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Top TVOD platforms generate high revenue per user

TVOD – Build a Transactional Video on Demand Platform

Transactional Video on Demand (TVOD) model can be used for elearning and entertainment videos. TVOD model enables you to make maximum money from videos.

There are many questions video creators have in mind when starting a video on demand website. The biggest one of them is:

What would be the best business model for my video website?

We have previously discussed the Subscription VOD model in detail. In this blog we’ll be shining light on its complement, the Transactional Video on Demand model. In doing so, we answer the following questions related to TVOD:

In 2016, US Domestic consumers spent over $2 Billion purchasing films from Electronic Sell-Through platforms such as iTunes and Amazon Video. A large cut of this revenue figure goes to the original content creators. In live sports, Pay-Per-View buys generated $400+ mn revenue for the August 2017 megafight between Floyd Mayweather and Conor McGregor. Surely, TVOD works for entertainment content.
The exhibition fight between Mayweather and McGregor generated $400+mn in Pay-Per-View buys, validating the TVOD model
The TVOD model works well for elearning VOD platforms just as well. In 2016-17, the K12 and competitive exam prep startup Byju’s generated $40 mn revenues. Byju’s, which offers year-long courses along the TVOD model has received total funding of $244 mn. Coursera, valued at $800 million, has emerged as the top elearning VOD platform largely on the basis of their course specializations which until recently followed the TVOD model.

Surely, when done right, TVOD can bring immense riches for video creators.

TVOD is amazingly good for making money

The major business model for video creators are TVOD (Transaction VOD), SVOD (Subscription VOD) and Advertising VOD (AVOD). Of these the TVOD model has the potential to generate the most money from a given video.

Case in point the Fight of the Century boxing bout between Floyd Mayweather and Manny Pacquiao. The mega-fight had 4.6 million users buying Pay Per View rights at $89.95 ($99.95 for HD). The exhibition boxing fight between Mayweather and Conor McGregor had approximately 4.4 million PPV buys at the price of $99.95.

In the Electronic Sell-Through (EST) market iTunes is the largest TVOD platform. iTunes presents various options for users to catch their favorite film. Users can rent a film for $4.99, or purchase it for unlimited viewing at a higher price ($9.99 or more, which can vary for different titles). SVOD platform Netflix on the other hand charges users around $10 for full catalog access.  TVOD models ability to generate fantastic revenue becomes clear when you consider that iTunes generates the same revenue from a user renting 2 films in a month as Netflix does for monthly access to its entire catalog.
In TVOD revenue per film is the highest
Amazon Video offers a hybrid TVOD-SVOD model. Amazon provides its SVOD service as part of its Prime membership. We’ll discuss the reason why some titles are sold separately along TVOD model later in the blog.

Among education websites, Udemy is a TVOD platform. Built as a marketplace with little content moderation, Udemy offers lifetime access to courses at a fixed price. As of December 2016 the platform had over 14 million students, and the highest earning instructor had exceeded $2.8 mn in total earnings.

Defining Transactional Video on Demand (TVOD)

In Transactional Video on Demand users are expected to pay one-time for access to video content. The nature of this access can vary –

  • Users get access to the video for a fixed period of time on the website/ app
  • Users get access to the video indefinitely on the website/ app
  • Users may also be able to download the video for offline viewing (protected by DRM so that users can only access it through authorized apps)

The absence of a recurring payment is the key difference between Transaction Video on Demand and Subscription Video on Demand.
TVOD - Defining attributes
Even when purchasing films through Electronic Sell-Through platforms, users do not actually “own” the film. Instead they license the film from the platform, a license that can be revoked by the rights holders. This has caused controversy when iTunes and Amazon video users have found movies disappearing from their libraries.

TVOD business model can be implemented as:

  1. Pay per view for live sports
  2. Fixed-period access to education content
  3. For electronic sell-through via iTunes, Google Play Movies or Amazon Video

When is Transactional Video on Demand the right model for you

TVOD model works best for highly differentiated and compelling content. This is because customers are willing to pay a premium for videos that offer unique value.

Consider the animation film Despicable Me. The $600mn+ grossing superhit film was released in 2010. The film spawned two sequels, ‘Despicable Me 2’ and ‘Despicable Me 3’, and a prequel named after the stars of the series, the ‘Minions’.

Despicable Me 2 and Minions are available on Netflix’s SVOD platform. Despicable Me 3, released in 2017, would likely makes it way to SVOD by 2018 as well. So why then is Despicable Me only available on TVOD?

A 7-year-old film occasionally broadcast on cable TV, Despicable Me has only a small potential audience that has not seen the film. The film has achieved a cult status in popular culture. There is likely to be a significant subset of fans who would like to own the film for repeat viewings. Universal Studios, the distributors of the film would have calculated that revenue from the title earned through the EST option would be higher than the licensing revenue from SVOD platforms.
Film studios offer Despicable Me only on TVOD because of the higher revenues per user generated in the model

Transactional VOD business model is ideal when you have a small potential audience that are willing to pay a higher price for your videos.

Indeed, offering highly differentiated content is a pre-requisite for a successful TVOD platform. Prospective users should know the value that your video content will offer them. The marketing for your eLearning TVOD platform should be focused on how your platform uniquely enables learners to achieve their objectives.

Elearning TVOD

Education VOD platforms can succeed with TVOD model when they can demonstrate to potential learners the value addition to them. This value addition could be scoring higher in a competitive examination or learning new skills for a new job/ promotion.

TVOD is widely popular for skill-upgradation courses. Analytics Guru Jeff Saur for instance sells lifetime access to his Beginner to Advance Google Analytics course for $497. With his analytics course Jeff promises that learners can complete Google Analytics certification within a month of starting. A clear achievable target that your viewers can achieve should be the focus of your elearning TVOD platform.
Jeff Sauer's Advanced Google Analytics Course uses the TVOD model

For elearning TVOD platforms, there is necessarily a timeline in which online content is accessed. You should create a structure that learners can follow to achieve their objectives.You should also incorporate additional elements beyond just the videos.Quizzes and Assignments are important so that learners are able to test themselves and ensure that they are absorbing their knowledge. On the SVOD platforms such as Great Courses and Lynda are essentially a buffet of video content with no evaluation element.

Entertainment TVOD

You can build an entertainment transactional video on demand platform by offering highly rated films not offered on SVOD platforms.

Hollywood Studios are also assessing a variant of TVOD, called the Premium Video on Demand. In this model, newly released films would be offered on Video on Demand within weeks of theatre release, at a higher price than when they are eventually released on Blu-Ray.

Whereas Google Play Movies and Apple iTunes are content aggregators, film distributors are also entering the VOD market through their own Transactional VOD platform. The UltraViolet Rights Management system enables users to purchase films from different platforms. This enables users to centrally store proof-of-purchase. In a highly fragmented VOD market, a centralized database for users to save the licenses of films they have purchased is very useful.
With UltraViolet, users can purchase films from participating TVOD platforms and centrally manage licenses on the UV platform

Implementing a Transaction Video on Demand model

Electronic Sell-Through – Download to Own vs Download to Rent

iTunes has both renting and buying options. There are restrictions involved in renting a film – you have 30 days in which you can start watching a film, and once started, you have 48 hours to finish watching the film. You can watch the film as often as you like, until it expires after 48 hours of starting. You cannot stream it simultaneously on different devices, or download it on more than one device at a time.

In the purchase option, users have license to download and stream the film on any owned device. Purchase options for films cost on average $9.99, with some variations depending on the title.

In TVOD your users license your content

Major TVOD platforms such as iTunes and Amazon Prime Video have faced controversy when they had to pull films from the libraries of users who had purchased the titles. Licenses for films can change hands between distributors, at which point the rights holder may pull it from the TVOD platform.

Users buying digital content – whether books, music or films, only buy a restricted license to that content. On the other hand when users purchase hard copies of books or Blu-Ray discs they own that content (subject to copyright restrictions).

When selling online content, a Digital Rights Management system is necessary to implement user licenses. DRMs enforce restrictions such as preventing users from making illegal copies and sharing and allowing access for a fixed period of time only.
DRM systems manage user licenses in TVOD platforms, ensuring only authorized viewers watch the video

Implementing TVOD for eLearning videos

For eLearning videos you should offer fixed-period access access to students. For example, if you provide videos for IAS exams, the fixed period cycle for users could be 11 months over which learners prepare for the exam. You may alternatively offer lifetime access as well, in which case you would need to regularly update your content in line with changes in the field.

Distinctions between TVOD and SVOD model

Customer Perception of Value tends to be Higher for SVOD platforms

For SVOD platforms, users pay a low amount per month in return for unlimited access for a month. This seems a good deal on the surface, and users are likely to continue the recurring payments. In TVOD model on the other hand there is a usually high one-time fee for access to content.

Consider an online course that you would complete in 6 months. The online platform may charge you $10 per month subscription, or it may charge a one-time fee of $50. Assume that in either cases it would take you 6 months to complete the course. Users are more likely to opt for the subscription because of the lower upfront fees. However the net fees is actually higher for SVOD than for TVOD. This paradox is the reason why educational VOD platforms such as Udacity and Coursera, which have been looking to scale up, have transitioned towards the SVOD model.
Customer Perception of Value tends to be higher for SVOD content than for TVOD content

Customer Retention is a major challenge in TVOD

In SVOD business model you retain your customers over a period of time. Users get habituated to paying a fixed monthly fee in the SVOD model.

In the case of TVOD, users deliberate before every transaction. Customer retention is a major challenge in TVOD. TVOD platforms require a greater marketing effort, both to retain existing customers and to get newer ones.
Customer retention is a major challenge in TVOD

TVOD is best suited for new VOD platforms

In TVOD the revenue generated per user is high, which makes up for the lack of scale when starting out. Coursera adopted the TVOD model in its growth stage.

Coursera evolve into a Subscription Video on Demand platform in 2016, as it chased better scale. Subscription VOD platforms are suited for large number of users. The lower ticket size in SVOD is compensated by the larger number of users.

Video content owners opt for TVOD largely when the expected audience size is low, but the audience are willing to pay a premium for the content.
TVOD model is the right choice for new VOD platforms

Royalty calculations are straightforward for TVOD platforms

Most elearning SVOD platforms pay video course creators a a portion of their revenue proportionate to the number of viewers to their videos. This involves complex calculations, and the platform has to take into account different metrics such as number of learners who enroll into a course, number of learners who complete a course, and net number of viewers. Royalties paid to course creators tend to be quite low in comparison to the overall revenue of the SVOD platform.

Royalties are much higher in the TVOD model. The video creator gets a larger percentage of transaction revenue. In the case of Udemy, video creators and Udemy each receive 50% of every course purchased organically on the platform.
In TVOD video royalties are much higher than for SVOD

Marketing Your Transaction Video on Demand business

In SVOD payments are recurring, and offer a stable revenue base. However, that is not the case for TVOD platforms. You cannot take repeat transactions for your TVOD platform for granted. An elearning VOD platform has done its job when users complete the course. Students will be unlikely to pay a second time to complete the same course. For EST platforms, returning users do the same cost/benefit analysis at the point of each purchase.

As a result, TVOD platforms suffer from lower user retention and fewer repeat transactions. This translates to low revenue stability.

You should use the right marketing channels for continuous growth. Social Media and Email marketing are the best channels to attract new users to your TVOD platform. Social Media enables you to target audience on the basis of their interests. It also utilizes network effects, so you can easily multiply your reach across your potential audience.
Social Media and email marketing are the best channels for promoting your TVOD platform

When you market an online video course you should highlight the measurable improvements that the course offers. This could include higher test scores or better chances of climbing up the career ladder. You can also include testimonials from successful learners to highlight the value of your course.
Checklist for promoting online video course on TVOD model

Effective Paywall is more important for Transaction Video on Demand

One-time costs are high for TVOD content. This makes potential users seek means to access the video content for free, thereby increasing likelihood of content piracy. It is much more likely that users will download video content, and share it with friends, either to help them save costs for the one-time access fee, or to split the one-time fees.

In subscription VOD there is an ongoing relationship between the user and the platform. Users are likely to continue on the platform out of loyalty. Indeed the rise of SVOD platforms has significantly contributed to decline of piracy of films.

Apple applies a DRM to movies downloaded via iTunes, preventing users from sharing the video content.

VdoCipher offers a DRM solution to implement a paywall for your TVOD content. VdoCipher’s secure video hosting protects your video content from downloader plugins.
VdoCipher secure video streaming is perfect for TVOD

Check out our full list of features to see how you can use VdoCipher for business.

TVOD (Transactional Video on Demand) vs SVOD (Subscription Video on Demand)

Video on Demand (VOD) is a hot word today. Movies and Education sites are bombarding users with massive online content on their websites and apps. Such VOD platforms use multiple revenue models to monetise content. The top of these are TVOD, SVOD & AVOD. This article takes a look at TVOD and SVOD, brings out a comparison and implementation module for these.

What is TVOD (Transactional Video on Demand) ?

As the name suggests for TVOD, user makes a payment for particular choice of video or small combination of videos. This can be in form of making payments for a movie or Series combination. Sometimes paying for a movie to watch in one go is usually known as “pay-per-view“. A famous example of VOD platform with TVOD as major model is Youtube paid videos. There is a cost for each movie. After looking into definitions, pros and cons of these aspects, we also present some key stats and estimates on SVOD & TVOD implemented with Netflix, Youtube, Hotstar, and some of VdoCipher customers. (Infographics are below)

What is SVOD (Subscription Video on Demand) ?

