In Video on Demand, there are two key revenue models that businesses and content creators need to know about: AVOD SVOD.

• AVOD gives viewers free access to the content provided, with the business’s revenue coming from displaying ads alongside the videos.
• SVOD needs a subscription fee for users in order for them to watch the content, thus offering a direct profit for the business. 

In 2020, the market for AVOD became more competitive and the cost per user dropped as more avenues for revenue generation. Meanwhile, the size of the SVOD market is grow and reach USD 32.3 billion by 2025.

You need to know about these OTT monetization models and choose which is the best for your business.

SVOD Vs AVOD: Which Is Best For Your VOD Business

What is SVOD?

SVOD stands for “Subscription Video on Demand”. This leads to customers needing to subscribe and access video streaming services.

Advantages of SVOD:

1. Expected And Recurring Income

Keeping a fixed price per user per month or year enables OTT video platforms to manage a solid and expected amount of income every month. You can calculate the money and use it to give useful content to your viewers.

2. Best Profit Margins

It allows greater revenue with only a few thousand subscribers other than OTT video monetization models.

3. Better Customer Support

This customer base enhances your business growth and earns larger viewers who will be interested in paying to watch your videos.

Related: How do “SVOD” platforms create more income in streaming video content?

The Disadvantage of SVOD:

1. SVOD only operates at scale, Unsafe at a low user authority

SVOD does not essentially link operational values of bandwidth directly to resources, it usually runs on a larger scale. The price of delivery decreases on a scale. High costs or restrictions on content can make a low number of customers.

2. Income-sharing deals are difficult in SVOD

It is hard to decide which movie or serial inspired the customer to purchase the subscription. Video views and commitment data are at the backside, the almost income distribution model becomes critical. It is a mixture of pre-paid permission charges for content, income share on the number of views, and property price, etc.

Related: How to Monetize Your Video Content using SVOD, TVOD, and AVOD

The subscription method can generate a steady stream of income, including:

• Live-events: Customers can watch a short live stream event, usually just one to two hours lasting.
• Direct live-streams: Customers can watch your content, which is telecast continuously 24/7.
• On-demand records: Customers can watch particular video content at any moment without waiting for a special chance to get it.

What Is AVOD?

Advertising-Based Video on Demand, companies earn capital by marketing advertisements on their videos, like display banners, sponsored content, video commercials, etc. They do not price any views of watchers to get their content.

Frequently connected the marketing pattern with traditional TV. These services like Pluto TV and Tubi are seeking to make free TV.

Many services like Netflix, Prime, and Disney+ struggling for customers’ money may have a valid reason.

Advantages of AVOD:

1. Unlimited Videos for Free

Customers may watch ads and access some content for free or with a premium, rather than paying for a subscription or viewing ad-free content.

2. Customized Ad suggestions for brands

It enables the platform to join the customers and make the brands satisfied by assisting ads to only important people.

YouTube is the best example. 

3. Vast Reach

Video-watching platforms have large and different viewers that businesses can use with targeted advertisements.

4. Popular Viewership

The shortage of a uniform payment assures that all video content can got by anybody everywhere, and this improves the range and demand of your platform rapidly.

The Disadvantage of AVOD:

1. Runs only on a large system.

Video is a high-frequency-rich business. Besides, TVOD or SVOD allows the content partner to overcome the loss of bandwidth in a small system. It also needs a large method to have low per-unit streaming rates.

2. Profitability takes time to hit:

It takes more time to improve profits, because of bandwidth costs, proper improvements of ad variables, and content type

Possibility Services:

1. Provide video advertisements from your direct sponsors and supporters. You can select your ad rates by yourself and receive profits directly from the sponsors and supporters. 

2. Advertise your ads to different OTT TV apps. You can advertise your ads with the Connected TV Ad Network and get finance lavishly!

3. Merge ad stocks from major video ad networks on your web players, mobile apps, and TV app platforms to get ad income from the networks.