Are you one of those who want to know how do VoD streaming platforms earn money? Well, you’re not alone. Lucky for you because this post will answer some of your hard-pressed questions about this topic.

More and more people have been cutting the cord and shifting from traditional TV to live and on-demand video. The reason behind that is relatively simple: internet-based video delivery is more accessible, affordable and provides better quality.

Video on Demand (VOD)
photo credit: Cottonbro / Pexels

Thanks to the advancement of VOD technology, and the booming VOD market, a lot of consumers have many providers to choose from. In fact, you will find hundreds of streaming services available, and each one provides unique features, benefits ad content.

With a massive increase in VOD viewership, more and more streaming providers and publishers are entering the competition by launching and monetizing VOD apps. Consider that over a quarter of American households use some OTT application every day and are subscribed to at least five OTT apps. There’s enough room in the market regardless of the high competition.

However, how are publishers monetizing on VOD services? What are the best VOD monetization models out there? How do you determine you’re ready to launch a VOD app? These are some of the questions we will answer in this post.

What is a VOD Streaming Platform?

VOD refers to Video on Demand, a video that can be streamed whenever the viewer wants to do so. That can be performed either with the viewer downloading the video to their devices to watch later or through direct streaming from an online source.

That’s opposed to standard broadcasting, where the viewer can only watch their video at a scheduled period and only a device with a satellite or cable connection.

You see, video on demand began with pay-per-view broadcasts of movies and live events over satellite and cable connections. Nonetheless, it has since shifted to the digital world with mobile devices and fast internet proliferation.

Video on Demand (VOD) platform
photo credit: Pixabay

How DoesThe VOD Streaming Platform Earn Money?

You will find three major video monetization models classifications, which are determined based on how the rights holder gains its share of the revenue, compared to the methods utilized to present content to consumers. These models include the following:

1. Transactional VOD (TVOD)

The transactional model is a rental, where the consumer pays a specific amount to access a content unit for a particular time. The price point could range between $1.99 and $15.99, and the period could differ from forty-eight hours to thirty days. The delivery method within the transactional model is EST (electronic sell-through), also referred to as DTO (download to own), offering a digital sale with perpetual, unlimited viewing.

Companies using this model are Amazon, Vimeo and iTunes, as well as CinemaNow, Blinkbox, and Vudu.

2. Advertising-based VOD (AVOD)

The AVOD monetization model is constantly becoming more advanced with choices including skippable or not, full screen or bucketed, pre-roll, mid-roll, or post-roll, and many other formats. Video advertising services such as Google AdSense, AOL One, YuMe, Videology, AdoTube, Auditude, SpotExchange, and Brightroll offer the media buy or ad exchange without a sales staff.

The ad revenue is divided between the platform, the rights holder, and an aggregator or distributed if one is utilized. Most deals are 70/30 or 50/50, with YouTube offering one extreme 45/55 (not in favor of the producer) and Vimeo 90/10 (in favor of the producer).

3. Subscription VOD (SVOD)

Netflix widely popularized this subscription model. It is legendary, seeing as the company began with a DVD-like transactional model. The standard subscription fees have settled between $8.99 and $9.99. Price battles occurring in some territories are in the price range of $3.99 to $5.99.

Hulu Plus, Amazon Prime, and Netflix currently lead the market—with different niche players evolving, such as Mubi and Fandor. Netflix doesn’t officially release data, but some experts reference that commissions of $5,000 for a two-year non-exclusive license are typical, along with a negotiation of $10,000 to $20,000 considered average. A massive but rare $50,000 negotiation is possible.

4. Hybrid VOD

Even though it is operating beyond VOD, you will find other three nuances worthy of mention. Hybrid options combine TVOD, and SVOD LIKE Sony’s Playstation Vue, Xbox Live, Canada’s CraveTV, Roku, and UK’s SkyTV create an auxiliary component to the audience’s viewing experience by collaborating the physical technology along with the VOD platform.

There are other self-supported services as well, like DotStudio and FilmBuff, where content creators can upload their material and benefit from marketing, platform and hosting services.

Netflix subscription business model

Choosing The Best VOD Platform Provider

Would you like to build your own VOD platform? Then you need the services of a great video on demand platform provider. The market is populated with different VOD solution providers, but it’s essential to pick the right one that fits your business needs and goes well with your content strategies.

An efficient and effective VOD solution provider should have all the latest technologies and features, which are also future-proof. A powerful IT infrastructure combined with a dependable distribution network will help you stay relevant and scale up in the future.

Further, if you’re seeking to make money from your VOD platform, it will help if you pay close attention to the payment gateways support and monetization models. Ultimately, the service must be within your budget as the streaming and content creation business takes massive investments upfront.

Final Thoughts

Video-on-demand streaming is a great tool for businesses out there. However, learning how does VOD streaming platforms earn money can be a bit confusing. But with efficient planning and careful investments, you can certainly accomplish greater success.

At the same time, conventional TV broadcasting is anticipated to contract at a compounded annual rate of 1.5 percent between 2020 and 2026. That indicates that VOD is the best way for you, especially if you wish to get into video content creation.

We hope you find this post engaging and informative. Are you ready to earn money with VOD streaming platforms? We wish you the best of luck in your journey!