Prominent famous VOD sites like Netflix, Hulu, Hotstar, Amazon Prime , Byjus etc have Thousands of hours of content.  They provide such unlimited stuff in an affordable price per month or year. This idea of providing an offering of bundled video content in one to all pricing is SVOD. The basic practical assumption for SVOD is that the user will only watch a certain amount of content (say 20 to 100 hours per month).  If the user is able to somehow watch all the content offered to him, the bandwidth costs for the business will lead to overall losses.

Now we enlist all the advantages and flaws in the two models. Thus, the reader can make an informed choice amongst the two. We also then look at some numbers using famous and medium sized companies operating on these two models. It will help you better understand and implement the economies for your business. Before that lets look at a stats full infographic on SVOD with Netflix.

SVOD for Netflix: Statistics Infographic

SVOD for Netflix: Key Stats, User Engagement, Monetisation

TVOD – Pro & Cons


  1. Accurate estimation of operational TVOD costs and lower risks:

    As the estimates for operational margins is being done quite accurately before the start of business; you never run into the risk of a single user or group of user exploiting the bandwidth. Operational costs in TVOD business are the costs of server + CDN to stream the video of a particular size + cost to acquire the single customer.

  2. Easy revenue distribution model to video content creators:

    Unlike SVOD there is no confusion in what the user paid for. Thus the revenue share distribution for TVOD content is usually straightforward.

  3. Better revenue opportunities for fresh release VOD content

    Generally the audience worldwide has an affinity for newly released movie and serial content. Thus charging a small amount for such piece of content leads to immediate payment from users and can reach a considerable scale.

  4. TVOD can work on smaller scale then SVOD, Good option to launch business

    Since operational margins are fixed and revenue can be linked directly to content owner , it is a good option to start. SVOD generally kicks at a considerable scale.


  1.   User retention is a problem in TVOD

    Since user has the tendency to pay for a particular content and then go off the platform, there is no motivation or push for him to buy new content. SVOD can just push to user to try some new unexperienced content.

  2.  Content visibility controls content revenues: Challenge of recommendation

    Since the user is going to pay for the exact content and watch, whatever is presented to him in homepage or as a priority attracts his attention. There are greater chances that he will pay for it. There might be better compatible content for him in the inside pages, which by the time he discovers has no budget left to spend on it. Thus personal recommendations and presentation are a key aspect of the monetisation in TVOD platform.

  3. Limited Trial Opportunities, Restrictive for large content size. (E.g 2000+ hours)

    It is bad to expect the user to have an idea of all the content you have and being already decisive about the video to make payment for. He cant try without paying, and limits the explorative nature of the platform.

    We will go to SVOD pros and cons after this infographic.

    TVOD & SVOD for Youtube movies and Hotstar: Statistics
    TVOD for Youtube Movies, SVOD for Hotstar

SVOD – Pros & Cons


  1. User Retention is high: New content trial is easy

    Since user has paid for the whole platform in SVOD, though he has some favourite content but there is also lot of additional content he can try. Mail campaigns, ads , homepage prompts can motivate the user to try additional content. Yes, it will lead to higher costs, but it also leads to higher retention, more content ingestion and thus better performance of the overall platform. Iterations over recommendations and costing are done for better monetisation strategies.

  2. SVOD allows recurring revenue streams: Better Predictability

    SVOD supports recurring charging models. Users can put in their credit card which renews the contract on monthly basis. This allows for the VOD platforms to better predict their upcoming revenues and thus grow their business.

  3.  Best for large content portfolio

    SVOD works best if you have a large content portfolio, provides better retention, time per user , and trust to content providers that their content reaches maximum of audience. More details on how to make it work are here.


  1. SVOD Only works at scale, Risky at low user base

    Since SVOD doesnot inherently directly link operational costs of bandwidth to revenues, it works generally at larger scale. The cost of delivery reduces at scale.  High pricing or Limitation on content hours can make it work at lower audience number.

  2.  Revenue distribution agreements are tricky in SVOD

    It is difficult to determine that which movie or serial actually prompted the user to buy the subscription. Though video views and engagement data are at backend, the overall revenue distribution model becomes tricky. It is a combination of pre-paid license fees for content, revenue share on basis of number of views, and retention rates etc .

  3.  Recommendations and Visibility for large content is a challenge

    Since VOD platforms with SVOD as major revenue channel have 1000s of hours of content , which movies/serials to present at front, which to recommend is a challenge. Though at same time , it is an opportunity to charge money from new content producers for advertisement and promotions on the platform.

Now we present some key stats and estimates on SVOD & TVOD  implemented with some of VdoCipher customers.

SVOD & TVOD Statistics for VdoCipher customers

To launch a VOD platform with highest security from piracy + seamless experience, Start free trial at

This short video here explains how to upload, embed and securely stream videos through VdoCipher.

Basic HLS Encryption where the key is in the manifest file

HLS Streaming, HLS Encryption & Setting High Secure DRM

What is HLS Streaming ?

HLS Streaming ( HTTP Live Streaming) is a streaming protocol used for video content across desktop and mobile devices. HLS is developed by Apple, which forms the biggest use case for the streaming protocol. Beyond Apple there is wide support for HLS streaming across Android devices and browsers. Indeed, HLS can be used as a streaming protocol for all major browsers, including Chrome and Firefox.

In HLS Encryption the video files are encrypted using a secure AES-128 algorithm. The AES-128 is the only publicly available security algorithm that is used by the NSA for encrypting its top-secret classified information.

HLS streaming and HLS Encryption can be used for both the cases of live streaming and for Video on Demand streaming (VOD). Because video streaming is over HTTPS, there is no need for a streaming server, unlike RTMP, which requires its own streaming server

HLS Streaming Protocol is not blocked by firewalls, unlike RTMP streaming protocol

How & Why Apple Developed HLS Streaming ?

Until about 2010, Flash was the most popular video streaming application. It was supported by all desktop browsers. Because Flash utilized the same runtime across all browsers, it meant that video streamers did not have to create separate workflows for different devices. DRM and encryption were also supported by Flash.

Flash was however plagued by security issues. Video playback on Flash was processor-intensive, which caused mobile batteries to drain very fast. For these reasons Apple did not support Flash in the iPhone and in iPad, instead including support for native HTML5 playback.

Apple created its own specifications for video streaming, which could be used for both live streaming and for pre-recorded video streaming. Android OS followed suit by blocking flash playback from browsers on Android. From the introduction of the smartphone to the emergence of MPEG-DASH around 2015, Apple’s HLS streaming has been the most widely used protocol.

Because of Apple’s continued support for the protocol, encoding for HLS player is an integral element of any video streaming provider’s workflow.

How does HLS streaming work?

In plain vanilla HTML5 video streaming, only a single video file is available for streaming. The download of the complete video file is initiated every time the stream is played. Even if a viewer watches only 2 minutes of a 30 minute video, the full video would be downloaded, causing data wastage at both the server and the user end.

Streaming protocols remove this inefficiency in video streaming. Streaming protocols such as HLS effectively break down a video file into multiple chunks when streaming, and these video files are downloaded over HTTP in succession. HLS streaming uses the same workflow for both live and for on-demand content.The core idea in multi-bitrate streaming is that multiple renditions of each video, of varying resolution, are encoded. High resolution videos are delivered to large screen devices having high network bandwidth, whereas lower resolution videos are encoded for mobile phones. Encoding for low resolutions also ensures continuous video streaming when the network connection speed drops.

Progressive streaming using HLS AES-128 Protocol

When the user decides to change video resolution, or when the network bandwidth changes, video streams can be manually (or automatically) switched. HLS video streams are encoded using the H.264 standard, which can be played across all devices. Each of the video copies is broken into multiple chunks having the .ts (transport stream) extension.

There is a main index file, called the manifest file (.m3u8 file format), associated with the video stream. The main manifest file contains links to the specific manifest files associated with each unique video stream. Each of these specific manifest files in its place directs the video stream to the correct URL for video playback when streams are switched. This ensures that stream switching is seamless.This process of manifest file referring to the video stream is the same for both live video streaming and for on-demand video streaming. The only difference for live video is simply that the video files are being encoded in real-time.

Streaming over HTTP has many advantages over using a separate server. For example firewalls which may be used to block ports used for RTMP are unlikely to affect video streaming over HTTP. No additional cost are required for streaming over HTTP server.

Video Streaming through HLS protocol

What is HLS Encryption ? Is HLS Encryption effectively secure against piracy ?

HLS AES-128 encryption refers to video streams using HLS streaming protocol wherein the video files are encrypted using the AES-128 algorithms. The key exchange happens through the secure HTTPS protocol. If done in a rudimentary way the key for decryption can be seen from the network console by accessing the manifest file. A poor implementation of HLS encryption would result in plugins automatically finding the key and decrypting the HLS encrypted stream, rendering video security ineffective.

Basic HLS Encryption where the key is in the manifest file

There are however methods to strengthen the HLS Encrypted stream. The challenge is to make sure that the key is not exposed directly. These are the options for additional security in HLS Encryption:

  1. Not including URL to decryption key in Manifest File
  2. Implementations for this vary widely, and are quite difficult by themselves. This method for protecting HLS content may also cause compatibility issues on devices. If done properly however it is definitely a major improvement in video security.

  1. Using authenticated cookies for HLS Encryption streaming
  2. In this method, the browser of authorized users stores authentication cookies. These cookies are stored with a digital signature, to ensure that they are not tampered with. This ensures that only the authorised user (and not some external plugin) is seeking to fetch content. The following workflow is used for configuring authentication cookies for HLS encryption:

    1. Trusted signers are configured, who have permission to create authentication cookies. This configuration is done at the edge location (content delivery network)
    2. Application is developed to send set-cookie headers to authorized viewers
    3. Authorized users store name-value pairs in the cookie
    4. When user requests protected content, the browser adds the name-value pair in the cookie header to the request
    5. The CDN uses the public key to verify the digital signature in the name-value pair
    6. If the authentication cookie is verified, the CDN looks at the authentication cookie’s policy statement. The policy statement determines if the access request is valid. For example the policy statement could include the beginning and end time for cookie validity.

    Advanced HLS Encryption, using authentication cookies/ signed URLs
    For further information on authentication cookies for content protection you can have a look at Amazon Cloudfront’s documentation.

  1. Signed URLs can be generated for authorized users
  2. The following workflow is used for configuring signed URLs for HLS encryption:

    1. In the CDN trusted signers are created, who have permission to create signed URLs
    2. Develop application to create signed URLs for protected content
    3. When user requests protected content by signed URLs, the application verifies if they have authorization to access it
    4. If verified, the application creates a signed URL and sends it to the requesting user
    5. On accessing content through signed URL, the CDN verifies that the URL has not been tampered with. This is done by using the Public Key to verify the digital signature of the URL
    6. If the signed URL is valid,
    7. The CDN uses the public key to verify the digital signature in the name-value pair
    8. If the signed URL is verified, the CDN looks at the signed URL’s policy statement. The policy statement determines if the access request is valid. For example the policy statement could include the beginning and end time for the signed URL. For protecting content, this period of validity of URL should be short – as little as a few minutes is optimal. For this you can create dynamic URLs, that change every few minutes.

    For further information on signed URLs for content protection you can have a look at Amazon Cloudfront’s documentation.

All these 3 steps make the video stream considerably immune to direct download through plugins. However these methods are still breakable by already available codes and tech hacks.

How is DRM level security for HLS Encryption possible ?

DRM requires that the key exchange and licensing mechanism is highly secure and is always out of reach of external tools and hackers. A DRM technology also has additional elements. It delivers a license file, which also specifies the usage rights of the viewer. Usage rights specify the conditions in which the video playback is allowed.
Implementation of these usage rights ensures that the signed key used for decryption can only be used for playback on the viewer’s device. The key would simply fail to decrypt the video stream if the video file is copied to any other device.

DRM adds complex layers of workflow for license management. This workflow includes:

  1. Specifying highly detailed usage rights such as-
    1. Limiting video playback on a device to only a fixed number of times
    2. Video access can expire after a period of days if subscription is not renewed
    3. Limiting the device or screen on which the video can be played. For example usage rights can be used to restrict users to cast their video playback on an external device such as a Smart TV.
  2. The license database is also bound to the user’s device, which means that if shared the license and decryption key becomes redundant.
  3. Licenses are also signed with the digital signature, which means that they cannot be tampered with either during transit over HTTP or when stored locally on the device.

Implementing DRM along with HLS streaming entails considerable modification of the HLS Encryption infrastructure.  At VdoCipher, we have been able to do that and provide a full fledged proprietary + HLS DRM. We cannot technically say that we are streaming a HLS encrypted stream as it is highly modified. We use combination of other technologies based on different platforms and are able to roll out a cross-device, cross-browser compatible DRM.

