In recent years, there has been a surge in the number of video platforms, each of which has its own monetization model. Advertising-based Video on Demand (AVOD) platforms generate revenue by showing ads before, during, or after the video; Subscription Video on Demand (SVOD) platforms offer a monthly subscription for access to the video library; and Transactional Video on Demand (TVOD) platforms require the user to pay for each video they watch, such as Google Play and iTunes. Each of these models has its own set of advantages and disadvantages, so it is important to find the right model when starting a Video on Demand platform. Doing so requires an understanding of why VODs have been so successful in gaining new subscribers, and what can be done to improve the process.
What is VOD (Video On Demand)?
Video on Demand (VOD) is a streaming technology that gives viewers the ability to choose when , where, and how they watch videos. It allows audiences to watch videos whenever they want on their devices, without the need to download them or access them through external drives. This gives broadcasters more flexibility in scheduling, as they no longer have to adhere to rigid broadcast times. VOD also provides a more efficient system of video playback with improved streaming quality
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What is TVOD (Transactional Video on Demand)?
TVOD stands for Transactional Video on Demand and is a form of video-on-demand content where users can purchase or rent individual videos for a specific price. Through TVOD, businesses are able to make money by selling or renting videos, allowing customers to purchase each movie or TV show they watch on the Internet.
The nature of this access can vary – When users purchase or rent videos from a TVOD business, they get access to the video for a fixed period of time through the website or app. After the period expires, the access will be revoked. If the TVOD business offers download options for the video, users may also be able to download the video for offline viewing, with the videos protected by digital rights management (DRM) that only allows authorized apps to access it.
TVOD business model can be implemented as:
- Pay per view for live sports
- Fixed-period access to education content
- For electronic sell-through via iTunes, Google Play Movies or Amazon Video
Transactional Video on Demand (TVOD) is a popular model for both eLearning and entertainment videos, allowing businesses to make maximum money from each individual video. The key difference between TVOD and Subscription Video on Demand (SVOD) is that with TVOD, there is no recurring payment, with users paying for each video individually.
When purchasing films through Electronic Sell-Through (EST) platforms, users do not actually “own” the film. Instead, they license the film from the platform, with the license being revocable by the rights holders. This has caused controversy in the past, with users finding movies disappearing from their libraries after purchasing them from services such as iTunes and Amazon Video.
When starting a video on demand platform, many video creators have one pressing question: what tools and strategies should they use to make their platform successful? From selecting the appropriate video hosting service to optimizing content for maximum viewership, there are a number of considerations video creators must make to ensure their platform stands out from the competition.
“What would be the best business model for my video website?”
The Transactional Video on Demand (TVOD) model is an alternative to the popular Subscription Video on Demand (SVOD) model. While SVOD involves subscribers paying a regular fee for access to an extensive library of content, TVOD involves users paying for individual pieces of content. To increase repeat transactions in TVOD and bring in new customers, it is important to market the platform with an eye towards the customer experience. Having a platform that is easy to use and offers a wide selection of content is key to driving repeat transactions. Additionally, it is important to have an effective marketing strategy that reaches potential customers, such as leveraging social media and content marketing.
In terms of scalability, TVOD usually requires more resources than SVOD, as each piece of content needs to be individually managed, whereas SVOD can leverage the same library of content for all customers. However, a business model can always be changed to adapt to changing markets and customer preferences.
Piracy is always a risk with digital content, but the potential for piracy is higher in the TVOD model due to the nature of the model. TVOD requires a paywall, which can be a deterrent to potential pirates. Additionally, it is important to have effective copyright protection in place to reduce the risk of piracy.
Yes, the Transactional Video on Demand (TVOD) model is an effective way to monetize entertainment content. According to a report from the Motion Picture Association of America, the revenue through Pay-per-view or TVOD platforms is projected to be US$10.42 in 2022. Electronic Sell-Through platforms such as iTunes and Amazon Video take a large cut of this revenue figure, which is then typically given to the original content creators.
In live sports, Pay-Per-View buys have become increasingly popular as a way to monetize major events. For example, the August 2017 megafight between Floyd Mayweather and Conor McGregor generated $400+ million in revenue for the Pay-Per-View buys. This demonstrates that TVOD is an effective way to monetize entertainment content and make it accessible to viewers.
The TVOD (Transactional Video on Demand) model has been proven to be successful for elearning VOD (Video on Demand) platforms. In 2020, the K12 and competitive exam prep startup Byju’s was able to generate revenues of $100 million thanks to its year-long courses. Byju’s has since then received total funding of $244 million, proving the efficacy of the TVOD model. Coursera, a VOD platform valued at $800 million, has also benefited from their course specializations which followed the TVOD model. It is clear that when done correctly, the TVOD model can be a lucrative opportunity for video creators.
