In today’s digital landscape, where streaming platforms have become the staple offering endless entertainment at your fingertips, content delivery has become just as important as the content itself.
And video streaming platforms are consistently resorting to innovations to cater to audiences with multiple preferences, and monetization plays an essential aspect.
But have you ever thought about how these platforms make money?
The reality is that behind every web series or viral video is a smart monetization model that is the money-making secret of these platforms.
Currently, the streaming industry is mostly dominated by two popular models—AVOD (Ad-Supported Video On Demand) and SVOD (Subscription Video On Demand). Alternatively, trusted OTT platforms, such as Enveu, also let you access the HVOD (Hybrid Video On Demand) model so you can earn from multiple revenue streams.
Read below these articles to explore these monetization models—AVOD vs SVOD, features, benefits, and more. Also learn about how a hybrid model can be the best pick for your OTT business.
What is AVOD?
AVOD, short for Ad-Supported Video On Demand, is a popular monetization model that lets users stream your content for free. Perhaps you may now think of the catch! It is—the users just have to sit through a few ads.
In simple words, it’s a typically digital version of watching TV in the 2000s. Some of the big platforms, such as YouTube, Pluto TV, and Tubi, implement the AVOD format to make money by showing ads to viewers. This means more viewers, more dollars in their pocket!
This model is great for users who enjoy free entertainment, and slight interruption won’t be much trouble to them. And for businesses seeking to target a large audience in regions where affordability is key, this is perhaps one of the best monetization choices to go for.
Advantages of AVOD
With its user-friendly and mass-viewership approach, AVOD has truly carved out its way in the streaming industry. And the best part? It lets users access free entertainment while simultaneously generating revenue from ads.
Here are the key advantages that make AVOD a standout choice for video streaming businesses.
Free Access
After all, there’s no one who doesn’t love free content! AVOD platforms let viewers access content at no cost, just supported by ads!
Massive Reach
The truth is, from casual viewers to regular binge-watchers, free platforms naturally attract a wide audience, thereby offering a massive reach.
Advertiser Appeal
For specific demographics where viewers consider pricing as an essential aspect, AVOD plays a big role in advertising.
Highly Scalable
Lastly, the fact is—the more viewers, the more ad slots a platform sells, which makes it quite a scalable revenue model.
Limitations of AVOD
Despite its benefits, AVOD comes with a few limitations too. To say, while a free model draws a huge audience in, too much reliance on ads can often backfire. Here are the limitations of the AVOD model.
Ad Overload
No matter the free content offered, too many ads often irritate the viewers and interrupt their experience. This can be a potential reason behind user drop-off.
Lower Revenue Per Viewer
When compared to SVOD or subscription-based models, AVOD is typically inconsistent and is generally dependent on ad revenue, which is lower than that of revenue through subscriptions.
Content Restrictions
The truth is, that producing high-quality and exclusive content needs huge budgets, which AVOD platforms are typically unable to secure.
What is SVOD?
Subscription or Subscription Video on Demand is a revenue model that requires viewers to pay a subscription fee to access exclusive content that typically comes without ads. This premium appeal is actually what appeals to the users to experience explicit, uninterrupted, high-quality streaming.
Top platforms, such as Netflix, Amazon Prime Video, and Disney+, are some SVOD-supported video streaming platforms that offer access to an extensive library of original and exclusive content.
And truly, SVOD has become synonymous with the ultimate cinematic experience. However, such platforms spend heavily on content production to create a loyal user base.
Advantages of SVOD
SVOD is certainly the go-to for premium users by offering a value-for-money experience to their subscribers. SVOD guarantees a stable source of income by investing in high- and exclusive-quality productions.
Here are the key benefits of the SVOD monetization model.
Ad-Free Premium Experience
With a seamless viewing experience, without ad interruptions, SVOD ensures user satisfaction at every level.
High Revenue Per User
The recurring subscription fee charged ensures a consistent revenue stream, which is often higher than ad-supported monetization models.