VdoCipher HLS Encrypted DRM Infrastructure Details

  1. Upload of Videos (All common formats are supported )
    The content can be uploaded through Dashboard or APIs. Upload from desktop, FTP, Drop Box, Box, URL, Server all are supported.
  2. Encryption & Transcoding for DRM streaming
    Videos are converted into encrypted files, and multiple qualities & versions for ensuring delivery of quality content at all devices, browsers and all connection speeds. The encrypted content is stored at our AWS S3 servers and raw videos are never exposed. We have setup our custom EC2 instances for the encoding pipeline, and the resultant files are hosted securely on AWS S3 servers.
  3. Encrypted Video Streaming (Modified HLS Encryption & Streaming)
    As discussed above the high secure key and license exchange mechanism supports the transfer of encrypted video data ,ensuring HLS DRM level security. Dynamic URLs ensure that each playback is authenticated and the URL cannot be extracted outside the website or app for pirated playback. We use multiple top tier CDNs – Cloudfront, Akamai, Google CDN, Verizon to ensure smooth delivery of content all across the globe
  4. Decryption in Video Player & Watermarking
    There is private communication between our API & the client website. This ensures that its not possible for hackers to decrypt our streams. The One Time encryption that we use is theoretically and practically hack-proof . The website embedding the video content requests a One-time password from the VdoCipher web server using the API. This OTP request is made only after the user is authenticated. The VdoCipher API returns the OTP, which is used to render the embed code. This embed code is valid for a single playback session only. Along with the key a usage policy is specified, ensuring that only a logged-in and authenticated user is allowed to playback the encrypted video. The video would simply fail to play if an external plugin or downloader is used to try to access the video file.We have timely modifications to our licensing and authentication mechanism to keep sareecurity updated.Watermarking -Video licensing and playback are combined to generate customisable viewer specific watermarks. The watermark can be IP address, Email ID  and User ID shown in customisable colour & transparency to identify a playback session by the viewer.
  5. Result – Progressive High Secure Streaming
    Through this 6-step Video Hosting, Encryption and Streaming process, VdoCipher is able to provide a progressive high security video streaming with future buffer possible. This is also different from RTMP which does not maintain any buffer and can be quite erratic as a result.

HLS encryption, HLS Streaming, DRM streaming

Demo Free Trial for HLS DRM Streaming

You can signup for a free full version trial at VdoCipher.
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.

Hollywood’s Premium Video on Demand Model

Streaming video has opened the floodgates to home entertainment. With inexpensive subscriptions to Netflix, Amazon Prime and niche subscription video on demand platforms, you now have access to limitless content within a few clicks. Underlying technological shifts have led a ginormous rise in subscription video on demand platforms. These same shifts have also contributed to an equally dramatic collapse in DVD sales.

DVD sales are declining and being beaten by Subscription Video on Demand

DVD revenues have, since their launch in early 2000s, dominated the home entertainment market. At their peak in 2006, DVD sales dwarfed box office receipts. The $16.5 billion in DVD sales towered over $9.6 billion in theatre revenues.

However, in the intervening decade, the rise of SVOD platforms has contributed to a decline in DVD sales. In 2016 revenues from streaming services ($6.2 billion) edged out DVD sales ($5.5 billion) for the first time ever.

Movie studios hand has been forced by piracy. The most pirated episode of Game of Thrones has been downloaded 13 million times. While subscription video on demand services are also afflicted by piracy, the bigger brunt has been faced by movie studios.

This is because streaming services offer an inexpensive alternative for most users who would otherwise be lost to piracy. This weakens the position for movie studios when it comes to licensing content to streaming video on demand platforms.

Growth in the home entertainment industry has primarily been in the subscription video on demand space, dominated by Netflix and Hulu. Subscription video on demand platforms offer seemingly unlimited choice to consumers, with the express intent to lock-in viewers to their platform.

Amidst the rapid shift towards subscription video on demand services, movie studios are looking for a new source of revenue. And now they just might have found one.

Premium Video on Demand

Whispers of a Premium Video on Demand model have been heard around Hollywood ever since streaming video became a possibility. What has changed over the last year has been theatre chains’ willingness to consider this model.

This new revenue model entails release of film through video on demand before the film is made available on DVD, Blu-ray or Streaming services. The time of release is critical. This is because films are proposed to be released on Premium Video on Demand within a few days of theatre release.

This is the thinking: The first two weeks of a film’s theatre release is when a large percentage of revenue is generated at the box office. Beyond this period,  the initial novelty fades. The movie however is still in the mind of the general movie-going population. Premium Video on demand is intended to capture the segment of potential audience that would like to watch the movie at the comfort of their homes, and who otherwise might not go to the theatre to catch the film.

Needless to say, when considering the pricing and timing of the Premium Video on Demand release, maximum care needs to be taken so as to not cannibalize theatre revenues, and yet earn strong revenues. Movie studios are considering time windows of 10-45 days from the date of theatre release to release new films on premium video on demand.

In all likelihood, movie studios are likely to build their own platform to use for Premium Video on Demand. Costs of building and promoting a premium video on demand platform are low when compared to the losses from sharing revenue with an aggregator like Netflix. Movie studios can quite conveniently use VdoCipher’s secure video streaming to host videos on their premium video on demand platforms.

What is the Hollywood Release Window?

In Hollywood the release window is the period after the release of the film when the film is solely available on theatres. This period of 90-120 days before the film is released on DVD or subscription services is considered sacrosanct by the theatre chains. Theatre owners indeed have reason to consider this period sacred. They fear that attempts to shorten this window would cause theatre-goers to skip the cinema halls altogether and wait out a short period to catch the newest release.

On the other hand, studios are aware that different movies have different reception at the box office. Some films see extended runs in theatres for over 3 months whereas many end up disappearing within a month. The challenge is to apply a one-size-fits-all premium video on demand model in the film industry. This is because with films it is only about a week after release that a film’s fate becomes clear.

Risks in launching Premium Video on Demand for Studios

The studios are aware of the dangers of trying to fix something that is not broken. Risks in the premium video on demand model are evident – Premium VOD may cannibalize theatre revenues, confuse users, and may even lead to further decline in the culture of audience going to cinema to watch films.

Watching films in cinema halls is a different experience from watching at home. Besides the physical experience of watching the film in theatres, there is also the aspect of pop-culture relevance of films. Popular films gain an audience because people watch a film and recommend it to their peers. This peer pressure contributes to a large percentage of people going to theatres.

Netflix has already disrupted the film industry with its model of releasing films on the VOD platform on Day 1 itself. Starting a Premium VOD option may just about be the final nail in the coffin for movie theatres.

Just as studios are wary of pulling audience away from movie theatres, they are aware that overall changes in home entertainment means that viewers now experience films differently than before. Developing a premium video on demand platform would mean that movie studios are better equipped to fight off Netflix and Subscription VOD websites.

Ideal release window and price point for Premium video on demand

The debate currently is about the time window between theatre release and release on Premium Video on Demand. A related problem is that of price. It is over these two points that the major studios differ.

Studios, Advertising and Pricing

Warner Bros has proposed a $50 fee for a Premium Video on Demand release 17 days
Fox is considering $30, and making films accessible after a 30-45 day period of theatrical release
Fox and Warner Bros. have displayed flexibility in this, with Warner Bros. also interested in the pricing and timeline of Fox’s proposal.
Universal wants to see Premium video on demand release date in under 20 days. Their proposition is $40 after 10 days.
Disney is seeing a golden 2017 (Beauty and the Beast, and Pirates of the Carribean both generating handsome profits). Disney films are often seen as sure bets at the box office. Their films are eminently suited for the theatre experience, for which reason it is extremely unlikely to undermine its bottomline by agreeing to Premium Video on Demand.

Major Hollywood studios are actively considering a Premium Video on Demand model

The studios cannot collaborate together to achieve a Premium VOD model because of anti-trust laws, and are likely to enter into agreements directly with theatre chains.

Advertising and Public memory: Upto and during the weeks of a film’s release released, there is extensive promotion and publicity for movies. If the film being released through video on demand shortly (between 10 to 30 days) of the theatre release, it is much more likely to be in public memory. On the other hand if this period is extended to beyond 45 days a separate promotional campaign would be required to release on premium video on demand, which may not be as effective either. The risk is that by Day 45 the movie would have receded sufficiently from public consciousness that responses will be tepid.

Pricing also becomes relevant in this regard. The lower the price the higher are people likely to want to watch films at home only and avoid theatres. To placate theatre owners, studios may price premium video on demand films for as much as $50.

Theatre Owners and Film-makers on Premium Video on Demand

Exhibitors are quite clearly against Premium Video on Demand, and they seek reassurance that there will be no further changes in the release window over the next 5 to 10 years.

Film-makers are divided when it comes to Premium VOD. Many such as Steven Spielberg and Peter Jackson back the concept of Premium Video on demand (supporting Screening Room). On the other hand many filmmakers such as auteur Christopher Nolan stress the significance of theatre for film, and would not want to be involved in anything to jeopardize that.

Subscription Video on Demand Platforms

Netflix has of course circumvented the entire theatre release model. This has found the video on demand platform facing some resistance – Cannes Film Festival now requires that to be able to compete for the Palme d’or movies need to have theatrical releases. 

Netflix released Okja directly on its video platform

Amazon Studios on the other hand reaffirmed their committment to theatrical release of films that they produce. The studio produced Oscar winner Manchester by the Sea, which enjoyed an extended theatre run.

Other Players in Premium Video on Demand – Prisma and Screening Room

Prima is a high-security home entertainment system that enables users to watch films at their homes at the same time as theatre releases. It is prohibitively expensive, and the anti-piracy restrictions means that folks are unlikely to want to capture films using this technique. Prima costs $35,000 for installation and $500 for each time you want to watch a film. The service offers movies from Film Studios Univeral, Lionsgate and Paramount, and is in talks with Warner Bros., Disney and Sony.

Prima Security features include background check, restrictions on size of home theatre hall and minimum size of theatre screen, besides fingerprint authentication at each time of video playback. This is one that the likes of Brad Pitt and Woody Allen are likely to have at their homes.

Sean Parker cofounded Screening Room, which intends to introduce direct online release of films at the same time as theatre release.Sean Parker is notorious for disrupting the music industry with Napster. Under its plan, viewers can rent movies the same day as theatre release for $50.

Screening Room faces considerable opposition from studios and exhibitors.The company claims that it can generate $8.5 billion revenue annually for the film industry. Movie studios however disagree, and believe the potential returns are not very sufficient. 

Under its proposal, of the $50 rental fee, 20% would go to the movie’s distributor, participating theatre chains would get upto $20 from the fee. Screening Room has not gained much traction, largely because of its outsider status in Hollywood and because of its aggressive same-day release model.

It is likely that Premium Video on Demand will take in the near future. VdoCipher’s full-stack DRM is eminently suited for releasing films online simultaneously with theatre release. 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.

Top Video entertainment platforms have adopted the SVOD model

SVOD – Build a Subscription Video on Demand Platform

Why Subscription Video on Demand (SVOD platform) is the big deal

I cannot get tired of quoting this stat – Netflix accounts for over 35% of peak internet traffic in North America. At any time every third internet user is streaming videos on the VOD platform.

When a single VOD platform offers such variety as Black Mirror, BoJack Horseman and House of Cards, how else would you spend your time?
SVOD giant Netflix have reached 100mn+ subscribers internationally
Indeed Netflix dominates as an SVOD platform because of their fantastic library of popular and critically acclaimed TV shows and movies. In Subscription Video on Demand users pay a periodic (most often monthly) fee, in return for which they get access to unlimited content on the VOD platform. SVOD model is best suited for websites that have a large library of video content, and that can attract large number of viewers.

Indeed, subscription video on demand platforms are havens for internet users looking to spend their down-time on entertainment videos. Many Subscription VOD platforms have followed Netflix’s lead. Amazon Prime Video, Hotstar and Hulu are amongst the biggest SVOD platforms in entertainment.

SVOD platforms are also incredibly good at making money. In 2016 SVOD platforms in the US generated $6.2 Billion revenue, compared to $2 Billion generated by Electronic Sell-Through platforms such as iTunes and Google Play Movies.

E-Learning Video providers have also adopted the SVOD model. Udacity, Coursera and Pluralsight have achieved sustained growth in revenue and a stable user base by implementing the Subscription VOD model.
Elearning VOD platforms have adopted SVOD model
In this blog I detail why there is immense potential for growth in SVOD market, and how you should get started with your VOD platform.

Will Video on Demand replace Television

Video on Demand platforms have grown exponentially in size over the last 10 years. Cable television, for a long time the default medium for family entertainment, is now facing an existential threat because of all-you-can-watch SVOD platforms.

Consider the figures from a global Nielsen survey on the popularity of video on demand platforms.

26% global users are subscribed to at least one Video on Demand platform

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 a Television connection offers – Movies & Series, News, Sports, Infotainment and Kids Entertainment – can barely be matched by a single Video on Demand platform. Netflix for example has ruled itself out of acquiring sports content. The company believes in focusing on its niche of feature-films and television. 

Potential for a vast ecosystem of VOD Platforms

Much needs to change for Video on Demand platforms to successfully replace television. An ecosystem of platforms, which would offer both general entertainment and niche content, needs to emerge.

YouTube is the biggest video on demand platform. Viewers on YouTube clock over 1 billion hours of videos viewed, every day. This, as YouTube is keen to point out, comes to to over 100,000 years worth of videos viewed, every single day.

YouTube’s revenue model is Advertising video on demand (AVOD). The platform generated $9 billion revenue in 2015. Inspite of the huge audience and revenues that it generates revenues earned by artists is very low. YouTube’s content-creator split means that YouTube takes 45% of ad-generated revenues from every channel. Video creators also have to sign up with Multi-channel Networks to handle the monetization aspect effectively. This in turn sees their split from video come even further down to 38 percent.

Besides this, per ad revenues are often very low – the high is at about $20 per 1000 views. And that is when users watch through a full ad.

