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The arrival of the internet has had a profound impact on video and the way we engage with it. The ability to deliver content over both wired and wireless telecoms networks has opened the door for innovative online services like YouTube, Vimeo and Twitch, as well as Netflix, Hulu, Amazon Video, and many others.

But it has also changed the way we view content: the days of selecting a programme from a handful of TV channels, then waiting a week for the next episode, have gone. Nor do we need to wait for our sporting highlights, with the ability to grab internet clips almost as soon as the action has happened.

We can now watch programmes whenever we want, by streaming them ‘live’ or downloading them for time-shifted viewing later on. The catch-all term for this new generation of entertainment is ‘video on demand’ (VOD). We now get our content when we want, not when a broadcaster/content owner decides to deliver it.

Going over the top (OTT)

The other term you might have heard is ‘over the top’ or OTT, which refers to material that’s distributed directly to viewers over the internet. OTT is a subset of VOD, which also includes cable and satellite services.

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The increasing gravitation towards OTT content simultaneously frees us from cables, geographic restrictions and broadcast schedules, and fundamentally changes the way video is sold, produced and consumed.

For the end user it’s all fairly seamless and invisible, but beneath the technology there are a range of business models that control our access to content. The common acronyms used to describe these different business models applied to online services are SVOD, AVOD and TVOD – or subscription video on demand, advertisement-based video on demand, and transactional-based video on demand.

SVOD – subscription video on demand

SVOD is similar to traditional TV packages, allowing users to consume as much content as they desire at a flat rate per month. Major services include Sky (plus its subsidiary Now TV), Netflix, Amazon Prime Video and Hulu, with new services coming from the likes of Apple, HBO and Disney.

With SVOD, there is far greater freedom to opt out, as consumers aren’t tied into a long-term contract. This offers greater flexibility to users, and providers of SVOD are continually challenged with retaining consumers, by providing exclusive new content, aggressive pricing schemes – and probably both.

TVOD – transactional video on demand

TVOD is the opposite of subscription video, where consumers purchase content on a pay-per-view basis. There are two sub-categories, known as electronic sell-through (EST), where you pay once to gain permanent access to a piece of content; and download to rent (DTR), where customers access a piece of content for a limited time for a smaller fee. 

TVOD services tend to offer more recent releases, providing rights holders with higher revenues and giving consumers timely access to new content. TVOD services typically retain customers by offering attractive price incentives, so they continue to return in the future.

Examples of TVOD services include: Apple’s iTunes, Sky Box Office and Amazon’s video store. Imagen can provide both subscription and pay-per-view models for your hosted video. 

AVOD – advertising-based video on demand

Unlike SVOD and TVOD services, AVOD is free to consumers. However, much like broadcast television, consumers need to sit through advertisements. You can see AVOD in action when watching DailyMotion, YouTube and 4OD, where ad revenue is used to offset production and hosting costs. 

Premium content owners rarely use AVOD as it generates lower amounts of revenue than SVOD and TVOD. It’s interesting to note that YouTube has started to move its subscription-based Premium content to an ad-based model, with reports that the service was slow to catch on with users.

Multiple business models

In practice, there are services that operate with multiple business models. Take Amazon Video and Sky for example: audiences pay a fixed subscription per month for access to a library of content, but brand new movie releases and specific sporting events command an additional fee.

With the popularity of OTT content soaring, it’s likely that business models will change as technology and consumption habits continue to evolve.

Crucially, businesses can develop their own VOD delivery systems by using enterprise video platforms. Imagen provides an award-winning cloud-based platform for distributing large volumes of video content, including B2B licensing for high value broadcast clients as well as B2C consumption by a wider audience.  To find out more about how Imagen’s media management and distribution solution can unlock the full potential of your video, talk to us.

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