OTT is rapidly becoming the preferred way to distribute premium content, with the over-the-top market projected to grow from $40 billion in 2018 to $128 billion by 2026. As more people are cutting cable and choosing to watch their favorite TV shows and movies from the convenience of their own homes, many businesses are turning to Subscription Video on Demand (SVOD) to increase revenues.
We expect to see more and more subscription-based video-on-demand services, not just from the now market giants like Netflix, Amazon Prime, Hulu, Disney +, and Apple TV, but from others.
What is SVOD – Subscription Video On Demand?
Subscription Video on Demand (SVOD) is a service that allows consumers to watch content on-demand. Subscription services are typically offered in the form of monthly subscriptions for unlimited access.
SVOD is a business model for distributing content via the internet. It was first introduced to customers by Netflix and then took over the market with its plans that offer a wide range of movies and TV shows. Customers can choose from a monthly subscription package that offers as many as tens of thousands of TV episodes and movies.
In the Subscription Video on Demand (SVOD) model, users get unlimited access to video content for a monthly fees. SVODs are also often cheaper than traditional cable providers too, which make them an attractive option for many households who are looking for an alternative for their viewing needs.”
Netflix is the biggest SVOD platform in the world. Netflix accounts for over 35% of peak internet traffic in North America. What this means is that at any time every third internet user is streaming videos on the VOD platform.
When a single VOD streaming platform offers such variety as Black Mirror, BoJack Horseman and House of Cards, how else would you spend your time?
The Biggest SVOD platforms
SVOD model is best suited for websites that satisfy two criteria:
- Possess a large library of video content
- Have the potential to sustain large number of viewers.
Entertainment SVOD platforms
Top entertainment SVOD platforms offer more video content than any user can possibly watch. The unlimited choice of video content helps build a large audience that wants to “Netflix and chill”.
Netflix’s lead has been followed by many SVOD platforms. Amazon Prime Video, Hotstar and Hulu are amongst the biggest entertainment SVOD platforms in the world.
These SVOD platforms are incredibly good at making money. In 2016 SVOD platforms in the US generated $6.2 Billion revenue. This towers over the $2 Billion generated by Electronic Sell-Through platforms such as iTunes.
Elearning SVOD platforms
The subscription video on demand model works great in the elearning sector as well. Pluralsight and Lynda are most popular SVOD platforms providing professional training content. These platforms offer online training videos for people wishing to upgrade their skills.
MOOC providers Udacity and Coursera have also opted for the Subscription VOD model. The SVOD model enables these platforms to achieve sustained growth in revenue and a stable user base.
There is immense potential for growth in SVOD market. This blog provides a guides on how to create an SVOD platform.
Can Video on Demand replace Television
Video on Demand platforms have grown exponentially in size over the last 10 years. Cable television has dominated the living room for quite a while now. This monopoly is now being threatened by all-you-can-watch SVOD platforms.
Consider the figures from a global Nielsen survey on the popularity of video on demand platforms.
Nielsen’s followup to the study however revealed an interesting insight. Even though users express the intent to cancel cable, they rarely go through with cutting the cord.
The sheer variety of content that cable television offers cannot be matched by a single VOD platform. Indeed, SVOD platforms remain highly specialized. Most platforms focus on only a single range of content. This is because SVOD platforms need to excel in their niche to succeed.
YouTube is the biggest video on Demand platform
Viewers on YouTube clock over 1 billion hours of videos viewed, every day. The platform generated $9 billion revenue in 2015. This revenue comprises of the 45% of ad-revenue split from videos watched.
YouTube’s revenue model is Advertising video on demand (AVOD). In AVOD platforms, subscribers do not pay for access to content. The VOD streaming platform generates revenue from showing ads to users.
This ad revenue is often quite low. Ad revenue generated per user is significantly lower than revenue that can be generated from a user subscribing to an SVOD platform. The upper limit for money made from ads is about $20 per 1000 views.
For effective representation with YouTube, Video creators have to sign up with Multi-channel Networks. This brings their split down to 38 percent. Video creators barely make enough money from Youtube to recoup the investment in video.