As a result, revenues generated by many video creators are barely sufficient to recoup the investment in video. Many artists now opt to start their own video on demand platforms to better monetize their creative output. Case in point, Popular YouTube personality Casey Neistat took a break from vlogging on YouTube to start his own venture with CNN.

Explanation of business models for video on demand platform

Opportunities for better monetization of content are now available for video creators. The true size of the video on demand ecosystem can probably be estimated by the number of YouTube channels with over a million subscribers (somewhere around 2000)

Subscription Video on Demand – The Whys and Hows


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.
SVOD platforms are successful when they combine large range of viewing options with building viewer loyalty

SVOD platforms are successful when they combine large range of viewing options with building viewer loyalty

Examples of niche video on demand platforms include:

  • Indieflix, which is a platform for independent short films
  • Noggin, Nickelodeon’s video subscription app 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. 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

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.

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. 

Netflix offer tiered memberships to their SVOD platform

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.

Use 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.

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. 

VdoCipher’s secure video streaming offers a full-stack DRM, helping you battle piracy effectively. Security features include –

  • 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

Use VdoCipher for your video on demand platform
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.
Check out our analysis of the TVOD – Transactional Video on Demand model to evaluate the right business model.

Video on Demand Platform for Media & E-learning Businesses

Video on Demand platforms have opened up a plethora of choices for viewers. Viewers no longer find themselves dependent upon what their cable network is broadcasting at a particular time. Channel surfing is replaced by informed decision making on VOD platform. Strong recommendation systems help show relevant content to users, thereby optimizing user experience.

Because of this ability to offer a personalized user experience, Video on Demand Platforms retain a phenomenal ability to engage viewers and keep viewers on their platform. Netflix and Amazon Prime Video have both been aggressively building a vast content catalogue. It is imperative for these Over-the-top (OTT) platforms to present just the right kind of content for different kinds of viewer preferences.


  1. A Case Study of a Video on Demand Platform – Netflix
  2. Identify your niche and create your Video on Demand Platform
  3. Why VdoCipher is best for your Video on Demand Platform
  4. Select a Tech platform to build your Video on Demand Platform
    1. WordPress/ Joomla/ Drupal/ Moodle Content Management Systems
    2. Develop your own website using Node.JS, PHP, ASP.Net, Python, Ruby
  5. Design your website
  6. Monetization model, Pricing and Payment Processing

A Case Study of a Video on Demand Platform – Netflix

Going back 10 years, Netflix was primarily identified as a DVD-by-mail business. The company had introduced its Video on Demand platform in January 2007 as a bonus for DVD subscribers. What began as a tentative step to build a slight advantage over competitors has now become the world’s biggest Video on Demand platform. In this period the company has consistenly worked to improve its technology stack and content catalogue. The company now has close to a 100 million subscribers, with the number only expected to grow.

Identify your niche and Create your Video on Demand Platforms

As internet connectivity across the world improves, demand for video streaming services will continue to grow. In North America Netflix  contributes to over 35% of peak internet traffic. In India broadband connections have become the norm in urban areas, whereas mobile networks led by Reliance Jio are making an aggressive push to enable internet connectivity across the country.

Compared to the costs of creating and distributing videos, revenues are not hard to attain. Setting up a video on demand platform is certainly one of the most attractive proposition for content creators and distributors.

Video on demand means so much more than movies and TV shows. YouTube, which is the world’s biggest VOD platform, enables creators to share videos on niche subjects. Users create videos covering anything from video games, film and music discussion and vlogging to educational videos. To get started you only need to reach out to a small subsection of your potential audience base.

Video content is 40 times more likely to be shared than other forms of content. This means that quality videos can generate an audience with minimal effort in marketing. You need to identify your niche, and offer top-quality content to ensure that your video on demand platform is a success.

Videos are also heavily being used for marketing and for product videos. Four times as many users prefer to to watch a video about a product than read about it.

Video is also revolutionizing E-Learning considerably. Instructors are using video to reach millions of people eager to learn. Massive Open Online Courses (MOOCs) such as EdX, Coursera and MIT OCW have made quality higher learning accessible to anybody with a good internet connection. 

Coursera e-learning video on demand platform

You can setup your own video on demand platform, which would give you complete control over your video streaming application.You can directly communicate with your audience, and can interact with them help improve user experience, helping achieve a greater audience.

Setting up your own VOD platform, you can setup your monetization options, opting for either a subscription model or an advertising video on demand business model, as you see fit. You can make further customizations such as custom encoding to optimize bandwidth usage, and custom player skins to offer a customized viewer experience

It would also mean being no longer dependent on video aggregators like Vimeo and YouTube. YouTube for all its advantages offers limited monetization options. It does not leave the users much control over their content and their audience. Throughout playback viewers are completely free to switch to another video, meaning that meaningful engagement is hard to achieve.

Why VdoCipher is ideal for your VOD Platform

Streaming videos involves a large workflow process, which involves:

Import videos directly from Amazon S3 bucket to VdoCipher for secure video hosting

  • Video Upload and Transcoding
    • Upload to secure S3 bucket
    • Transcoding to different file formats, enabling multi-bitrate streaming
  • Video management through dashboard
  • Secure Video Streaming
    • Amazon Cloudfront and Akamai CDN network for fast delivery
    • Server-side encryption, including HLS encryption
    • Player authentication, through backend private key
    • Dynamic watermarking
    • URL whitelisting
  • Smooth video playback
    • Design custom skins and customize video player
    • Thumbnail customization
  • Plugins for WordPress, Joomla!, Drupal, Moodle, and developer-friendly APIs
  • Multi-device compatibility
  • VAST ad insertion for Advertising Video on Demand platform
  • Access video playback analytics through API and dashboard
  • Pay per use model – pay for bandwidth and storage

The entire process of conceptualizing, storyboarding, and video production is extremely time and resource-intensive. To regain the investment that goes into making videos you need to ensure effective monetization from content.

Yet piracy presents a major challenge to monetization. Our statistical study shows that about 25% of the world population uses common video download tools to pirate content. 

VdoCipher’s large user base relies on our secure video streaming solution to ensure that their monetization opportunities are not affected due to piracy losses. VdoCipher video hosting solution provides the complete solution for video on demand platforms. Our full-stack Video DRM enables video content providers to secure their videos effectively, and set up their videos behind a paywall solution. In this blog we discuss why self-hosting is rarely a good idea.

Using VdoCipher means that you can continue to focus on improving your website experience and your content catalogue, while resting assured that your viewers are getting a smooth video experience. Buffering is the reason a lot of users leave videos – a study revealed that even for videos of length greater than 30 minutes, a delay of 30 seconds can lead to more than 60% of users leaving the video. Viewers have little patience and high expectations when it comes to streaming videos. VdoCipher has developed expertise in delivering high quality videos in locations with spotty internet connectivity. Video playback through the VdoCipher player is smooth and seamless, and time taken for buffering is minimal.

In this blog we discuss how to use VdoCipher to maximum effect to setup your video on demand platform. To learn more about how the VdoCipher feature set works out for different cases check out this blog on VdoCipher for business.

CMS and Programming Languages to Build your Video on Demand Platform

Create Video on Demand Platform with WordPress

WordPress currently powers over 25% of the websites on the internet. Some of the most prominent websites using WordPress because of its easy functionalities are New Yorker magazine and

Use WordPress for video on demand platform

Embed using Shortcodes

  • Create an account on VdoCipher. You will be mailed your client secret key.
  • Install the VdoCipher wordpress plugin, and enter your client secret key. You are all set to embed VdoCipher videos to your website.
  • Right-click on the video in the dashboard that you wish to embed to your website. Copy the video id to the shortcode format, replacing the 123456 in the shortcode below, and using a single parenthesis.  

[vdo id="123456"]

  • Add the shortcode to the page in which you wish to embed the video. Its a simple two-step process to embedding your video.

Dynamic Watermarking

To add a dynamic watermark go to the settings panel of the VdoCipher plugin, and add the text that you wish to add to your WordPress website. More details are given in this blog.

Themes for WordPress developers

WordPress supports a fantastic community of developers who create plugins and themes. This makes WordPress extremely useful for beginners looking to buy off-the-shelf solutions for their website. To create your own Video on Demand Platform there is a wide variety of themes and plugins that you can use to embed your videos to your websites.  Some of the best themes that we have found to offer great functionalities and easy monetization options are:

  • Vlog

Multi-purpose – can be used for vlogging or for news websites.
Supports Series plugin, which enables you to create playlists of videos
Integration with WooCommerce for monetization options
Enables Advertising Video on Demand by supporting banner ads on pages
$69 one-time purchase

  • VideoTube:

$49 cost
Easy integration with membership plugins enabling you to monetize your website as Subscriber Video on Demand

  • VideoPlus

$39 cost – includes 1 year of theme updates and 1 year of personal support

  • PremiumPress Video Theme

$79 cost
Whereas most video themes are designed to enable monetization from advertising video on demand model. PremiumPress’ Video Theme is designed to enable you to secure videos behind a membership plugin.

  • NewsMag Lite

This is free plugin that you can use to create your own newspaper-like or magazine-like website. You can use a combination of texts, images and videos for your site.

Membership Plugins for WordPress

You can manage user access rules using membership plugins. This includes partial protection of content on web pages to restrict content to only paid subscribers. Partial protection is implemented through shortcodes, and means that free subscribers/ non-subscribers can only see part of the page, while the remaining would be protected by a paywall. You can also protect entire sections and pages behind your paywall membership plugins.

WP eMember and Membership Pro 2 are two of the most popular membership plugins. An important feature that WP eMember offers is to prevent simultaneous logins. This stops users from sharing passwords with other people. Another plugin.

Create Video on Demand Platform with Joomla!

Joomla! is one of the most popular PHP-based content management systems. A vibrant community of developers has made Joomla one of the best platforms on which to build your video on demand platform.

Joomla! for video on demand platform

VdoCipher’s Joomla video plugin makes all the backend API calls, meaning that all you need to do to embed your videos is add the embed code. The installation procedure to integrate VdoCipher’s video plugin to your Joomla-based video on demand platform is:

  1. Dowload the VdoCipher Joomla Extension
  2. Upload the VdoCipher Joomla Extension to the Manage Extensions page
  3. Click on VdoCipher to open Parameters page
  4. Enter your client secret key, which you would have received in the mail on registration, in the given field
  5. On saving the settings you are good to go
  6. Get your video id directly from the VdoCipher dashboard
  7. Enter your video id to the shortcode, in the format (where you replace 123456 with your video id)

[vdo id= 123456]

Note that PHP5-curl needs to be installed on the server for this extension to work. Attributes for the shortcode include the display settings of height and width – for example if you require height = 350 and width = 700, you can add the following attributes to the shortcode

[vdo id=123456 height=350 width=700]

The shortcode is space-sensitive, so any additional space at the end of the shortcode before the brackets can cause an error.

Create Video on Demand Platform with Drupal

Drupal for video on demand platform

VdoCipher module for Drupal uses a shortcode to display videos inside any node, which may include articles and posts, besides custom content types. The shortcode is added to the WYSIWYG text editor, and the module handles the API calls. The client secret key is used for API calls between your Drupal website and the VdoCipher video dashboard. The plugin abstracts away the API calls, meaning that all you need to do get started is:

  1. Upload your video to the VdoCipher dashboard
  2. Download the VdoCipher module
  3. Upload the module file from the “Install New Module” page on your Drupal installation
  4. Click on the Configure link on the module page to complete your setup
  5. Copy the API Key from VdoCipher Dashboard -> Config -> General
  6. Enter your client secret API key.
  7. Get your video id directly from the VdoCipher dashboard
  8. Enter your video id to the shortcode, in the format

Required argument id for embedded video not found.

  1. Embed the video id to any content_type text field in your website

We are currently working on integrating the VdoCipher plugin with the Drupal media module. You can add dynamic watermarks to your video as well using these annotation code guidelines.

Video on Demand Platform with Server-Side scripting languages and Frameworks

We have also developed our API for use-cases with Python, Ruby, Node.js, ASP.NET and PHP. Together these backend-languages power much of the internet. Using our embed code and the API reference for the respective language, you can host your videos to deliver a truly unique experience for your clients.

Web Frameworks that are most popular currently include:

  • Django, Flask and Pyramid frameworks for Python
  • Rails framework for Ruby
  • CakePHP framework for PHP
  • Node.js framework for Javascipt

The utility of frameworks is in enabling developers to use boilerplate code, thereby avoiding having to repeat the same thing multiple times. Frameworks help you manage and enforce your web architecture. Using a framework also enables you to use vast a variety of libraries that are available.

For Web Hosting the most popular website hosting servers are DigitalOcean, Rackspace and AWS.

Create Video on Demand Platform with PHP

PHP (PHP: Hypertext Preprocessor) is one of the most popular server-side scripting languages used to build websites. The biggest utility for PHP is its ease-of-use, which has enabled blogging platforms such as WordPress, Joomla! and Drupal to emerge. The world’s largest encyclopedia – Wikipedia is also setup using PHP. Popular e-learning platform Moodle is yet another implementation of PHP. Facebook also uses PHP in its core codebase.

PHP is arguably the easiest language for beginners to make a basic functional website, and for that reason retains its popularity.

In our developer library you can find the embed code for integrating your VdoCipher videos to your website. Using this embed code you would need to add the video id to the embed code, and your client secret key to the API reference, and you would be ready to embed your videos directly to your website.