TVOD is amazingly good for making money
The major business models for video creators are TVOD (Transactional Video on Demand), SVOD (Subscription Video on Demand) and Advertising VOD (AVOD). Of these, the TVOD model has the potential to generate the most money from a given video.
This is evident in the case of the “Fight of the Century” boxing bout between Floyd Mayweather and Manny Pacquiao, which had 4.6 million PPV (Pay Per View) buys at $89.95, and the exhibition boxing fight between Mayweather and Conor McGregor, which had approximately 4.4 million PPV buys at the price of $99.95. In the Electronic Sell-Through (EST) market, iTunes is the largest TVOD platform.
Users can rent a film for $4.99, or purchase it for unlimited viewing at a higher price ($9.99 or more, which can vary for different titles). On the other hand, SVOD platform Netflix charges users around $10 for full catalog access. It is clear that the TVOD model can generate more revenue than other models, as iTunes can generate the same revenue from a user renting two films in a month as Netflix does for monthly access to its entire catalog.
Amazon Video offers a hybrid TVOD-SVOD model, where its SVOD service is part of its Prime membership. This means that some titles are sold separately along the TVOD (transactional video on demand) model. Udemy is a TVOD (transactional video on demand) platform specifically for education websites.
Built as a marketplace with little content moderation, Udemy offers users lifetime access to courses at a fixed price. As of 2020, the platform had an Annual Recurring Revenue (ARR) of around $239 million.
When is Transactional Video on Demand the right model for you
The TVOD (transactional video on demand) model works best for highly differentiated and compelling content, as customers are willing to pay a premium for videos that offer unique value.
This type of business model is ideal when you have a small potential audience that is willing to pay a higher price for the videos. To be successful, the content must be distinct and offer something of value to the user. A great example of this is the animated movie Despicable Me. This cult classic was released in 2010 and grossed over $600 million. It spawned two sequels, Despicable Me 2 and Despicable Me 3, as well as a prequel, Minions. While Despicable Me 2 and Minions are available on Netflix’s SVOD (subscription video on demand) platform, Despicable Me 3 is only available on TVOD.
This is because Universal Studios, the film’s distributor, calculated that the revenue from the title earned through the EST (electronic sell-through) option would be higher than the licensing revenue from SVOD platforms. This demonstrates that the TVOD model can be a profitable option for films with a small potential audience that is willing to pay a higher price for the content.
To be successful with a TVOD platform, it is essential to offer differentiated content of value to the user. The marketing for the platform should focus on how the platform uniquely enables learners to achieve their objectives.
Elearning TVOD
Education VOD platforms can succeed with TVOD (Transactional Video On Demand) models when they can demonstrate to potential learners the value addition to them. This value addition could be scoring higher in a competitive examination or learning new skills for a new job or promotion.
To maximize the appeal of the TVOD model, platforms should create a structure that learners can follow to achieve their objectives. Additionally, they should incorporate additional elements beyond just the videos, such as quizzes and assignments, to help learners test their knowledge and ensure they are absorbing their lessons. This will also help differentiate the platform from SVOD (Subscription Video On Demand) services, which are essentially a buffet of video content with no evaluation element.
Entertainment TVOD
You can build an entertainment transactional video on demand (TVOD) platform by offering highly rated films not offered on SVOD (Subscription Video On Demand) platforms. Hollywood Studios are currently assessing the Premium Video on Demand (PVOD) model, where newly released films would be offered on Video On Demand within weeks of their theatre release, at a higher price than when they are eventually released on Blu-Ray.
In addition, film distributors are entering the VOD market through their own Transactional VOD platform. To make this market more accessible, the UltraViolet Rights Management system enables users to purchase films from different platforms and save the licenses of films they have purchased in a centralized database. This is a convenient feature for users as it allows them to keep track of their purchases.
Implementing a Transaction Video on Demand model
Electronic Sell-Through – Download to Own vs Download to Rent
When it comes to renting or buying a movie on services such as iTunes or Google Play, there are some restrictions that users should be aware of. Renting a movie gives you 30 days to start watching it and 48 hours to finish it once you’ve started. You can watch the movie as many times as you like during the 48 hour period before it expires. You also cannot stream it on multiple devices at the same time or download it onto more than one device.
For the purchase option, users are given a license to download and stream the movie on any of their owned devices. The cost of purchasing a movie usually averages $9.99, with some variation according to the title. This option gives users the freedom to watch the movie as many times as they want on any device without any time restrictions.
