Online video service and monetization: which alternatives?

2020/02/21

For any online video service, producing and acquiring content can be a significant investment. The subject of monetization is therefore crucial to consider a fast ROI (return on investment) and a viable business model.

This article presents the 3 main monetization models that can be considered for a video platform, alone or in a mixed model: SVOD, TVOD and AVOD.

SVOD

What does it stand for?

SVOD (Subscription Video On Demand) allows you to watch part or all of a platform's video catalogue (series, films, cartoons, short films, professional training, coaching or tutorials) in exchange for a monthly or annual subscription, for example. In general, the price of a subscription must remain accessible in order to bet on a recurrent purchase by the consumer. The video offer in the catalogue must be regularly enhanced with new features to build customer loyalty. 

Example of a platform offering SVOD using the kinow solution: Equidia 

Equidia, the television channel dedicated to horse racing, has trusted Kinow to broadcast its videos on demand. The new sports media site won the silver medal for "Best Branded Website at the 2018 Digital Grand Prix”.

The online video platform solution enables Equidia to monetize its shopping by monthly subscription, live and replay.

How does it work? 

If you have enough content, you can also create your own video platform to fully control your monetization. In this case, it will depend on your catalogue, if you use productions that are not yours you will have to pay back the copyright. Generally, the rights are paid back in proportion to the consumption by your subscribers.

TVOD

What does it stand for?

TVOD, or transactional video on demand, is the opposite of subscription video. With TVOD, consumers buy content on demand. There are two sub-categories known as direct electronic selling (DES), in which consumers have permanent access to content once purchased or leased (DTR) where customers can access content for a limited time at the time of rental. TVOD services tend to offer more recent content, which benefits right holders for higher revenues and consumers for timely access to new content. 

TVOD services generally retain customers by offering them attractive pricing incentives. 

Example of a platform offering TVOD powered by Kinow: 

● TVOD rental : KWA film 


Kwa Films offers you the opportunity to discover the best of Indian Ocean cinema: short films, long films, documentaries all from Reunion Island, South Africa, Madagascar, Australia and many others.

Kwa Films' offer can be adapted to suit everyone's expectations: from €2 for film rental to €7 per month for an unlimited subscription.  

How does it work?

The real need for this type of monetization is to attract an audience willing to pay for each video viewed. This will increase your profits in the short term (compared to Youtube for example). It is not necessary needed to have a community of one million people to live off its content.

When you release your films or video content on generalist TVOD platforms (Itunes, Google Play or YouTube Originals), they pay you an average of 60 to 70% of your revenues. If you choose the direct selling model to your audience, you receive all your income directly from which you will just have to deduct your technical costs. It may be appropriate to combine the 2 solutions by highlighting some best-sellers on these platforms and present your entire catalogue on your own platform.

AVOD

What does it stand for?

AVOD (Advertising Video On Demand) is based on the classic television model. The consumer can access the video free of charge after viewing one or more advertisements. The pioneers in this field are Youtube and Dailymotion. The service is free of charge for the end customer because the advertiser is the one who finances the distribution of the videos. Platforms like Youtube collect all advertising revenue and then pay the money back to the rights holders. 

How does it work?

To become profitable with advertising monetization, you will need to generate a lot of views. If you want to broadcast on YouTube, there are many things to consider. 

For example, with a video that received 40,000 views:

On Youtube, with CPT (cost per thousand) average of €5 as well as a 70% sharing but a filling rate of 50% that makes €0.00175 / view. You will win €70.  

Nevertheless, if you already have a community, you can consider having your own streaming platform with your own advertising system (and/or using ads exchange): this will allow you to obtain higher CPTs (between $15 and $25) and control your monetization: you will be able to sign agreements directly with advertisers, and have control over all your users' data (age, country, sex, viewing habits, etc.).

If we repeat the previous hypothesis with an audience down by half (because you no longer benefit from Youtube traffic) and an average CPT of €15, you will earn €105 or 50% more than on Youtube for half the number of views.

 As with TVOD, it is interesting to position a few key videos on social networks such as Youtube and to have your own AVOD service in addition.

Other possibilities to watch video for free or at a lower cost exist. Hulu, for example, offers a Freemium or hybrid model with a lower monthly subscription for the consumer who will accept to watch advertising. 

Example of a mixed platform (AVOD + SVOD) financed by advertising: Hulu

Media chronology according to the CNC based on the sliding window principle

Other monetization models exist for creators

  •  Product placement: it remains one of the practices that is developing most for independent creators but also American blockbusters (which systematically integrate a large budget of various advertisers into production budgets). On Youtube, many brands pay influencers directly to promote their content in publications. The income estimate depends on many factors, but generally on Youtube you can count between 500 and 1000 € for 10 000 views.
  • Donations: Participatory fundraising sites led the way, followed by other models such as Patreon. This type of monetization model is difficult to estimate, but perhaps very interesting, and sometimes donations from only 1% of a community can finance a large part of a creator's income.


To conclude, here is an overview of the main American platforms and their revenue models:

Our turnkey OTT solution allows you to apply all these monetization models to your video service. Contact us and create your own VOD platform!