaction model. Standard subscription fees range from $ 8.99 to $ 9.99. Price wars that occur in some areas are in the price range of $ 3.99 to $ 5.99.

Hulu Plus, Amazon Prime and Netflix are currently leading the market – with various niche providers such as Mubi and Fandor. Netflix doesn’t release official data, but some experts point out that commissions of $ 5,000 are typical for a two-year non-exclusive license, along with a negotiation of $ 10,000-20,000 as the average. A massive but rare $ 50,000 negotiation is possible.

4. Hybrid VOD

While it goes beyond VOD, there are three more nuances that are worth mentioning. Hybrid options combine TVOD and SVOD such as Playstation Vue from Sony, Xbox Live, CraveTV from Canada, Roku and SkyTV from the UK and create an additional component to the audience’s viewing experience by combining physical technology with the VOD platform.

There are also other self-catering services like DotStudio and FilmBuff where content creators can upload their material and benefit from marketing, platform and hosting services.

Business model for Netflix subscriptions

Choosing the best VOD platform provider

Would you like to build your own VOD platform? Then you need the services of a great video-on-demand platform provider. The market is populated by a variety of VOD solution providers, but it’s important to choose the right one that suits your business needs and goes well with your content strategies.

An efficient and effective VOD solution provider should have the latest technologies and features that are also future-proof. A high-performance IT infrastructure in combination with a reliable sales network helps you to remain relevant and to scale in the future.

Also, if you want to make money from your VOD platform, it will help if you pay close attention to the payment gateway support and monetization models. Ultimately, the service must be within your budget as the streaming and content creation business requires massive upfront investments.

Final thoughts

Video-on-demand streaming is a great tool for businesses out there. However, learning how VOD streaming platforms make money can be a little confusing. But with efficient planning and careful investment, you can certainly achieve more success.

At the same time, conventional TV channels are expected to shrink at an average annual rate of 1.5 percent between 2020 and 2026. This shows that VOD is the best route for you, especially if you want to get into video content creation.

We hope you find this post interesting and informative. Ready to Make Money Using VOD Streaming Platforms? We wish you the best of luck on your way!

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