Last Updated on April 15, 2024 by Ali Hamza
As more and more customers prefer watching video on demand over linear TV, OTT television is growing by leaps and bounds. The freedom to choose what you want to watch when you want to watch it, and on whatever device you want has completely changed your viewing habits. It has also influenced how marketers and content providers benefit from video content. However, with new formats and technologies, new monetization models have emerged. And three of these models have propelled themselves to the forefront of video monetization: AVOD, TVOD, and SVOD.
When people buy videos on a pay-per-view basis, it is referred to as transactional video on demand. Users of Transactional VOD are not purchasing access to a whole library of videos. Instead, they’re simply purchasing access to the stuff they want to see. The best examples of TVOD services include iTunes, Amazon Store, and Google Play. Moreover, when launching a Video on Demand platform, you need to choose the right video monetization model, and it is not an easy task. To help you out, this blog has everything you need about TVOD Video on Demand.
Without further ado, let’s get started!
So, What Is a TVOD Platform?
The TVOD definition or TVOD meaning is the opposite of subscription video, in which users can buy a specific piece of video-on-demand content on a pay-per-view basis. Tvod examples include paying for each movie or TV show watched on the Internet after purchasing them. TVOD transactions can be short-term rentals or long-term licenses. In most cases, the user does not genuinely own the video they purchase; it simply does not expire unless the user violates the terms and conditions of the service or the VOD provider goes out of business. Vudu, Google Play, iTunes, and Redbox are some of the TVoD Platforms examples.
The key to making this model work is to offer attractive prices and content people are willing to pay for. Only in this way, more people continue to pay for or rent watching rights in the future. And that’s why TVOD models usually come as the best alternative to an SVOD or AVOD model.
Why Is Building a TVOD Platform So Profitable?
TVOD, SVOD, and AVOD are the most common business models for video creators. Out of these three, the TVOD model offers the most potential for profit from a specific video.
For instance: Let’s consider the boxing match between Floyd Mayweather and Manny Pacquiao, dubbed “The Fight of the Century.” The mega-fight got 4.6 million viewers who paid $89.95 ($99.95 for HD) for Pay Per View rights. The exhibition boxing match between Mayweather and Conor McGregor got around 4.4 million PPV purchases at the $99.95 pricing point.
iTunes is the largest TVOD platform in the Electronic Sell-Through (EST) sector. Users can watch their favorite movies on iTunes in several ways. Users can rent a movie for $4.99 or buy it for unlimited watching for a higher fee ($9.99 or more, depending on the title). Netflix, on the other hand, costs roughly $10 per month for full library access. When you realize that iTunes makes the same money from a customer renting two films per month as Netflix does for monthly access to its entire repertoire, the potential of TVOD models to create amazing revenue becomes evident.
When Is Transactional Video on Demand the Best Option for Your Business?
The TVOD model works best with very unique and engaging content. Customers will be ready to pay a premium for videos that provide unique value.
When you have a small potential audience willing to pay a premium price for your movies, the VOD business model is suitable. Indeed, a successful TVOD platform must provide unique content in such a way that the prospective users should realize the benefit that your video content will provide them. Besides that, your marketing should highlight how your platform uniquely helps learners to reach their goals.
Consider the film Despicable Me. The $600 million-plus grossing superhit film got released in 2010. The film spawned two sequels, ‘Despicable Me 2’ and ‘Despicable Me 3,’ and a prequel titled ‘Minions,’ after the series stars.
Minions and Despicable Me 2 are both available on Netflix’s SVOD service. Despicable Me 3, which came out in 2017, will most likely be accessible on SVOD. So, why is Despicable Me only accessible on TVOD?
Despicable Me, an old film occasionally played on cable TV, has a small potential audience that has not seen the film. The film has attained cult status in popular culture. A significant number of fans are likely to acquire the film for future viewing. Universal Studios, the film’s distributors, would have calculated that money from the title generated through the EST option would be more than licensing revenue from SVOD services.
Key Benefits of TVOD (Transactional Video on Demand)
Some of the unique benefits of TVOD (Transactional Video on Demand) are as follows:
Precise Prediction of Operational Tvod Expenses and Reduced Risks: Because operating margin predictions are prepared very accurately before the start of operations, there is little chance of a single user or group of users misusing the bandwidth. The operational expenses in the TVOD business are the costs of the server + CDN to stream a specific size of video + the cost of acquiring a single client.
Simple Revenue Distribution Model for Video Content Creators: Unlike SVOD, there is no confusion about what the user paid for. As a result, revenue share distribution for TVOD content is often simple.
Increased Revenue Opportunities for New Release VoD Content: In general, newly released movie and serial content attracts a global audience. Thus, charging a small fee for such content results in quick payment from users and can reach a significant scale.
TVOD Can Function on a Smaller Scale Than SVOD, Making It an Excellent Option for Starting a Business: Because operating margins are fixed and revenue can be readily connected to the content owner, it is the best option to start. In general, SVOD takes off on a large scale.
How to Create a Transaction VOD Platform?
Here’s how to build a TVOD Platform:
# Identify Your Niche and Create a Brand
Doing what you do well might be an excellent starting point for developing a transactional video-on-demand platform. Producing content for specific audiences requires a solid understanding of viewing trends and audience watch history. Finding a specialization also simplifies growing your brand and establishing yourself as an expert.
# Develop a Customized Streaming Website
A website that promotes your brand organically boosts the business. The website must be scalable and capable of broadcasting to people globally. Therefore, create a unique brand using customer-focused website copy that resonates with website visitors.
# Get a Highly Customizable OTT App
Including mobile applications in your distribution strategy and optimizing your website for mobile viewing will help your TVOD platform reach a larger audience. Developing apps that are compatible with Android, iOS, and Smart TV platforms have the potential to generate income.
# Attract Your Transaction-based VOD Crowd
Integrating your TVoD platform with social media is one of the most basic ways of marketing. By delivering quality content and strategic placement, you can get netizens to notice your platform on their favorite social media platforms. Building a transactional video on demand platform is only half the battle; the other half is getting it to the audience.
Summing Up
To sum it up, understanding how OTT business models work can help you define the strategy that best matches your brand and how you want your users to access the content you provide.
Do you want extensive reach without limitations? Then an AVOD model can be the best fit for your business. Do you need exclusivity and a loyal following of content subscribers? If so, creating an SVOD platform can be an excellent option. Do you feel customers prefer to pay for content per-user basis? In that case, you need to consider a TVOD model. However, out of these three, TVOD today reigns supreme with a desirable offer that rewards better growth in business development while targeting the right audience at the right time.
