The following article breaks down what is video on demand and how it works.
It’s 2022, and we’re living in a time where we’re used to fast and convenient content that we’re in control of. Thanks to the rise of online distribution platforms and apps, videos on demand are able to provide that for us at the touch of a button.
Let’s look into what video on demand (VOD) is and how it can work for both viewers and advertisers.
What does VOD mean?
Video on demand – or VOD – is a way viewers can have the ability to view media over the internet whenever, wherever, and however they like, without relying on satellite or cable connections that are offered by conventional television broadcasts. It’s a service offered by any platform that distributes content, either for free or by paying towards a subscription. Users can also choose whether they want to directly stream the content or prefer to download it to their mobile or smart device to watch later.
As a result of VOD, traditional broadcasting barriers are no longer in place, such as requiring viewers to watch their videos only at established times on a cable or satellite connection. As fast internet connection speed and the use of mobile and smart devices proliferate in the digital world, we are now able to watch videos on demand with exceptional quality wherever we have a connection, whether it is on our phone or at home.
How Does Video on Demand Work?
Put simply, the way VOD works is by sending users data bundles to their chosen video players from the servers that host the video content.
Providers of VOD make money from distributing their content using the following two models, which each have advantages and disadvantages, which are outlined below.
Advertising VOD (AVOD)
This model allows viewers to watch their videos on demand for free with the condition that they also watch certain advertisements provided. Examples of AVOD distributors include YouTube, Xumo, Pluto TV, 4OD, Peacock by NBCUniversal, DailyMotion, and Crackle.
There are several factors that determine whether an advertisement can be profitable, including its duration, whether or not it is skippable, whether it has interactive elements such as videos, audio files, and GIFs, whether the users click through the advert and convert, and how appealing the content is to advertisers.
Advertising via streaming platforms can also be risky because the earnings are highly dependent on the algorithms that are being used at any given time.
Subscription VOD (SVOD)
In an SVOD model, customers can pay for a subscription that grants them access to a large library of videos on demand as many times as they want, as long as they have a strong internet connection. When opting for this service, users will not be exposed to third-party advertisements while watching video content.
Disney+, HBO Prime, Hulu, Netflix, and Amazon Prime are all SVOD distributors who thrive on this model. Some streaming platforms like YouTube also offer additional premium services (aka YouTube Premium) that remove advertisements. These are known as hybrid VOD platforms.
While SVOD earnings can be much more predictable, content is usually at the mercy of the streaming platform’s decisions.
The SVOD segment is predicted to swell to a market volume of $82,431m this year alone. With reports from Social Media Today, predicting 82% of all internet traffic from consumers will come from video by 2022, there really is no reason not to leverage video creation to help reach target audiences where they spend the most time online.
So, what is video on demand? To summarise, VOD is a service and prominent advertising tool that’s evidently on the rise due to its ease of access, viewer flexibility, and affordability when compared to traditional broadcast television.
