AVOD vs. SVOD vs. TVOD: Breaking Down the Three VOD Models
Experts forecast the video-on-demand (VOD) market will reach $159.40 billion in 2023. In other words, VOD is here to stay.
More and more platforms offer VOD content, from Netflix to Pluto TV to Peacock. While users experience a seamless video streaming experience, video-on-demand content looks different behind the curtains.
Publishers and advertisers can group video-on-demand content into three different business models: SVOD (subscription video on demand), AVOD (advertising video on demand), and TVOD (transactional-based video on demand). What is the difference between AVOD, SVOD, and TVOD? Which model works best for your business goals? We'll break down the three primary VOD services and what makes each unique.
Want to learn even more? Check out our guide to CTV inventory.
What is AVOD?
In the AVOD model, consumers access free or discounted streaming content in exchange for watching advertisements.
Pluto TV is one of many existing AVODs. Viewers watch intermittent ads that air before and during the shows or movies they watch, allowing them to enjoy content for free while keeping it easily accessible. Other popular platforms that embrace this AVOD model include Peacock TV, Freevee, and Tubi.
AVOD creates a mutually beneficial scenario for both advertisers and audiences. Viewers can consume a wide range of shows and movies at a low cost or even for free, enjoying flexibility in terms of when and where they watch. Meanwhile, publishers are still able to generate revenue by offering ad-supported content.
What is SVOD?
Subscription video on demand (SVOD) enables viewers to enjoy on-demand video content by paying a recurring rate or subscription fee. It is one of the three common ways video-on-demand (VOD) services monetize their offerings.
SVOD platforms may offer ad-free viewing experiences or include advertising within their programming. Nevertheless, all SVOD services require users to pay a recurring fee in some form.
Netflix is a great example. The platform charges its subscribers monthly or annually in exchange for unlimited access to Netflix's extensive library of on-demand content. Other prominent SVOD platforms include Hulu, HBO Max, Disney+, and Amazon Prime Video.
SVOD platforms typically offer tiered packages so viewers can pick a plan that best suits their needs, making it an attractive offer for users of all budget sizes. Even better, viewers can join without signing a long-term contract, unlike traditional cable contracts.
What is TVOD?
Transactional video on demand (TVOD) allows consumers to buy and stream content on a pay-per-view basis. We can break this model down into three subcategories.
Download to rent (DTR): Consumers make a single, typically smaller payment to gain access to content for a limited duration.
Pay-per-view (PPV): Consumers make a one-time payment to enjoy a single viewing of pre-programmed content, such as sports games.
Electronic sell-through (EST): Consumers make a one-time payment for permanent access to a specific piece of content.
This particular type of video-on-demand service is known for generating substantial revenue by offering viewers timely access to the latest streaming content. Competitive pricing, exclusive content, and promotional offers motivate consumers to repeat purchases.
Take Amazon Prime's video store, where viewers can rent or purchase on-demand content, ranging from single episodes of TV shows to full-length movies and beyond. Instead of committing to a membership, viewers can acquire content as per their preferences.
AVOD vs. SVOD vs. TVOD: What makes each model unique?
Not surprisingly, these acronyms are often confused with one another. Because each model differs in varying ways, it helps to consider their differences by asking the following questions.
Where do advertisers get their revenue from? AVOD and SVOD generate revenue through advertisements. On the other hand, TVOD operates ad-free and relies on viewer fees. In other words, viewers pay a one-time fee to access or own specific content without advertisements.
How often does the platform charge viewers? In a TVOD platform, viewers make a one-time payment to access specific content. SVODs rely on recurring fees, either monthly or annually, as their primary revenue source. AVOD models typically do not charge viewers and primarily depend on advertising to generate income rather than direct payments from viewers.
What content works best for each platform? Video content that will keep viewers engaged over a long period works incredibly well for SVOD platforms. Think of niche content viewers can't get anywhere else — this kind of content can be a sticky factor that encourages viewers to renew their subscriptions again and again
TVOD works well for monetizing exclusive content, such as limited-edition releases, special events, or live performances. More and more publishers are also using TVOD as a distribution window for films, with movies often becoming available on TVOD before they are released on SVOD services.
What VOD model works best for me?
You now know what makes each VOD model unique. How do you pick which one works best for your brand?
It ultimately depends on your goals and resources. Think about each model's benefits and how they align with your core KPIs and long-term goals. At a high level, the benefits of each model include:
- SVOD provides a consistent, predictable revenue stream.
- AVOD has become especially attractive to advertisers and viewers alike because payment plans and log-ins are not required. The result? The barrier to entry is low, giving advertisers access to a massive, diverse base of viewers.
- TVOD works well with other video monetization models. Give your audience the option to access basic, free content, but lock your most premium content. Once a viewer is hooked, they'll be more likely to pay for exclusive content locked behind a paywall.
Leveraging VOD Models for Your Brand
Video-on-demand content is a golden opportunity for advertisers to reach a massive, engaged audience, but how can you ensure your content finds itself in front of the right viewers?
With the right technology, it's possible, even easy. Simulmedia's TV+ platform seamlessly integrates with over 250 networks and publishers, ensuring advertisers can efficiently plan, purchase and evaluate campaigns spanning VOD programming.
Ready to try it out? Request a demo to get started.