Exclusive Content
SVOD platforms, such as Netflix and Amazon Prime Video, often produce original and exclusive web series, films, and shows, which are the main elements contributing to subscriptions.
Personalized Recommendations
With advanced user analytics, SVOD platforms offer personalized content suggestions, thereby ensuring a boost in engagement and user retention.
Limitations of SVOD
While SVOD may easily stay ahead in terms of quality, high expectations, and competition are increasing the challenges.
Here are some key limitations that even the best platforms might face.
Subscription Fatigue
With the number of platforms available, it becomes difficult to pay for multiple subscriptions, thereby leading to potential cancellations.
High Entry Barrier
Usually, the upfront cost of subscriptions can deter many users, particularly in demographics where users are price-sensitive.
Intense Competition
The intense competition among video streaming and OTT platforms to deliver top-notch content quality consistently has resulted in instability.
Churn Risk
The other fact is that subscribers can cancel their memberships anytime, thereby resulting in challenges to create a steady user base.
Key Differences Between AVOD and SVOD
When comparing AVOD vs. SVOD, there are significant differences. The choice, however, depends on your budget and the platform’s needs. Below are the key differences between AVOD and SVOD.
The Hybrid Model: Combining Both AVOD and SVOD
The hybrid model, or HVOD (Hybrid Video On Demand), perfectly blends in both monetization approaches—AVOD and SVOD. Thus, users can enjoy free ad-supported content along with premium ad-free subscriptions.
Platforms such as Hulu and Peacock have already implemented this revenue model, considering its reach to a diverse audience base.
The hybrid monetization model is particularly beneficial for platforms that not only want to maximize their revenue streams but also broaden their user base.
Such platforms monetize free users through ads while allowing them to upgrade to premium subscriptions for a better experience.
Benefits of Hybrid Model
When it comes to availing the benefits of both models—AVOD and SVOD—there’s nothing better than the hybrid model. This approach focuses on providing free, ad-supported content alongside paid, ad-free, exclusive content.
Here are the key benefits of the hybrid monetization model.
Broader Audience Reach
From free to premium content, the HVOD platform serves multiple preferences. So, the users who seek to enjoy free, ad-supported options can go for basic content, while users seeking exclusive, premium content can switch to subscription-based content.
Dual Revenue Streams
The best part is the HVOD model taps into advertising revenue through both models—AVOD and SVOD. This promises a steady income flow, which is a much-needed aspect for delivering a consistent, high-quality product.
Viewer Flexibility
With the opportunity to choose how to consume the content comes the viewer’s flexibility. A casual viewer can stick simply to basic content, while a regular viewer can upgrade to an ad-free experience.
Easy User Transition
SVOD platforms often persuade the basic users to switch to premium tiers after experiencing explicit features, such as exclusive shows and early access to upcoming releases.
Competitive Edge
Since the streaming industry has become competitive lately, incorporating both AVOD and SVOD models has turned out to be a win-win for both the businesses and users. This approach presents the platform’s ability to cater to all user preferences, thereby building loyalty from existing customers while attracting a new audience.
Overall, the hybrid model merges both dominant models—AVOD and SVOD—into a single, combined strategy to offer something that’s beneficial for viewers, advertisers, and platforms alike.
Conclusion: Choosing The Right Model For Your OTT Business
When deciding between AVOD, SVOD, or a hybrid model, figuring out your target audience and business goals plays a big role. So, if you’re catering to price-sensitive users, AVOD might be your go-to. While, if you’re targeting loyal subscribers, SVOD might be your best choice.
But if you want to cast the widest audience, there’s nothing that beats the hybrid model.
With Enveu, launching your own OTT platform has never been easier. From integrating HVOD to customizing the user experience, Enveu, with its exclusive feature, is explicitly designed to offer every feature you need to sustain in the competitive streaming landscape.
It’s time to transform your vision into reality! Get in touch with Enveu today and truly redefine your streaming success.
