Intelligent Monetization on OTT & CTV: What are SVOD, TVOD, and AVOD?

July 20, 2021

Video on demand (VOD) is a promising technology with top-notch and lucrative opportunities in the new cord-cutting status quo. Since modern audiences prefer video to other forms of content, people have begun to spend an increasing amount of time watching shows on Roku, Apple TV, Amazon Fire, Android TV, and other platforms. By 2023, Cisco System predicts the number of internet-connected devices to be more than triple of the global population.
With the increasing gravitation towards OTT content production and distribution, approaches to video consumption have fundamentally changed. Streaming Media reports that a video-on-demand viewing time has grown up to 155% year-over-year, comprising 17 minutes per session on average. This rise in demand for video content, therefore, provides marketing managers and advertisers with endless opportunities to promote their goods and services in the digital TV landscape even more effectively. They can apply proven advertising models with respect to their needs.
Let's get into all the nuances of SVOD, AVOD, and TVOD to better understand what models best suit your needs.
SVOD services are all the buzz in the modern digital TV landscape. The acronym stands for Subscription Video On Demand. This service allows watching ad-free video content available on the platform at a flat rate, with a monthly or annual subscription. Users can use internet-connected devices to watch as many favorite shows and programs as they want.

What you should know about the SVOD monetization models

As for businesses, this method provides lucrative monetization opportunities. First off, companies receive revenue directly from consumers on a regular and predictable basis. Secondly, businesses can bypass advertisers' services and engage more viewers with content free from pop-ups and other interruptions. This point makes a SVOD platform even more popular and provides a feedback loop for the continuing rise of cord-cutting technologies.
The most popular SVOD services include Netflix,HBO, Hulu, Apple TV, Disney+. Their staggering growth reached the peak in 2020. The total number of Netflix subscribers comprised 201 million users. As for Amazon Prime, ranking the second in the industry, this number amounted to 117 million. However, these figures aren't the limit. By 2026, the number of SVOD subscriptions is expected to reach 1.5 billion worldwide.
AVOD, meaning Advertising-based Video On Demand, is the second monetization model working effectively in the CTV and OTT space. Through this service, you can generate revenue by selling ads displayed at the beginning, end, or middle of the video or audio. These can be commercials, pop-ups, or any other type of sponsored content. The biggest perk for advertisers is that these creatives are non-skippable and thus can reach out to a larger audience across multiple devices.

How does AVOD function?

BidMind by Fiksu
So you can tap into a programmatic DSP advertising platform, like BidMind by Fiksu, to drill down to the relevant watchers and listeners prone to respond to your ad creatives more readily. With AVOD granular targeting opportunities, advertisers can leave far behind age and geo and employ more precise data about their audience's interests. Moreover, it's possible to advertise on one or several AVOD inventory platforms in connected TV, desktop, and mobile ecosystems.
Today, AVOD has promising potential. More and more companies choose AVOD for their business development due to subscription fatigue - a growing tendency among OTT and CTV viewers as streaming services proliferate and viewers find themselves juggling increasing amounts of subscriptions.
Through this service, you can generate revenue by selling ads displayed at the beginning, end, or in the middle of the video. These can be commercials, pop-ups, or any other types of sponsored content. YouTube and 4OD come to mind first when you think of the AVOD video on demand model.
When adopting the OTT AVOD service, you can profit from advertising without charging extra fees from your viewers for access to the content. AVOD isn't as popular among premium content owners and streaming giants mainly because this model generates less revenue compared to SVOD.

TVOD: Get Access to Premium Content

TVOD, meaning Transactional Video On Demand, refers to a model also known as Pay-Per-View. When adopting TVOD, your business can benefit from either renting or selling video content. Unlike SVOD's fixed subscription rate, users buy only the content they are interested in, whenever they want. This strategy suits tutorials, lessons, sports, or other seasonal events. Sky Sports Box Office is a good example of TVOD platforms.
What's more, TVOD services provide their clients with brand-new releases and exclusive content, as well as attractive discounts and other offerings. Because TVOD allows businesses to offer content piecemeal, this means they have more freedom to offer discounts and trial content without worrying about foregone revenue – and these customer appreciation techniques also inspire greater brand loyalty. When using transactional video on demand, businesses should aim to offer exclusive, high-quality content that drives user retention.
If you can't decide on one model, or if your needs differ from the straightforward approach, you can always mix and match monetization models. AVOD, SVOD, and TVOD hybrid models are a proven approach to profitable advertising in the CTV and OTT ecosystem. Looking at Hulu or Apple TV, for instance, both services offer a subscription (SVOD) model. However, you can watch videos with ads for free on Hulu, as an AVOD model. As for Apple TV, the service gives you an alternative to buy or rent movies and shows (TVOD).

Hybrid Monetization Models:

Monetization models will likely continue changing and weaving, so we can expect more new approaches to the rapidly developing OTT and CTV market. Start adopting one model that meets your business needs, and then gradually integrate others in order to generate more revenue and open up multiple lucrative opportunities for audience engagement.