The developer library also includes sample code for enabling video uploads to your VdoCipher dashboard directly from your website. This would enable your users to directly upload videos without needing to open the dashboard. After the API call is made by your PHP application server, a video upload policy document is returned. You can use standard Javascript libraries to make the process of upload smoother – Angular, JQuery or Dropzone. The video upload should be made within 1 hour of the video upload policy document.

Create Video on Demand Platform with Node.JS

Node.js is currently the most exciting framework for server-side scripting. Its primary utility is its single-thread non-blocking I/O design, which means it is eminently suited for web applications requiring vast scalability. Some of the most popular transaction and event-based web applications currently using Node.js are PayPal, Uber and Netflix

The VdoCipher Node.js module enables you to handle your videos securely on your video hosting platform. VdoCipher’s secure video hosting

Using Node.js for server-side scripting means that both your frontend and backend use Javascript. Most Javascript frameworks are for frontend; Node.js is a singularity in that context. . The Node.js core itself is quite lightweight. There are numerous modules that are made available by an active developer community, adding powerful functionalities to Node.js programming. An active developer community means that for most purposes you could easily find a developer library to achieve a nydesired functionality.  

VdoCipher Node.js API

Class VdoCipher. Create a class instance vdocipher (client_secret_key). Instance method of the VdoCipher API include vdocipher.getOTP, which passes the video ID, and receives OTP. Instance method vdocipher.getSignature returns a signature authenticating the video playback.

For more information about the API reference please look up the API reference. Check out the embed code.

You can find sample code to generate OTP for a video on demand platform on WordPress, to authenticate video playback

The github reference can be found here.

Create Video on Demand Platform with Ruby on Rails

Hulu is a major video on demand platform built using Ruby on Rails. Other web applications built using Ruby on Rails framework are SlideShare, Github and Groupon.

Ruby is one of the most popular server-side scripting language. Popular for its developer-friendly structure, Ruby can be used with the Rails framework (Ruby-on-Rails).

VdoCipher gem for Ruby-on-Rails handles the API reference. Steps for integrating VdoCipher video player to your video on demand platform:

  • Add this line to your Gemfile in your rails application
gem 'vdocipher'
    • And in your controller file add these lines
require 'vdocipher'

vdo_api = "CLIENT_SECRET_KEY");
@embedcode vdo_api.play_code("VIDEO_ID", "style=\"height:400px;width:640px;max-width:100%%;\"");
      • Now in your view file embed code where you would like to play videos

Create Video on Demand Platform with Python Frameworks (Django, Flask, Pyramid)

Most popular websites using the Django framework with Python are Instagram, Pinterest, Google. The biggest video on demand platform YouTube, although originally built using PHP, now also runs on Python.

You can see a sample file for integrating VdoCipher to your Python website here. You should break this file, which includes the embed code, player OTP call and API reference, according to your MVC architecture.

Design your Website’s User Interface

A great and intuitive user interface goes a long way towards building and retaining your audience. Here we bring tips from observing popular video on demand platforms, that you should implement to make your VOD platform a success.

      • Clean and Easy Membership system – a popup box can be used to login. You may also enable social login via users Google or Facebook accounts
      • These are the home pages of Twitter and Netflix – the similarity? Both of them give a glimpse of interesting content that you find on the platform. This would improve conversion of site visitors to subscribers.


      Netflix Video on Demand home page   Twitter home page
      • Personalized Recommendations based on ratings that you give movies and your watch history.  Netflix implements a Thumbs Up and Thumbs Down rating system – it aggregates user behaviour across different patterns of ratings. Using your viewership data Netflix recommends content that you are likely to watch.
      • Easy grouping of content helps viewers decide what to watch. This includes content based on your recent watch history, and content grouped according to genres such as Action & Adventure and Romantic Films.
      • Get your movie descriptions right – help users understand exactly what they are signing up to watch. Your users will appreciate it.
      • Multi-Device synchronization – For viewers constrained by time, it may be possible only to consume long-form content in small chunks. By providing synchronization across devices you enable your viewers to start from the last-watched locations, and stop in the knowledge they can resume when they want to on whichever device they wish to. This is one of the most important features to get right. Your video player should be able to synchronize your last played location on the video. VdoCipher gets this right by automatically saving the pointer to the last viewed location on the video, meaning that you can easily play back videos.
      • Get the balance between high quality and streaming on low bandwidth networks – It is important to provide a great experience for viewers with high-speed connections as well as for viewers with low-internet bandwidth. This is critical for VOD platforms in developing countries, where internet connectivity in rural areas is poor. Encoding optimizations can help viewers stream reasonably good videos even on 2G-speed internet connections.

Monetization Models, Pricing, and Payment Gateway

SVOD – Subscriber Video on Demand

Subscription Video on Demand is definitely the most popular monetization model used by most video on demand platforms. A recurring subscription gives users access to unlimited content on the VOD platform.

To target different kinds of users you can implement a tiered pricing model, wherein subscribers to the basic plan get the core content offering. Subscribers to higher payment plans can get access to additional content that supplements the core video offering. For example Netflix gives unlimited access to its complete library for its basic plan. However if you wish to watch Netflix simultaneously on multiple screens (share a subscription), you are encouraged to buy a multi-screen subscription at a higher price point.

Explanation of business models for video on demand platform

AVOD – Advertiser Video on Demand

As a monetization model this is the strategy that YouTube offers. Through this YouTube can share revenue with its content creators. In this case, content creators do not have a direct relationship with the video on demand platform, and therefore advertiser Video on Demand in YouTube’s case enables revenue sharing. AVOD is the optimal strategy when you are expecting a lot of users to tune in to your website.

The only caveat to basing your business model exclusively on advertising is that it is viable only when you have a large audience. Revenue from a single ad is often very low – you need to have a large enough audience to be able to generate meaningful revenue. For videos on subjects of broad interest the inherent virality of content is extremely critical. In such a case YouTube is often the ideal platform for building and connecting with their audience. If you are looking to build your website with the target of earning revenue from advertising, you should at least target million plus page views per month. 

TVOD – Transactional Video on Demand – Pay per view or buy the content

You can make specific content accessible for users on payment of a fees. This is for one-time content created which you want to monetize. Most online tutorials fall into this category. You can package your videos individually, or as part of a bigger package. The difference between subscription and pay-per-view content is that users pay for access to specific content only. TVOD is ideal when you have differentiated content offerings which have value by themselves.

Payments Gateway and Processing

You need to setup a payment gateway solution so that you can receive payments from across the globe.

Instamojo, PayU and CCAvenue are some of the most popular payment gateways in India. Internationally PayPal and Stripe are both widely trusted payment processors.

Comparison of International Payment Gateways – PayPal and Stripe comparison

PayPal Stripe
Ease of use Easy embed code which can be downloaded from PayPal website Requires a separate coding framework to integrate Stripe
Fixed Monthly Costs PayPal Standard account is free,
Advanced Account costs $5
Pro account costs $30 per month – Advanced and Pro offer native integration with website
Stripe does not charge any monthly fee
Transaction fees 2.9% + $0.30 per transaction 2.9% + $0.30 per transaction
Customer Support Better customer support – Quick Answers & Community forum, besides KnowledgeBase and Email support KnowledgeBase and Email support

Comparison of Indian Payment Gateways

Instamojo Setup Fee – 0 Commission Per Transaction – 2% + Rs.3
PayU Setup Fee – Rs. 4,900 – 29,900 Commission Per Transaction – 0.75% – 2.90%
CCAvenue Setup Fees – Rs. 7,500 – 40,000 Commission Per Transaction – 3% – 7%

All Indian payment gateways – Instamojo, PayU and CCAvenue offer integrations with WooCommerce Platform for WordPress. By using any of the free plugins offered by these payment gateways you can get your Video on Demand platform to accept payments within minutes of setting up.

The onboarding process of tying up with the Payment Gateway can take some time though. Most of the payment gateways require scanned copies of documents.

Setting up Payment Gateway for Video on Demand Platform

  • Install WooCommerce and the free plugin for the Payment Gateway –
  • WooCommerce Settings Page -> Checkout -> Payment Gateways
  • Click on the Payment Gateway of your choice after downloading and installing the plugin
  • Rename the payment gateway Credit Card/ Debit Card/ Internet Banking
  • Configure your payment gateway by adding your merchant ID and Merchant Key
  • You can finally select a redirect URL – the page on your website where customers will be taken after the transaction

Individual process for these payment gateways vary. If you opt for any of the payment gateways for your WordPress website it would be a good idea to first integrate it with your WordPress installation to make sure that the plugin is compatible with your WP themes.

If you have more queries on VOD platform, please give us a shout at A free trial to secure stream videos for your video on demand platform is available at

The Netflix revolution – Part 1: History of Netflix

Here at VdoCipher we are in awe of how over its history Netflix has consistently innovated in streaming video. Over the history of Netflix, the company has maintained a content catalogue which would be delivered at first via mail. When the technology infrastructure became available Netflix pioneered video technology, which revolutionised home-based video entertainment. The technical decisions that Netflix takes often serve as guides for VdoCipher’s course of action, while the long-term vision that the company has executed in its two decades has helped it standout from competition. Netflix offers a fantastic glimpse into how long-term strategy and decision-making ensured the company crested the wave of vastly increased internet connectivity in recent years.


  1. Introduction
  2. Netflix’s Subscription-based Business Model
  3. Competition with Blockbuster
  4. Netflix launches Streaming Video on Demand
  5. Partnership with Hardware Platforms
  6. Shift to the cloud
  7. First Major Content Licensing Deal
  8. Netflix and the Culture of Binge Watching
  9. Original Programming
  10. Separating DVD and Streaming Video
  11. Domestic Growth in US and International Expansion
  12. Conclusion: From Dot Com Bubble to Baring its FANGs

In this first edition of our multi-part blog series on the streaming video giant, we take you back to how Netflix has evolved over the two decades of its existence. Netflix started as a personalized web-based movie recommendation and rental system, transforming over the years into a streaming video giant. The management’s commitment to digital content has enabled Netflix to emerge as the biggest name in the streaming video industry, and more importantly, to stay at the top of its game as it expands globally and seeks to capture increasing audiences internationally.

Founded in 1998 by Reed Hastings and Marc Randolph, the story of Netflix’s founding must be situated amidst the dot com bubble. This was a time when online businesses would sell consumer goods directly via their dot com domains. Amidst the excitement around internet-enabled delivery of services and goods, companies like, WebVan and offering to sell goods directly to consumers raised funding from venture capital firms. However owing to flawed business models which meant losses at each sale, these companies burned cash from the outset.The dot com bubble crashed in due time.

Netflix's DVD-on-mail plus Streaming Video subscribers in the period 2000-2011

In September 1999 Reed Hastings implemented a subscription-based business model. Netflix, although unprofitable until the mid-2000s, survived the dot com bubble. The company offered DVDs via US Postal Service, and had put up their catalogue online. Relying on US Postal Service’s delivery meant that Netflix could focus on their core offerings of a curated and personalized catalogue.

Netflix’s unique offering was its web-based catalogue of films. Instead of having storefronts, the primary means by which customers could access the catalogue was online. This meant that every user in every part of the country could have access to the full library that Netflix possessed, rather than being limited to the titles the nearest stores carried. This also meant that users could shop around for the films they wanted to watch in the leisure of their homes.

Netflix streaming video helped boost their subscription growth

Netflix’s Subscription-based Business Model

The company at the time struggled with two fundamental problems in their business model. One was that because the DVD was sent via mail, it would take anything between one day to 4 days for the shipment to reach the subscriber. Even though people were likely to try Netflix, conversion to repeat rentals was low. Secondly, people would far more inclined to rent out the latest releases. For the company to break even on the cost of purchasing a DVD to rent-out, they would have to generate 15-20 rentals for each DVD.

Two of the most important elements of Netflix’s business model emerged out of their responses to the problems. The company shifted to a recurring-revenue model – the subscription model – which improved second-time movie rental rates considerable. Customers were locked in to the platform, and were therefore much more likely to try rentals again. The company also created a queue, one in which users would select the movies they would like to watch next. This speeded up the process for subscribers to receive another DVD once they returned their first one. This also eliminated the point of late fees charges – the motivation for returning DVDs was to get another DVD to watch by mail. Netflix business model of subscriptions was a response to the problem of retaining customers. Secondly, to enable maximum utilization of their DVD content catalogue, the company created their movie recommendation system. Through Cinematch Netflix would recommend shows for their subscribers to watch. The point for this was to alleviate pressure for DVD rentals away from new releases, to a more uniform renting out of their content library. This solution has over the years become considerably sophisticated, and drives how customers experience Netflix and how the company makes decisions when acquiring new content.

Netflix’s response to these problems was reflective of how the management was focused on building a sustainable business model, as opposed to growing up too fast. Instead of focusing on building a huge content library the company instead optimized their DVD-on-mail solution for their existing library. This business decision was what helped the company survive the crash that followed the dot com bubble.

Barry McCarthy, CFO of Netflix from inception till 2010, spoke to the Unofficial Stanford Blog on Reed Hasting’s idea of the subscriber-based model in an industry where video rentals were centered around retail stores:

“It was Reed’s insight that the subscription model would resonate with consumers in a compelling way. He re-engineered the Web site and software to support a subscription model…we began to grow exponentially overnight. In 1998, I think the business did $1 million in revenue. In 1999, we did $5 million, then $35 million and then $75 million and $150 million and then almost $300 million…We were I think five years to $500 million and another three years to a $1 billion, all because of the subscription model.”