Potential for a vast ecosystem of VOD Platforms
Artists are increasingly starting their own video on demand platforms. YouTube personality Casey Neistat stopped vlogging on YouTube to start his own venture with CNN.
Opportunities for better monetization of content are now available for video creators. Video creators have the opportunity to contribute to an ecosystem of VOD platforms that would displace television.
Video on Demand Business Models
- Advertising Video on Demand (YouTube, Hulu)
- Subscription Video on Demand (Netflix, Amazon Prime, Hulu Plus, Hotstar)
- Transaction Video on Demand (iTunes, Google Play Movies)
- Premium Video on Demand (PVOD)
Subscription Video on Demand – The Whys and Hows
Why Should You Consider SVOD (Subscription Video On Demand)?
The time is perfect for you as a video creator to start your own Video on Demand Platform. Revenues per subscriber on your own video platform are much much higher than revenue per subscriber to your YouTube channel.
Subscription costs in SVOD tend to be quite low compared to the aggregated costs of cable membership. This means that users can easily opt for multiple subscriptions to VOD platforms, without burning a hole in their pocket. SVOD is a much more sustainable model for VOD platforms, from both customer’s and video creator’s perspective.
Subscription Video on Demand model is ideal when you:
- Are confident about building a loyal audience, and
- Have a sufficiently large library that users can watch when convenient.
Examples of niche video on demand platforms include:
- Indieflix, which is a platform for independent short films
- Noggin, Nickelodeon’s video subscription platform for preschoolers.
- Panna Cooking – Video Recipes from master chefs
Costs of Content licensing in Subscription Video on Demand
If you are a content aggregator, you can choose to acquire different kinds of video content, and offer a combined subscription to your video package. A large library of content that would appeal to your subscribers is ideal for the SVOD model.
On the other hand you can offer a select range of premium content. Transactional video on demand model, used among others by Apple iTunes, makes more sense for premium content. p Examples of premium content would be movies being released through streaming video close to their theatre release. Hollywood studios are actively considering a Premium Video on Demand model, offering films to users at high price points within weeks of theatre release.
Determining the costs and potential revenue from adding video content is a key problem to solve. You would need to assess the value that it adds to your video library. Quantifying this value is the main challenge for video aggregators in the SVOD model.
User management is the most critical element to a subscription video on demand. It is at this stage you should ask yourself what features you wish to incorporate as part of the subscriber membership experience.
For example, do you want users to have access to all the content on your website at once? The answer depends on how you want your users to experience your SVOD platform.
You can implement Multi-tiered Memberships – Suppose you have somehow bagged the streaming rights to HBO’s Game of Thrones. You can sell a subscription to users who want to watch the show as it is released, and another (pricier) subscription to users who wish to catch-up with episodes of previous seasons.
With your own subscription video on demand platform you can customize user’s experience. You also have flexibility over pricing, meaning that you can effectively monetize from budget customers as well as from customers seeking a superior experience. In this case, don’t forget to integrate a local phone service so that customers can reach out whenever they have questions and get quicker support.
Netflix has a tiered pricing model, starting at $7.99 in the US. By upgrading to the $9.99 subscription users can simultaneously watch Netflix on two screens, and for $11.99 subscription can access it on 4 screens. Most new video on demand platforms implement a variant of a freemium model, with free content available to attract new users, and then tiered pricing options.
Sell Multiple Memberships
You can also sell multiple memberships for piecemeal video content. Suppose you’ve managed to wrest House of Cards away from Netflix, and want to sell separate subscriptions to both House of Cards and Game of Thrones. You can do so, if it makes sense to sell separate subscriptions. While there is likely to be considerable audience overlap for the two TV series, selling multiple subscriptions makes sense when you believe that different kinds of users require exclusively one kind of content. Online education platforms generally adopt multiple memberships, based on the subject that students wish to learn.
