The rise of over the top (OTT) media has empowered audiences to cut the cord and enjoy entertainment on their own terms. People have more choices than ever before when it comes to how they consume movies, TV shows, sporting events, classes, and other video content.
In this brave new world of media, companies are grappling with how to distribute and monetize videos. The right choice can sustain and scale a business, while the wrong one can leave money on the table. One of those choices is transactional video on demand (TVOD).
Can your business benefit from implementing a TVOD monetization model? Is TVOD the right strategy for your goals? This guide to TVOD monetization will answer all of those questions and more.
Table of Contents:
If you’ve already read our articles on AVOD or SVOD monetization, then you know what we’re going to discuss here and can skip ahead to the next section.
If you haven’t read those guides yet, stick around to learn about the three main monetization models for OTT media: TVOD, subscription video on demand (SVOD), and advertising-based video on demand (AVOD).
Transactional video on demand (TVOD) monetization is a pay-per-view model. To watch a movie, show, or another type of video content, audiences need to pay a one-time fee to buy or rent it.
A popular example of TVOD in action is Amazon Prime Video’s premium “rent or buy” releases. While Prime Video’s main business model is subscription based, it also lets customers buy or rent films and TV shows that aren’t included in the Prime Video library. Prime Video usually charges $19.99 to buy a newly released movie and watch it an unlimited number of times, and $5.99 to rent it for 48 hours.
A subscription video on demand (SVOD) monetization strategy charges customers a fixed, recurring subscription fee in exchange for access to a content library.
Many streaming services, including Netflix, employ an SVOD model. Netflix subscribers pay $9.99 per month for a basic plan, $15.49 per month for a standard plan, or $19.99 per month for a premium content plan. Subscribers can watch as many films and TV shows as they’d like from Netflix’s library as long as their subscription is active.
With an advertising video on demand (AVOD) monetization model, audiences have to watch ads before, during, and/or after video content to gain free access to it.
YouTube is one of the best-known examples of a media platform that relies primarily on an ad-supported business model. Viewers who don’t subscribe to YouTube Premium have to sit through ads before, during, and after videos.
With this basic understanding of the three main video monetization models under your belt, you’re ready for a deep dive into TVOD monetization.
TVOD stands for “transactional video on demand.” This OTT monetization model involves customers paying a one-time fee to watch a video. Most TVOD services let customers buy perpetual access to a piece of content, or rent it for a limited time for a fraction of the purchase price. Most businesses that leverage TVOD apply it to newly released shows or films, then make these programs available through AVOD or SVOD after their novelty wears off.
Pay-per-view content is often easier to market than SVOD or AVOD programming. When you add a pay-per-view title to your library, you can promote it on its own, rather than promoting your entire library to attract customers. If a TVOD customer has a good experience with your platform, they’ll likely come back for more.
Not sure if a TVOD monetization model is right for your business? Let these benefits and potential downsides inform your decision.
Need some real-world inspiration before launching a TVOD option of your own? See how these OTT companies use a pay-per-view model to their advantage:
Here are several scenarios in which a TVOD monetization model is more suitable than AVOD or SVOD monetization:
Although it’s a powerful monetization model on its own, TVOD doesn’t have to be used in a silo. In fact, it’s often more effective when used in conjunction with SVOD and AVOD. The most successful OTT businesses use mixed revenue models to serve customers without leaving money on the table.
Whether a viewer’s priority is watching blockbuster hits as soon as they’re available or binging shows while spending as little money as possible, you can maximize sales with a hybrid revenue model.
Pay–per–view prices tend to be similar to the cost of a month-long subscription to a streaming service, where customers get unlimited access to a whole library of content. Because of that, it can be difficult to sell customers on paying to watch one movie or episode of a show. However, that sell is easier when you give customers a free sample of what they’ll get after they pay.
For example, you could let people preview the first 15 minutes of a movie or watch the pilot of a show for free. By implementing ads during this free sample, you can still make money. After this preview, customers will be more willing to pay to continue watching the movie, or to watch the next episode or season.
Many media platforms use TVOD to get customers to pay a premium for newly released shows or movies. Maximize profits by introducing new videos as pay-per-view content. Then, after they’ve run their course, transition them to your SVOD library, or make them available for free through an advertising-based revenue model.
Relatively high prices for pay-per-view content can keep some customers away. Attract price-sensitive customers while maximizing profits by offering tiered pay-per-view pricing.
Many TVOD-based platforms offer purchase and rental options. When viewers purchase a movie, for example, they pay a one time fee that’s higher than the cost of a rental (usually $20-$25). Then, they can watch and rewatch that movie as long as the platform exists.
Customers can also rent programming for a fraction of the cost of buying it (usually less than $10). Most platforms give viewers several weeks to begin watching rented content, and have several days to finish it after they’ve started before their access is revoked.
You could provide even more tiers by introducing a TVOD-AVOD model for purchases and rentals. Give customers a discounted rate in exchange for including ad breaks during their programming. Because 41% of consumers pay to avoid ads, you can eventually upsell these customers to get rid of ads.
Another way to implement tiered pricing that pertains to TV shows is to offer one price when customers purchase individual episodes and a discount when they purchase a whole season at once. Take advantage of the exclusivity and novelty of your content by giving an even bigger discount to customers who pre-purchase access to a brand new show.
As an all-in-one video platform, JW Player goes beyond TVOD, AVOD, and SVOD to help you attract and retain customers. With JW Player’s fast, high-quality streaming services, your customers can enjoy your content on whichever device is most convenient for them. JW Player also optimizes your CPMs and fill rate to keep viewers watching, resulting in more sales for you.
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