Netlfix’s business model of subscriptions was strengthened in February 2000 when Netflix started their Unlimited Movie Rental programme. This ‘All-You-Can-Watch’ subscription model, at a fee of $19.95 per month, offered customers unlimited movie rentals in a month, receiving upto 4 DVDs at a time. With a view towards maintain subscriber goodwill and loyalty, the company eliminated all per-movie, shipping and late-fee charges. Netflix, under the direction of technical head Neil Hunt, had by then also implemented their content recommendation system – Cinematch.

Netflix’s content curation was headed by Ted Sarandos, Chief Content Officer. Sarandos joined in 2000, and had prior experience in movie and television distribution. He has managed Netflix’s content offerings over the years, initially curating and providing inputs for the movie recommendation system, and is now a major cog in the wheel of the to the company’s original content – Netflix Originals – initiative.

Competition with Blockbuster

Netflix’s business model and vision in the movie-rental industry was considerably different from that of their chief competitior – Blockbuster. The chief of retail video rental chain Blockbuster, John Antioco, on the other hand believed that video rental was a much more spontaneous process, and that receiving copies in-store and watching immediately was prefered by customers over waiting for days for the DVD on mail.

Amidst this new rental programme, Netflix was losing money. Reed Hastings met with Blockbuster CEO John Antioco in Dallas, proposing to sell a 49% stake in Netflix to Blockbuster for $50 million and in exchange for running Blockbuster’s brand online –, while complementing Blockbuster’s offline DVD rental business. However Blockbuster passed on the deal, believing that Netflix, which was not profitable at the time, did not add value to their own business. It was this inability to see the long-term view, which Netflix was committed to, that led to the contrasting fortunes the two companies faced.

Netflix presented a considerable disruption to the business model of retail video rental chains. DVDs would be sent through the US Postal Service. Unlike Blockbuster for which late-fee was often a significant portion of its revenues, Netflix completely eliminated the late fee, with the incentive for returning for the customer being access to another DVD. Netflix’s products key differences were their lack of stores, instead mailing DVDs ordered online, and secondly not charging late fees. It was Blockbuster’s inability to compete with Netflix on these two counts that ensured that the upstart beat the established company in the home-entertainment ecosystem.

Netflix offered their initial public offering (IPO) on March 24, 2002, bringing in $82.5 million. At the time the company was not profitable, making a loss of $4 million on $30.5 million of revenues. This was, however, an improvement over the previous years figures of loss of $38.6 million on revenues of $75.9 million.

Its battle with Blockbuster was the first big win in the history of Netflix

In 2004 Blockbuster finally entered into the online DVD rental space. They also removed their late fees charges. However these two changes increased costs and reduced revenues, leading to activist shareholders led by Carl Icahn pressuring the CEO against the strategy. Blockbuster’s online initiative lost momentum and the late-fees was reinstated.

Blockbuster’s growth came and market dominance came about in a period when 80% of the company’s shares were held by Viacom. In 2004 Blockbuster decided to make an outlay of $200 million on Blockbuster online, and waived their late-fees charges which would have led to revenue decline of about $200 more. However Viacom exited the company when this strategy was adopted, believing the new path as not being aligned to its own vision. The challenge that the market dominating company was facing was being unable to reinvent its business model in the face of technological shifts. The agile startup Netflix on the other hand continued its growth, achieving growths in both revenues and subscribers, until finally in the 2010s the company expanded exponentially as streaming video technologies matured. John Antioco and executives at Blockbuster on the other hand faced resistance from the new shareholders after Viacom’s exit, who pressured the board to reinstate the late fees and drive down investment in the online business. It was the late entry to the online business, as well as the inability to get the backing of shareholders to implement a top-gear strategy for online video, that ultimately led to Blockbuster’s failure in the face of technological shifts.

Netflix launches Video on Demand

Netflix put further pressure on competition when they announced the launch of their streaming service in January 2007, as Watch Now. At the time the streaming service was expected to be of use only for power users with broadband internet connections, which were not all that common at the time. Users were required to have a 1 mbps internet connection to be able to stream movies, with a 3mbps connection required for streaming DVD-quality films. Subscribers under the $17.99 plan had access to 18 hours of streaming content. Video delivery was through a special browser applet that subscribers would have to install. By 2008 however Netflix had given access to unlimited video streaming for subscribers to its biggest plan .

“We named our company Netflix in 1998 because we believed Internet-based movie rental represented the future, first as a means of improving service and selection, and then as a means of movie delivery,” CEO Reed Hastings said at the time, “While mainstream consumer adoption of online movie watching will take a number of years due to content and technology hurdles, the time is right for Netflix to take the first step.”

About 1,000 titles were available for streaming online, as opposed to 70,000 that Netflix offered in its DVD mail-to-order business. Although digital delivery was part of Reed Hastings’ strategy from inception, at the time of its launch the streaming service was provided as an add-on to the DVD subscriptions business. The primary motivation at the time was to slow down user churn. Q4 2006 results showed a net margin of 4.9%, with a net income of $12.7 million on $255 million of revenues. Although it needed to improve its margins, the company had also been seeing subscriber churn of more than 4% each quarter.

Helped by the launch of streaming video, 2007 was the first time that Netflix generated upwards of $1 Billion in revenue. Over that year the company’s subscriber base grew 18%, revenues were up by 21% and net income was up by 36%, compared to the 2006 figures. The rise in revenue offset the increased costs from the online video initiative and strong competition helping the company generate higher profits.

Netflix’s approach to starting its streaming video service was a gradual process. Launched in January 2007, the company did not roll out its services for all its users at once, instead gradually scaling up the service offerings, completing it for all customers in June 2007. In hindsight, seeing Netflix’s experimentation with its video delivery infrastructure in terms of optimizing for the cloud, this slow and steady approach definitely makes a lot more sense than offering a full fledged streaming service and then dealing with downtime and error rates. Prioritizing building a robust technical infrastructure has helped Netflix keep their first-mover advantage. Oftentimes the first-mover advantage is squandered by technology companies who have to make way for businesses that solve the problem more efficiently. Netflix, however, by relying on a solid content and technical team, has managed to keep its competitive advantage since the launch of its streaming video service.

Partnership with Hardware Platforms

As the company started work towards building a streaming video solution, they also started to develop solutions for streaming video through hardware platforms. In 2004/05 the company was considering working with contract manufacturers on DVD disc drives with a video processor, which could download video content over the internet, and then stream it on TV. This model was similar to TiVo, which enabled TV owners to record TV shows on a disc. This was however shelved as competition with Blockbuster intensified and Netflix had to put resources into engaging in a pricing war with the market leader.

In 2008 Netflix began work on a device for streaming videos. Netflix started work on developing a video player to connect to television, through which streaming video can be played over the internet. However Reed Hastings was concerned that potential partnerships with consumer electronic platforms would be negatively impacted by having their own platform. Roku was subsequently spun out as a separate company.  For much of its history Netflix has had to face questions from cable TV providers whose content it would license, movie studios for movie licensing, as it presented a competition to their respective business models. Being perceived as a threat by the device manufacturers with which it was seeking to partner in the early stages of its streaming video business would hardly have severely limited its growth options. For this reason Netflix decided to spin out the Netflix Player team as a separate company.  

Netflix subsequently partnered with Microsoft for developing a streaming video app for their gaming console. They also later worked with Sony Playstation, developing

Shortly after the launch of Roku, Netflix announced partnership with Microsoft. As part of the partnership Netflix developed a native app for the game console Microsoft XBox 360. This gave access to XBox Live Gold Members access to Netflix on their television via their game console. For Netflix it meant that the market of 12 million XBox Live members was opened up, whereas for Microsoft could market their XBox for the million Netflix subscribers. The deal required Netflix to maintain the streaming video technology exclusively to XBox for an year. Subsequent to that Netflix would develop a Blu-ray disk based streaming video solution for Sony’s Playstation. The company would later go on to generalize the software platform they developed for DVD players to enable Netflix integration via Software Development Kits (SDKs). This also meant that as Smart TVs emerged and prevalence of streaming video over the internet developed over the years, Netflix was essentially prepared and could offer easy integrations.

Shift to the Cloud

In August 2008 Netflix experienced a major database corruption, and could not ship out their DVDs for three days. This was the stimulus which led to Netflix opting to host their business logic on the cloud. This cloud migration would take place for the main part in the period of 2010-2011, and would only be completed in 2015, when the company finally setup its billing infrastructure, the most sensitive part of its business operation, on the cloud. The complete shift to the cloud was a pathbreaker in the tech industry. Netflix has over the years built a highly robust cloud infrastructure, which has enabled the company to scale up seamlessly as it has seen exponential growth and as it has expanded to 190+ countries.

First Major Content Licensing Deal

In 2008 Netflix agreed a deal with Cable TV channel Starz to broadcast their content library for $30 million annually. Starz’s library of 2500 movies and TV shows, including movies Disney and Sony Pictures, became available for streaming on Netflix. The deal was a hugely important step in the history of Netflix, as its streaming video service could now offer a wide range of quality content to their video streaming subscribers. Starz on the other hand, probably expecting the streaming video industry to remain a niche segment, did not expect the deal to cannibalize their own PayTV offerings.

In 2011 Starz stopped its content licensing deal with Netflix, even after Netflix offers $300 million for licensing Starz’s library. Starz CEO went on record saying that he considered the deal a terrible mistake for Starz.

Netflix and the Culture of Binge Watching

Netflix soon started entering into content licensing deals with television studios. For television studios the income from Netflix’s streaming videos supplemented other geographical licensing deals. Television studios only make episodes of previous seasons available, in the belief that showing the episodes from the last aired/ currently airing season would through online video streaming services would lead to them losing users from the cable platforms, who were the primary monetization channel for television studios. Netflix would later turn this monetization scheme on its head when they started licensing original content, becoming a major revenue channel for television studios in their own right.

As more people began tuning into Netflix, content providers found that Netflix helped build audiences for their shows. Cable networks making past seasons and episodes of their television series available on Netflix enabled content discovery. Customers discovering quality cable content on Netflix helped would later tune into the currently airing episodes of the series. This helped boost ratings for television shows such as Breaking Bad and Mad Men, both produced by AMC. Ratings for Season 5 of Breaking Bad were more than double those of Season 1, and many times the ratings of Season 1, largely helped by the audience that Netflix generated for AMC. Netflix helped users catch up to currently broadcasting series, and enabled networks to focus on creating quality content with the knowledge that even a small initial following would convert soon enough to larger audiences.

Shortly before the final season of Breaking Bad aired, the shows’s creator Vince Gilligan reiterated his belief that Netflix helped generate an audience for the show: “Under the old paradigm – using the old technology of simply having first runs and then reruns on networks – I don’t know that we would’ve reached the critical mass that we reached.”

A major point in the history of Netflix was when it inaugurated the culture of binge-watching, and boosted ratings for shows such as Breaking Bad

For television studios, apart from the first run of the series on television, revenues are generated from syndicating TV series to other networks after the end of the season or the series. In this environment Netflix comes in as an added source of revenue for TV studios, besides, as seen in the case of Breaking Bad and Mad Men, Netflix has also enabled broader audiences for quality content through what is labelled as “catch-up TV”.

Original Programming

In 2011, initiating their strategy to differentiate themselves from other services, Netflix started outlaying budget for original programming, with their first original series House of Cards premiering in 2013. Netflix Originals became a critical component of the Netflix Business Model. The original content initiative would enable the company to become less dependent on movie and television studios, giving it leverage over its supply chain of content providers, while helping build a loyal audience. Netflix’s original initiatives would be copied by other OTT providers as well, with companies like Amazon Prime Instant Video and India based Hotstar all investing on originals to broaden their appeal.

Netflix’s decision as to which television shows to license is designed by their content recommendation systems. Their analytics team takes in various factors, including the popularity of the genre, how popular an actor/ director is, and even computing responses to similar content. Because Netflix’s business model does not rely on immediate ticket sales the criteria for a successful series is determined by whether the subscribers on Netflix platform watch the series, and whether the series can inspire a loyal following. The company’s first original license was for House of Cards. The story goes that Netflix ran data on the number of people who rented out the DVD for the UK Television series House of Cards and who watched political dramas such as The West Wing. They likewise computed the numbers who’d shown preference for the films of David Fincher, and who liked Kevin Spacey films. After finding that a significant percentage of their subscribers are likely to watch such a show, Netflix commissioned two seasons of the series, at a total cost of $100 million. This gamble was spearheaded by content head Ted Sarandos, whose reasoning was that the network effects of Netflix would generate sufficient publicity and viewing figures if the show generated even a small loyal following. The idea of creating content for different interest groups, where interest is defined in a much broader and cross-category way, is what drives Netflix’s content strategy. The company entered into a six-film deal with Adam Sandler in 2015. The first film under the deal, The Ridiculuous 8 received generally scathing reviews, and yet Sarandos contends that the film is valuable for Netflix’s subscribers as a large number of people are watching it on their platform. The streaming video provider has definitely seen some failures in recent years – Marco Polo and Get Down being two prominent series that could not achieve a critical mass of followers, and therefore being cancelled. The original content strategy is also important for the company as it expands globally, and as it seeks to penetrate international markets it needs to market content suitable for local tastes.

