3 Models for VOD Monetization

Learn more about VOD monetization at Streaming Media's next event.

Watch the complete presentation from Streaming Media East, DT202b. Hybrid Monetization Models: Increase the Bottom Line with a Hybrid Monetization Strategy, in the Streaming Media Conference Video Portal.

Read the complete transcript of this clip:

Matt Smith: Everyone's familiar with that term, VOD. So the letters in front of them denote different things. So subscription VOD is a simple way to call it is a Hulu or Netflix. You pay a monthly fee, you access all that content, crunch all you want, and I'll make tons more. AVOD describes advertising supported on demand content. So you may be watching a show on your favorite networks app or website, and in that first commercial break, you see a couple of ads come up.

In recent years, people have grumbled about why should I have to watch ads? But if you think about it, it's the very same consumption models it is when you watch in your home. The difference is you're paying for that overall subscription. And TVOD is transactional VOD. So you're watching your home cable service and your browsing the on demand titles and like the previous presenter said, you may find a movie that you like and you want to sit and watch with a significant other or your child and you just click and pay $4.99 and voila, there you've got it. So I think what we wanna probably talk about next is can you move a viewer from one to the other? Is there a progression?

Troy Dreier: Is that what hybrid strategy means: to move from one to the other or just four different possibilities?

Matt Smith: Well, I think that offering all of those possibilities to whomever is delivering the content is paramount. You don't want to pigeonhole them and say, well, we only think this works in this case. Because if you think about it, the journey usually for some of these providers is to take the the viewer from one model to another, perhaps. So if you have someone, if any of us encounter a service and you engage with the content and the titles, and the goal is to get you hooked in a good way, not in a bad way. But you find a show that you like, you watch an episode, you're like, "Oh, gosh, that was good I wanna watch another one." And at some point, you have to engage with that consumer, ideally to get them to say, "Okay, I'm in. I want to buy into this service."

So in that case, we're going from AVOD to SVOD. So we've got someone watching an episode of a show. They watch a couple of ads that come up and those natural breaks, they're okay with that. So the the providers monetizing that content through the AVOD model. Once you've watched this second or third episode, you say, "I really like this, I'm willing to pay $5 a month or $9 a month." Then we've got you migrated from an AVOD to an SVOD model and maybe those ads go away. Maybe the number of the ads compress a bit. So in a break, instead of watching six or seven ads, you're only watching two. Sometimes there are none.

It varies from provider to provider, but the idea is and the key takeaway here is make sure that as you develop these strategies and put these products out in market, that you're not in this binge-worthy society or scenarios that we have today. You don't want that free guy or girl to consume all the episodes of that show and look at the rest of the catalog and say, I'm out. So you've lost them as a potential subscriber. They've engaged with the content. Maybe you've monetized that free watching through the AVOD model, but you failed to convert them to SVOD. So that's that's a significant miss. So think about that as you build that strategy.

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