Video Monetization: SVOD or AVOD?

These days, it’s hard to pass up the flexibility and control that over-the-top (OTT) channels promise their users. And as viewers rapidly migrate to digital platforms, content owners are following suit. Creating an OTT presence has never been easier, especially with a fully packaged solution like Ateliere Discover, which includes the CMS, OVP, CDN, templated smart TV & mobile apps, analytics and monetization in a turnkey SaaS environment. There’s no longer a length roadblock of development time between your content and your audience. When it comes to assembling a well-oiled OTT machine, you’re 75% of the way there. So what accounts for that last 25%? It’s simple… revenue. In order to ensure long term profitability for your content and your platform, you need to develop agile and effective monetization strategies. In today’s marketplace, there are multiple options for your VOD offerings, including TVOD, PVOD, AVOD and SVOD.

Transactional VOD (TVOD) – is a pay-per-license model, where the consumer pays to rent or own a license to a specific title.
Premium VOD (PVOD) – designed for day & date feature content releases online, this offering complements the theatrical window by offering consumers a path to rent early access to content
Subscription VOD (SVOD) – services like Netflix, HBO Max and Disney+ have made SVOD fairly commonplace, with a monthly subscription paid in exchange for unlimited access to the content on the platform

Advertising-supported VOD (AVOD) – this content is made available to the consumer at no cost, and is monetized via ad-insertions from a dynamic ad insertion (DAI) platform, such as Freewheel.

TVOD is a fairly low percentage of the overall market, and PVOD is designed for a small segment of content in a very short window of time, so most OTT services will focus on either SVOD or AVOD monetization. Now, how do you pick?

AVOD

Let’s start with AVOD. Ads are familiar: people recognize that they are part of the natural order of content consumption. That being said, taking a page from the linear playbook and adopting this tried-and-true model for OTT platforms is almost a no-brainer. In fact, Google recently found that 75% of content owners saw greater ROI from their digital ads than their linear ones. However, implementing an AVOD model will bring on its own set of issues in the digital world. Ad Blocking Problem: There are over 236 million ad blocker installs in the US alone.Solution: Combat blockers by explaining why they are necessary: ads= free content, no ads= content will no longer be free. Buffering & DelaysProblem: Delays from multiple ad calls can slow down content and cause frustration with viewers. This is usually a side effect of client-side ad insertion. Solution: Use server-side ad insertion rather than client-side. That way, devices with less processing power won’t be affected. Ad Frequency Problem: 27% of respondents to an IBM survey claimed they stopped watching content with too many ads.Solution: Make sure you have a proper proportion of ads to content. Perhaps offer lighter loads to new viewers to hook them, then serve heavier loads later on.

SVOD

In a study performed by Convergence Research, SVOD revenues will jump to over $59 billion by 2023 (double the amount from 2020), with subscriptions accounting for over 50% of total revenue for OTT. Despite being a more predictable flow of income for OTT, SVOD certainly comes with a few challenges of its own. Customer Turnover Problem: People will cancel subscriptions after trial periods or will start one only to binge a certain show and then cancel.Solution: Produce and/or acquire high quality content that viewers can’t refuse. Good content will keep them returning for more. Login Sharing Problem: According to a Reuters poll, more than 20% of young adults use friend’s or relative’s login. Solution: Strategize on how to gain new customers. Provide them with incentives to sign up for your platform and engage them with new features and content. Technical Hurdles Problem: It’s difficult managing entitlement and payment across multiple apps and devices, along with handling varying payment obstacles. Solution: Seek advice from experts in the industry. Monetization is tricky, and consulting with someone who knows the ropes will help. Ateliere’s built-in subscription management & payment processing with Recurly ensures that your SVOD users can manage their subscription on the platform of their choice, including direct payment support for Apple, Amazon and Roku platforms.

Assembling a monetization strategy for OTT is no small feat. In many cases, it’s hard to allot the necessary time and resources that successful monetization requires. Teaming up with an experienced and knowledgeable partner like Ateliere can make all the difference. With our cost-effective monetization solutions built-in to the Ateliere Discover platform, we will set you up for success while you reap the benefits of a steady stream of ROI. Reach out here to schedule a demonstration today.