Spinning out DVD and Online Streaming

In 2011, in a move aimed at generating revenues for further investment into their video catalog, Netflix made major changes to their business model. The company separated memberships for DVD rental and online streaming businesses, getting users to buy different subscriptions. Buying both subscriptions would increase the cost for customer by $6 per month, from $10 for the single membership which included both DVD-on-mail and Streaming video, to $8 each for the two services. Netflix also proposed spinning off the DVD business as a separate entity named Qwikster. As a result of this abrupt price hike, 800,000 left the service, forcing Netflix to partially reverse the decision. Although the price hike remained, Netflix did not spin off the DVD company as a separate entity. Reed Hastings reiterated his belief that the future of home entertainment was in streaming video online, but regretted the communication gap with their customers. Although the move was something of a PR disaster, it was eventually only a blip as the company kicked off its exponential growth. The price rise also helped boost the company’s revenues, putting it in a strong financial position.

Domestic Growth in US and International Expansion

Netflix’s tech innovations have ensured that even though the company contributes to over 30% of peak traffic in North America, its impact on the broader internet infrastructure is minimal. Innovations in video encoding and content delivery have ensured that the company has managed to minimize its footprint, meaning that customers continue to get the best possible experience while not impacting other internet services.

In January 2016 Netflix accounted for 37.1% of traffic in North America’s fixed networks. This share declined to 35.2% in June 2016, which can be attributed to encoding efficiencies that Netflix implemented. Per-title encoding optimization replaced a more general encoding criteria. This ensured that lower bitrates were used for better quality video encoding. For some titles, these optimizations would yield a 20% reduction in bitrates, while achieving a better viewer experience.

The company has innovated in video delivery through the internet by tying up with ISPs to ensure minimal data transfer over the backbone of the internet, so that much of the traffic is routed internally through the ISPs only. Towards this the company’s Open Connect CDN connects through settlement-free peering with most ISPs. The company has also offered to locally cache content at ISPs, through their Open Connect Appliances, which would ensure that streaming traffic would only be local to the ISP. The business logic of customer data and content catalogue would meanwhile be on the company’s cloud services which are installed on Amazon Web Services. Netflix’s cloud operations run out of three different AWS regions – Oregon (US-west-2), North Virginia (US-east-1) and North California (US-west-1), which ensures that the company’s services remain uninterrupted even when entire AWS regions go down. The company has achieved its targetted 99.99% uptime since its move to the AWS cloud.

In January 2016 Netflix launched across the globe. The company’s streaming video service is now accessible in 190 countries, with the only major exception being China, with their cloud solutions scaling up and responding to the demands of global internet requirements.

From Dot Com Bubble to baring FANGs

There has been much internet-enabled transformation in the world that has enabled Netflix’s emergence. The company is a part of the tech industry’s FANGs, an acronym coined by US finance expert Jim Cramer in 2013,  FANGs – Facebook, Amazon, Netflix and Google. Although a relative minnow when compared to FB, Amazon and Google (now Alphabet), the acronym reaffirms how Netflix has over the two decades of its history captured a significant mindshare amongst the internet populaiton.

These tech companies have gained the most as the internet has taken an increasingly more significant role in our lives. Mobile phones have made internet access ubiquitous, meaning that for the youngest generations internet now informs global culture much more than other media. Technological behemoths such as Google and Amazon have enabled technical infrastructure in the form of Platform-as-a-service (PaaS) that anybody can use. By abstracting away the technological complexities and leaving more capabilities in the hands of software developers, these companies have enabled the development of technological infrastructure to develop consumer-facing products. This history of Netflix would have been considerably different were it not for the maturing technical infrastructure and internet popularity.

Amidst a decline in market sentiments around tech companies in 2016, Netflix was one of the very few companies to have a steady stock. This signifies the confidence that investors have over the revenue-model of Netflix. Throughout the history of Netflix the company has been a step ahead of market trends – their decisions towards online catalogue of films, then offering an unlimited movie subscription model, then inaugurating streaming video, and finally creating their niche by investing in original content have contributed to the dominant position the company finds themselves in. In the early 2010s, at a point when its technology no longer served as an effective enough competitive advantage, Netflix took on the incumbent cable television industry by investing in high-quality content. As it reaches saturation in the US market, Netflix needs to expand internationally. Finding the right content formula for international audiences is the challenge facing Netflix.

Premier League is Battling Online Video Piracy

Online Video Piracy is Posing an Existential Threat to Premier League

Online video piracy is increasingly becoming an existential threat for the English Premier League. The Premier League is widely branded as the best league in the world ( often to the dismay of purists who prefer the more technical Bundesliga or the superstar La Liga). The popularity and scale of the Premier League is rising with the wave of record high broadcasting revenues.

The reliance on broadcasting revenues however means that the league needs to ensure that viewers remain on the authorized broadcasting networks, and not opt for illegal video streams. Online video piracy takes away substantial revenue from the broadcasters. This causes reduction in profit margins, making the broadcast deals much less valuable.

The English Premier League was created in 1992, when the clubs in the top tier of English Football broke away from the Football League. The motivation for the creation of the PL was the lucrative opportunity of negotiating an exclusive broadcast deal.

The value of the broadcast deals has skyrocketed over the past few years. From the initial £304 mn for five years of exclusive rights (1992-97) that BSkyB paid, Premier League’s current television deal is worth £5.136bn for three years (2016-19).

Premier League's ever lucrative broadcast deals are being threatened by online video piracy

The money from the ever increasing deals has created a huge inflationary bubble in the Premier League. The result has largely been huge increase in player salaries and transfer prices. This has seen top world-class football talent being attracted by the Premier League’s largesse.

With the broadcasting deal for the period 2019-22 to be negotiated soon after the start of the 2017-18 season, the Premier League is under increasing pressure to combat online video piracy. Ensuring that the broadcaster’s revenue model, which is based on exclusivity, remains profitable is a high priority for the Premier League.

In this blog I seek to explain the business model of the media empire that is the Premier League. The profitability of this model is coming under increasing threat by the online video piracy tools – namely Kodi boxes and online video streaming sites.

History of Premier League Broadcasting deals

In 1992 Premier League shifted to paid satellite television network Sky Sports, after years of the First Division being shown on free to air games. The kickoff time for games was still 3PM, and live broadcast was not allowed. However delayed broadcasts signified that viewers could still watch their team from home without paying for the subscription.

After a bidding process between ITV Sports and BSkyB, with the alleged help of insider information, BSkyB came out victors. Sky bid £304million for a five year contract (although it eventually paid only £191million). This exclusive broadcast deal meant that football viewers would have to buy a Sky Sports subscription with their satellite tv network. This was unprecedented, as previously the live telecasts were available on free-to-air terrestrial networks. In bidding for the broadcast rights to the Premier League BSkyB bet the existence and growth of their TV network on the Premier League. The reasoning was that First Division football had a captive audience of devoted followers, who would pay up the steep subscription costs to be able to watch live football. This gamble paid off, as the company went from losses of £47 million in 1992 to profits before tax of £62 million the following year.

This subscription based revenue model definitely helped News Corporation expand their media and broadcasting empire. Sky TV earned profits before tax of £1.26bn in the period 2012-13.

These profit margins are however under pressure as the costs of acquiring the Premier League TV rights increase with each broadcast deal, and users begin to drop off the expensive services by relying on online video piracy. This pressure on both the costs and on the revenues means that the broadcasters face an existential threat from online video piracy.

Currently Sky Sports and BT Sports have the rights to show Premier League in the United Kingdom, while BBC has the rights to show only the highlights programme, Match of the Day , hosted by the charismatic Gary Lineker.

For the 2016-17 deal, of the £5.136bn payable to PL, Sky paid £4.176bn for 126 matches per season, whereas BT sports paid £960 mn for 42 matches per season. Sky also has first option on match picks for the weekend games, a majority of the second picks, and a large number of third picks as well.

Profitability of Sky Sports has declined due to online video piracy

Sky Sports and BT Sports try to recover these costs through their subscription packages, and from advertising. The revenue model for football depends much more on subscription than on advertising, because of the way the game is played and broadcast. Unlike in cricket where broadcasters have the opportunity to show ads after every 6-ball over, in live football streaming the broadcasters only have the half-time interval in which to show ads. Broadcasters do have opportunities to include ads on the screen during the game, as a footer or side ad, but the loss of value of user experience means that this source of advertising is used only in a limited manner.

Their two main sources of income are from viewers at home, and from their more lucrative Clubs and Pubs Packages, which are used to license pubs showing their games on matchdays. There is however substantial loss of revenue because of online video piracy in both these revenue chains. It is to combat revenue losses through unauthorized channels that the Premier League is aggressively pushing for measures against illegal video streaming and online video piracy channels. PL has taken different approaches for home viewers and for Pubs respectively.

Costs of subscription and the PL revenue model

To understand why users are resorting to online video piracy, it is important to understand the costs that viewers at home and pub owners incur for broadcasting Premier League games.

Currently the cheapest option for home viewers of the Sky Sports package is £36.50/month. The cheapest HD option would cost £58/month. It is in response to the high charges for this is the viewers at home are instead switching to online video piracy websites that offer football content at low prices or for free.

Sky uses the rateable value of pubs to determine pricing for Sky subscription for pubs. The rateable value in the UK is the value associated with a commercial building, based primarily on its size and location, besides other factors such as outdoor space and food and drink availability. These rates are, for a barkeeper interviewed by Hull Daily Mail, in the range of $1,000 per month for Sky and $400 per month for a BT Sports subscription.

The Sky Package for pubs covers 126 Premier League games and England home cricket matches. Additional rates are charged for F1 racing packs. These high costs for the Pub package add a major budgetary constraint for pub owners. With their backs to the wall amid rising costs and competition from other pubs, many pub owners opt to stream Premier League content routed through set-top boxes loaded with software (Kodi boxes) that stream games from illegal video streaming servers. This online video piracy problem is exacerbated by the high costs and by the ready availability of pre-loaded Kodi boxes that stream content through set-top boxes and through the internet.

Structural Changes to Viewership Patterns

The Sky Sports deal in 1992 marked a major structural change in sports viewership. Users had to lock-in to the Sky Sports ecosystem to be able to follow the national English sport of football. Over the previous 25 years however, there has been another major technological disruptor to how users watch sports – the internet.

Video streaming over the internet has become more prevalent, what with an extensive network of Content Delivery Networks and the ability to setup streaming servers in offshore locations where anti-piracy measures are made futile.

During the 2014 World Cup there were a total of 30million viewing hours of football streamed on ESPN in USA. In the same world cup there were a total of 20million page views of illegal streaming sites globally. While not exactly comparable – the American market forms a small subsection of the global football market, this reveals that illegal viewers of live sports events are numerically significant and represent loss of revenue equivalent to a major sports-following nation.

There were over 20 million views of World Cup 2014 through illegal video streaming sites. Online video piracy of this scale is roughly comparable to viewership figures of United States.

People have started to view online content through other avenues as well now. FIgures of 18-49 year olds has declined since the age of the internet

The Guardian reported in October 2016 that viewership figures have been down for the Champions League, and posed the question: Are these changes a blip or a trend? In other words is the reason for the lower viewership figures incidental factors relevant to a limited period of time, or instead actual effects of a structural change in viewership patterns. There is no conclusive answer yet, but it is undeniable that internet sources of following the match are changing the way football followers experience the sport.

It is not just the online pirated streams that are competitors to TV viewership – social networks provide an active community discussing match events real time. Major newspapers the guardian and telegraph provide a live blog covering the sports games. While not a direct substitute for the live video, live blogs definitely make the absence of live video much less acute for non-subscribers, diminishing incentives for subscribing.

Vines and GIF highlights are also used in these social networks to share highlights of the game. The ubiquity of the camera, internet and video-clip creating software means that very often vines are online within seconds of a highlight of the match – say a goal or a red card. This is a very disaggregated way of sharing content, and creates another headache for Premier League broadcasters, who have clearly been unwilling to go after end viewers.

Use of Kodi Boxes and Software for Online Video Piracy

In response to the high costs for subscription to Sky and to BT, many homeowners opt to setup Kodi Set-top boxes.

Since the major source of revenue for Sky comes from pubs that subscribe to the the Club and Pubs membership package, a number of these pubs now stream directly from non-British EU broadcasters, through set-top boxes. Set-top boxes preloaded with channels with much lower subscriptions are used to stream live games.  

Pre-loaded Kodi Boxes are used for online video piracy through computers and set-top boxes

Kodi itself is a free software application. It is an open-source media player that can integrate with different OS (Windows, Linux and Mac) and different platforms (Smart TVs, Set-top boxes and mobile phones). Because it can be installed on any device – computers, smartphones and on Set-Top boxes, unlicensed add-ons can be bundled with Kodi boxes that could give users free access to paid content. It is this act of bundling illegal add-ons that is illegal, and which the Premier League is trying to actively combat. With the latest ruling, ISPs can block access to entire online servers found to be illegally streaming premier league games. This creates a significant disincentive to pirates looking to stream the matches for profit.

Premier League can now get the servers that are used to broadcast video streams over Kodi Boxes blocked. Previously Premier League could only target and block individual stream sources, which users can shift to other sources. Now by being given the ability to target the computer servers means a major boost in the fight to block online piracy.

in February 2017, authorities conducted raids across North-west England, arresting individuals selling illegal Kodi boxes to bars and pubs.

Amazon recently banned sale of pre-loaded Kodi boxes on their platform in a major step forward towards combating online video piracy.

