The online video market arose as a result of the widespread introduction of broadband Internet access networks in the second half of the 2000s. This process led to the emergence of new sources of income for media companies in the audiovisual segment.
Let us discuss the most widespread business models that are used in this area and are presented on this page.
1. AVOD vs. SVOD Model
Today, the video market is in line with global trends, namely:
- The integration of the television and film business into the digital environment occurs.
- The high dynamics of growth in the revenue of OTT services are observed.
- The initial development of the advertising monetization model is replaced by paid models.
- The number of large OTT services grows together with online cinemas, video hosting, and social media.
Since the beginning of the OTT market formation, the ad monetization model AVOD (Advertising Video on Demand) has dominated the world market as well. This model is free for the viewer, while the advertiser pays for access to the content.
Further, the global video business on the Internet began to develop towards paid monetization. In the world market of legal OTT services, the advertising model ceased to be the leader in 2016. The subscription to content – SVOD (Subscription Video on Demand) – took the first place. The largest national SVOD markets are the United States and China, which, together, account for 56% of the global SVOD volume.
The SVOD model is implemented as a periodic user subscription with the possibility to view any content provided by the video service. An insignificant part of paid services are:
- TVOD (Transactional Video on Demand) model – payment for viewing some content.
- EST (Electronic Sell-Through) – paid purchase of content.
Thus, the main modern trend is the dynamic growth of subscriptions, and it is becoming dominant in the market.
2. Expanding the Content Library
A paramount issue in the video service business is the possibility to generate a constant flow of new content. Original online content forms an offer that is attractive and unique for subscribers.
Releases are becoming a way to compete for viewers and the main tool for increasing the subscriber base of OTT services. Along with this, high-quality products pay off not only through a subscription to the service but also through promotion to other video services as well as multi-platform distribution, taking into account film distribution and showing content on TV channels, including in the pay-TV segment.
Accordingly, each video service faces the task of producing or acquiring rights to releases. The global video business is solving the problem of expanding the content library. Companies have begun to develop their own manufacturing facilities to create products and, at the same time, develop partnerships with a group of production companies.
The third source of replenishment of content libraries is the acquisition of rights to display high-quality video products produced by companies outside the partnership or order scheme, as a result of which, global platforms show the best examples of products from a wide variety of countries.
In general, the online video market in the digital environment has become a new area of activity, a fast-growing and promising segment of the audiovisual industry.
3. Choose the Right Approach
Whether you want to offer a subscription service or provide the ability to others to promote their brands through your channels, choosing the right strategy is necessary. The key is to find a way to make a profit. Also, you should choose the right model according to your business.
There are different methods of monetization that you can implement, like earning from ads on your website if you have a great outreach, providing additional promotional space on-site or implemented in the content, simply selling the videos or offering a subscription, and more.
When it comes to the SVOD strategy, the best examples of that are popular streaming platforms like Hulu, Netflix, Roku, and more. This can be an excellent choice because more and more people are interested in paying subscriptions for these services since the consummation of online content this way became more popular than standard TV services.
Moreover, the great advantage of TVOD is that a user can choose a separate episode or part of some longer content, and pay only for it. This can be a great solution for podcasts or online courses.
The AVOD can be very profitable as well. If you are a professional video editor, this can be your career changer. A lot of companies are interested in targeting potential clients with promotional videos that will appear on YT or popular social platforms. Both YouTube and Facebook implemented the unskippable ad features on reels and short videos that a lot of people are watching these days.
Whatever your main method of targeting and monetizing is, reaching a higher status on the market is crucial. In that matter, you will have to work on promotion and offer the most recent features like live streaming, flexible payment options, the ability to create a profile, adding some free content, and more.
The streaming services like podcasts and live streams became very popular as well, especially on Twitch and YouTube. The model is different from services where you can watch movies and TV shows. Also, the payment method is similar to AVOD. Therefore, getting a lot of viewers who will subscribe to your page and share your content is one of the most important elements.
The benefit is that you can start without any investment. If you have the right content, even a solid mobile device will help you create decent content for the start. The only investment that you should acquire from the beginning is a good microphone. On the other side, it can be challenging to reach a lot of people since there are numerous people working in the same area. Click here to learn about strategies for product led sales, of which SVOD is a subset.
The SVOD is providing the best stability, but it can be challenging to provide people with high-quality content all the time. When it comes to TVOD, the best part is that people can buy only one part of your set of videos, the one someone finds more interesting. You can sell it for a higher price. However, consistency can be a problem here. Therefore, all of these three methods require you to focus on attractive and high-quality content that will keep people interested.
Rhydian Choi 
Nicola Holder