Managing User Access
Ultimately any good user management system succeeds on the basis of how well it manages user access. Adding user restrictions, such as the ability to download videos, watching simultaneously on different screens, and managing total user watch time can be highly important. You may also wish to implement a dripped content strategy, wherein your videos may become accessible to users only after a set period. You can for example release a new episode of a video series for new viewers. This makes eminent sense for online video courses and for newly released television shows.
A detailed comparison and statistical study of SVOD with TVOD is here.
WordPress for Subscription Video on Demand Platform
WordPress, with its fantastic ecosystem of plugins and themes offers a large variety of membership plugins. Popular WordPress membership plugins MemberPress, WooCommerce Memberships and Restrict Content Pro provide most of these user management features that you may wish to incorporate to your website. Each of these plugins has a unique feature set, and whether it is the best for your Subscription video on demand model depends on the feature set you are looking to incorporate to your website. WordPress guru Chris Lema has done a great analysis here of the features you should look for in a membership plugin.
Advantages of SVOD
If you want to be successful with your SVOD business, you’ll want to understand all the benefits of this new business model.
- Consistent Revenue: Subscription services provide a more consistent revenue stream. You may charge a fee for video content on a monthly or annual basis. This means you’ll have a regular revenue stream for the specific time period.
- Price Customization: There are no price restrictions for the monthly subscription fees that have been set up for your video content. You can decide the price on the basis of the content demand and trend.
- Customer Base: Provide your viewers with valuable and relevant content and they’ll become your committed followers. This customer base will let you grow your business and reach a wider audience
- Best for large content portfolio: SVOD works best if you have a large content portfolio, and provides better retention, time per user, and trust to content providers that their content reaches the maximum audience. More details on how to make it work are here.
Disadvantages of SVOD (Subscription Video On Demand)
- The problem with SVOD is that once you have subscribed to a channel you will have to wait until the subscription period is over and renew it if required.
- SVOD does not inherently directly link operational costs of bandwidth to revenues, it works generally at a larger scale. The cost of delivery reduces at scale. High pricing or Limitation on content hours can make it work at lower audience numbers.
- If your platform has more hours of content to present, it’s challenging to know which movies to show and what to recommend. Though at the same time, it is an opportunity to charge money from new content producers for advertisements and promotions on the platform.
Secure Video Hosting with VdoCipher
While TV is a major competitor to VOD platforms, video piracy poses a bigger, existential threat. Our statistical study shows that 1 in 5 of the internet population uses a video downloader tool. Your customers, who should help you bring in new customers through word-of-mouth, can just as well share their user password or download the content directly.
If your users share passwords among themselves, the number of people that they share it with would be the audience lost to your VOD platform. So if every 4th user shares it with 4 other friends, there is 1 lost subscriber to every paying subscriber. By combating piracy you can double your income from your SVOD platform. Losses from online sharing of videos are much higher.
- Server side encryption in Amazon S3 making sure your files are secure in the cloud
- Encrypted video streaming ensures that files remain secure throughout the streaming process
- Player authentication using OTP – User’s video player is authenticated at the time of playback, meaning non-authenticated users cannot log in, and the video cannot be shared on any unauthorized website
- Dynamic watermarking – Text/image overlay over the video, deterring pirates from using screen capture software
Online businesses also often require features over and beyond video security. VdoCipher fulfills all major requirements for enterprise video hosting. The complete set of features that VdoCipher offers for enterprise video hosting may be found here.
1. What does SVOD stand for?
SVOD stands for Subscription Video on Demand. In the Subscription Video on Demand (SVOD) model, users get unlimited access to video content for a monthly fee.
2. What are the advantages of SVOD?
- Viewers can watch all the available content they want as long as they keep the SVOD subscription active.
- Provides consumers with more choice than other streaming services because you can choose from a wider range of content
3. What are some examples of SVOD models?
Some of the examples of SVOD include Netflix, Disney+, Prime video.
Supercharge Your Business with Videos
At VdoCipher we maintain the strongest content protection for videos. We also work extremely hard to deliver the best viewer experience. We'd love to hear from you, and help boost your video streaming business.
CEO, VdoCipher. Writes about video tech, ed tech and media tech.