Litigation Against Pubs televising Premier League Games using EU subscription

The Premier League has conducted an aggressive litigation campaign against pubs streaming games through Kodi Boxes. These litigations have yielded both success and setbacks for the Premier League.

Karen Murphy of Portsmouth succeeded in her lawsuit against the Premier League,where the court ruled that the Premier League’s enforcement of only British subscriptions was anti-trust, and violated EU’s requirements of non-exclusivity. The Karen Murphy case was ruled upon in October 2011. The landlord of the Red and White pub in Portsmouth showed live Premier League games using a subscription (costing £800 per year) for Nova, which held the PL rights for Greece, as against Sky which cost £700 per month. The European Court of Justice ruled that Premier League cannot enforce exclusive access to broadcasters as such a system was contrary to EU law.

Karen Murphy of Portsmouth used Nova Sports, streamed from Greece, instead of Sky Sports. This is a form of online video piracy that is now made illegal on the basis of copyright infringement.

Since then the Premier League has developed another mechanism of enforcing the exclusive broadcast networks through a legal technicality – enforcement of copyright law. This is because Premier League’s logo (ordinarily shown throughout the match) and Premier League’s anthem (shown at the start of the match) are copyright material, and that showing this material without the Premier League’s consent is infringement of copyright. These logos, which are visible as a watermark outlay on the screen, and on player jerseys throughout the game (acting as a real dynamic watermark) mean that it is impossible for clubs to show the game in real time without obscuring the logo (and protecting themselves from litigation).

Cannot target users for fear of public backlash and because of EU ruling

Although the Premier League and the broadcasters have aggressively targeted pubs that show illegal streams through non-British (and cheaper) subscriptions, and through Kodi boxes, they have not yet started aggressively acting against end users. The reasons for this are two-fold

  1. EU Judgement – A landmark EU judgement in 2014 from the Court of Justice of the European Union ruled that viewing copyrighted material without explicitly downloading content is not piracy, and does not cause any breaking of piracy laws. This is because the cached files are temporary, and only transient and incidental to technology use. The relevant section of the judgement rules:
  2. Article 5 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that the copies on the user’s computer screen and the copies in the internet ‘cache’ of that computer’s hard disk, made by an end-user in the course of viewing a website, satisfy the conditions that those copies must be temporary, that they must be transient or incidental in nature and that they must constitute an integral and essential part of a technological process, as well as the conditions laid down in Article 5(5) of that directive, and that they may therefore be made without the authorisation of the copyright holders.

  3. Customer Backlash – Going against end viewers using online video piracy would be disastrous from a public relations perspective. With users already having options of alternate media streams, any action against end users (as opposed to intermediaries such as pub owners or Kodi box sellers) is likely to cause outrage and lead to litigation against the monopoly of television rights. Already pub owners streaming from other EU based broadcasters can legally stream from those broadcasters, undercutting Premier league broadcasters in England only. For a key customer facing organization, invoking the customer’s displeasure is definitely strategic hara-kiri and would do nothing to combat the actual challenge of online video piracy.


Ultimately revenues from subscription are critical for the maintenance of the premier league bubble. With clubs tied down to 4-5 year wage costs, the Premier League needs to maintain the same price evaluation for the next broadcast deal, which will be announced in the 2017-18 financial period, for the period starting 2019. That streaming premier League be profitable for broadcasters is the bottomline that the Premier League needs to ensure, whether by enforcing strict litigation against pirates, or by offering a bigger content package to end-users and making their services more affordable.

Payment Gateway Options to Sell Online Course

Setting up a payment gateway is essential to sell online courses successfully. You need to setup a solution so that you can receive payments from across the globe. The bottomline to the success of your online video course is your ability to monetize your content. From our conversations with E-Learning video course creators, it is this process of setting up a payment gateway that counts as one of the most stressful aspects of selling online courses.

In this blog we lay out how a payment gateway works, what options to consider when opting for a payment gateway to your site, and what how to actually apply for it.

The Parties to a Financial Transaction

There are essentially four parties to an online financial transaction:

  • The merchant
  • The customer
  • The acquiring bank whose services the merchant uses
  • The issuing bank whose credit card the customer uses

Parties to payment gateway and payment processing to sell online course

Payment Process

The workflow in the payment process works like this:

  1. Payment Gateway receives the card details securely from the customer
  2. Payment Gateway forwards the transaction information to the card agency
  3. Card agency then forwards the request to the Issuing bank
  4. Issuing bank verifies validity of transaction for credit/ debit card (checking card details, balance, expiry dates), and responds with approve/ deny response
  5. The approve/deny response is forwarded by the payment gateway to the merchant website
  6. The merchant then fulfills the order. The issuing bank clears the order only when the transaction is fulfilled
  7. Acquiring bank communicates with the credit card issuer to settle accounts
  8. Credit card issuer makes payment to acquiring bank
  9. Acquiring bank deposits funds to merchant’s approved account

Flow of information in payment processing - payment gateway for e-learning video sellers

Integrating a Payment Gateway to your Page: Options

  1. Hosting payment process on your site: To make the customer experience smoother the merchant hosts the credit card details on their own servers, and transfers it to the payment gateway/ processor which communicates with the relevant financial institutions. You would need to implement security mechanisms to ensure that card details are secure.
  2. iFrame of Payment Gateway on Website – In this method of integration a frame of the payment gateway is included on your website, through which you can then integrate a payment gateway directly to the website. The customer remains on your website, but the data is added to the payment gateway directly, minimizing your data liabilities.
  3. Payment form on another site – This is the simplest process, in which the user is directed to the payment gateway site to enter the card details. The customer is redirected to the merchant’s website after the transaction is completed.
  4. Hosted Tokenization – The customer adds card data on the merchant’s website, but this data is sent directly to the servers of the payment gateways. The merchant website only records a unique token of the transaction, so that merchant website is not liable to possessing the confidential data.

Difference between Payment Gateway, Payment Processor and Merchant Account

Payment Gateway

A payment gateway acts as intermediary between your website and the payment processor, helping to securely transfer information. Payment gateways have to be compliant to PCI-DSS standards (Payment Card Industry Data Security Standard), to ensure that details of your financial transactions are secure.

The payment gateway’s main role is to securely transfer transaction details to the payment processor. Whereas payment gateway’s responsibility is to provide a user interface and communication channel between customer and merchant, it is the payment processor which deals with the various financial institutions to validate the transactions.

Payment Processors and Merchant Accounts

The boundary lines between payment gateway and payment processor are often blurred, and most vendors function as both. Payment Gateways in India combine with banks to provide the payment processor and merchant account services. It is the payment processor which handles transaction data, and communicates with the banks. The bank handles the merchant account activities.

The stage of merchant account creation requires a lot of paperwork efforts. Banks are averse to accept merchants with high-risk business models. For this reason they will ask you for explanations of your business model. The requirements for a merchant account are:

  • Functional website
  • Company identity proof
  • Promoter’s identity proof
  • Company address proof
  • Business model presentation

For an example of merchant requirements, online payment processor ZaakPay provides the details for availing their ZaakPay merchant services.

International Payment Processors

PayPal, Stripe, Authorize.Net and Payline are the most popular international payment processors. WooCommerce offers integration with all of these payment processors. Their unique offerings are

  • PayPal is one of the most widely trusted payment processors. PayPal charges a monthly fees for Pro and Advanced Users. Its ease-of-use and customer support and service sets it apart from competition.

Use PayPal as payment gateway to sell online course

  • Stripe offers an international payment gateway plus processor service similar to PayPal. Through its APIs developers can integrate the payment gateway to their website for free. Its rates are also overall cheaper than PayPal.

Use Stripe as Payment Gateway to sell online course

Merchant Maverick here gives a very detailed explanation on how to choose a payment processor.

Indian Payment Gateways

The most popular indian payment gateways are:

  • PayUBiz – Offers variety of customizations for medium-to-large businesses. One of the mosted trusted brands, their merchant on-boarding process is fast, and the user experience is their highest priority
  • EBS – The first Indian Payment gateway to be PCI-DSS compliant
  • CCAvenue – CCAvenue is one of the longest-serving payment gateways, and is widely trusted and considered reliable. Customer trust is a very important quality in the payment processor industry.
  • InstaMojo – Instamojo offers the cheapest option amongst payment gateway. There are no installation costs, and it is recommended mostly for small-to-medium businesses offering physical goods. Their transaction discount rate is 1.9% for physical goods sale and 5% for digital goods. Their integrations leave much to be desired however, as the service does not offer support for retail payment processors.
  • RazorPay – This option offers netbanking, all cards, and wallets. This is one of the fastest growing payment gateway services.
Video in Content Strategy for Washington Post

Washington Post – Video in Content Marketing

The Washington Post was acquired in 2013 by Amazon’s Founder and Chief Executive Officer Jeff Bezos, at a time when the news industry had been seeing considerable decline in their revenues from print subscription. This trend is largely due to an increasing number of people getting their news from the internet. The key challenge for WaPo in the Jeff Bezos era ahead is to execute a content strategy that maximizes their digital presence. Part of their strategy is using video in content marketing efforts.

The Washington Post since 2013 has started to aims towards expanding readership and subscription to their digital content. This is expected to offset loss of revenues from declining print subscriptions and advertising revenues. At the moment they are experimenting with various content strategies. The target is to attract newer viewers from across the globe, while retaining the quality of their journalism that have seen their staff win 47 Pulitzer Prizes. A key aspect of surviving in the digital landscape is to maintain focus on video as a central tool for journalistic coverage. In this blog I explore how video is emerging as a key component of the Washington Post’s content strategy.

Video in Content Marketing Strategy

Currently, Washington Post’s mix of video content stands at 40% original content and 60% aggregated content. The company’s near term target is to flip this statistic to 65% of their own original content to 35% sourced from other agencies.

Video in Content Marketing - shift towards creating original content

Video in Content Marketing – shift towards creating original content

The company currently has 40 people on their video staff, of which 32 are regularly involved in shooting and producing content. To expand their video offering, the company posted 30 new jobs to their video department. The objective of their video strategy is two-fold:

  • To chalk out videos that are complementary to their content strategy
  • To create videos that gain prominence on social media channels.

To get a glimpse of how Washington Post is rolling out its video strategy, I checked out the page of their video section. The main video on the page was a video report of the Oroville dam spillway, which at the time was in the risk of a massive collapse. A visual report in such a scenario adds considerable more value to the message, unlike the case of press briefings for which value addition by video over text is much less important.

This current video strategy of Washington Post is to:

  1. Complement News Story – Roll out video content that complements the news story, increasing site engagement of visitors
  2. To gain new viewers – Video has the potential to engage newer viewers much more easily. Increasing the number of casual visitors directly leads to an increase in their potential subscription figures.
  3. Emerge as a Video destination – WaPo’s investment in video means that they no longer wish to be considered just a newspaper with a video section, but rather a video destination in their own right. Making video a central part of their content strategy requires that they leverage various forms of video delivery solutions – this includes social media and Over the Top video.

Leveraging different media – Facebook, YouTube and OTT

WaPo recognize that it is much easier to monetize videos that are on their own website. However, in order to attract new viewers they need to position themselves on social media, mainly Facebook, and video aggregator YouTube.

Facebook is emerging as an important player in the video segment. WaPo’s strategy for promoting video for Content Marketing for Facebook and YouTube is different, because of the different nature of the two technology platforms. Facebook users are much more passive, and are on that site for diverse and an unspecified range of content. For this reason content on Facebook has to be designed to be inherently able to appeal to new users, and to be inherently able to become viral. Besides content on Facebook should make minimal requirements on the viewer’s attention span. On the other hand users are on YouTube exclusively to watch video, which affords the company an opportunity to show longer videos that require greater attention span, and a greater engagement with their content.

Washington Post’s Over The Top (OTT) strategy is to promote themselves as a video destination on OTT services such as Apple TV, Roku and Fire TV. For OTT content the newspaper has hired video personalities, who will be producing longer and more scripted videos with studio quality production values.

Long Term Strategy at Washington Post – Jeff Bezos era

Jeff Bezos has a brought a long-term planning outlook at Washington Post. The desired result is to make WaPo bigger and more profitable, at the same time. Before his acquisition the newspaper had remained profitable amid declining subscriptions and revenue only by decreasing the size of their newsroom. Bezos has given the company considerable leeway to experiment with different strategies in the hope of coming up finally with a winning strategy, to emerge as a key destination in the digital landscape.

Preliminary metrics look promising. The Post beat New York Times in unique visitors in October 2015 – their 66.9 million unique visitors beating the 65.8 million for The Times. They also beat the popular content aggregator Buzzfeed in February 2016 in number of page views – their 890.1 million page views beating both the Times(721.3 million) and Buzzfeed (884 million). To monetize their content the company is offering discounted subscriptions to Amazon Prime subscribers. Their digital subscription membership is also considerably cheaper as compared to The New York Times, reflecting a strategy to gain a lot of subscribers at lower per person subscription prices, with volume making up for lower per unit price. This is just one of the many experiments that the company is carrying out at the moment.


Jan Ozer, The Washington Post is focused on video. Here’s Why, Digital Content Next

Brian Stelter, Washington Post launches major expansion of video team, CNNMoney

Shan Wang, In Revamping its Video Strategy, The Washington Post steers clear of imitating TV, NiemanLab

Dan Kennedy, The Bezos Effect, Shorenstein Center on Media, Politics and Public Policy