In TVOD your users license your content
Major TVOD platforms, such as iTunes and Amazon Prime Video, have faced controversy when they have had to pull films from the libraries of users who had purchased the titles.
This is due to the fact that the licenses for these films can change hands between distributors, and the rights holders may then pull it from the TVOD platform.
When users purchase digital content, such as books, music, or films, they are only buying a restricted license to that content. This means that they are limited in what they can do with the content, such as making illegal copies or sharing it. On the other hand, when users purchase hard copies of books or Blu-Ray discs, they own that content, subject to copyright restrictions.
In order to protect digital content from being illegally shared, a Digital Rights Management system is necessary. This system enforces restrictions on users, such as preventing them from making illegal copies or sharing the content, and allowing access for a fixed period of time only.
Implementing TVOD for eLearning videos
For eLearning videos, it is recommended to offer fixed-period access to students. This period should be based on the duration of the course or exam that the students are preparing for. For example, if you are providing eLearning videos for IAS exams, the fixed period cycle for users could be 11 months over which learners can prepare for the exam. This will ensure that the content remains relevant and up to date. You may alternatively offer lifetime access as well, in which case you would need to regularly update your content in line with changes in the field. This will ensure that the students are receiving the most up to date information.
Distinctions between TVOD and SVOD model
Customer Perception of Value tends to be Higher for SVOD platforms
The SVOD model may seem like a more attractive option for users due to the lower upfront fees, but the net fees for the SVOD model is actually higher than for the TVOD model. This is because the user is paying a monthly fee for a period of time that may be longer than necessary to complete the course. The TVOD model, on the other hand, offers a one-time fee for access to the content, which can be more economical in the long run. This is why many educational VOD platforms, such as Udacity and Coursera, have transitioned to the SVOD model, as it allows them to scale up their offerings more easily. However, this transition is not without its drawbacks, as the user has to commit to a longer-term subscription, which may not be beneficial if they are able to complete the course in less time.
Customer Retention is a major challenge in TVOD
In the SVOD business model, customers are retained over a period of time due to the fixed monthly fee they pay. This fee creates a sense of commitment and encourages customers to keep using the service. Additionally, customers will become more familiar and comfortable with the service as they use it over time.
In the case of TVOD, customers deliberate before every transaction, which makes customer retention more difficult. TVOD platforms require more marketing effort in order to retain existing customers and to attract new ones. Additionally, the high one-time fees associated with TVOD may make customers hesitant to purchase, as they may not be sure if they will use the service long-term.
TVOD is best suited for new VOD platforms
TVOD (transaction video on demand) is a type of streaming video service in which the user pays for each item of content they watch. The revenue generated per user is usually higher than in other types of streaming services [1], such as subscription VOD (SVOD) or ad-supported VOD (AVOD), making it a good option for content owners with a more limited audience size but willing to pay for premium content.
Coursera adopted the TVOD model during its growth stage, as it allowed them to generate revenue quickly and scale up their user base. However, in 2016 the company shifted to SVOD, as the larger number of users allowed them to generate greater revenue over time. This shift allowed Coursera to reach a larger audience and increase its revenue potential, making it a more viable business model.
Royalty calculations are straightforward for TVOD platforms
Yes, that is correct. Most SVOD platforms pay video course creators a portion of their revenue proportionate to the number of viewers. This means that the platform has to take into account different metrics such as the number of learners who enroll into a course, the number of learners who complete a course, and the net number of viewers. However, the royalties paid to course creators tend to be quite low in comparison to the overall revenue of the SVOD platform.
On the other hand, royalties are much higher in the TVOD model. Video creators typically get a larger percentage of the transaction revenue. For example, on Udemy, both the video creator and Udemy each receive 50% of every course purchased organically on the platform.
Marketing Your Transaction Video on Demand business
Payment through SVOD platforms is often recurring, providing a steady revenue stream. However, this is not the case with TVOD platforms, as repeat transactions are not guaranteed. For example, when a student completes an elearning course, they may not be inclined to pay again to take the same course. Similarly, with EST platforms, each user will assess the cost-benefit of their purchase before making a decision.
Due to the lack of repeat transactions, TVOD platforms suffer from lower user retention and therefore have lower revenue stability. To ensure the continuous growth of your TVOD platform, the right marketing channels should be used. Social media and email marketing are effective for reaching out to potential users. Social media allows you to target audiences with specific interests, and its network effects can help to expand your reach.
When marketing an online video course, it is important to emphasize the measurable improvements that the course offers. Testimonials from successful learners can also be included to highlight the value of the course.
Effective Paywall is more important for Transaction Video on Demand
One-time costs for accessing TVOD content are often high, which can lead to potential users seeking out means to access the content for free. This can lead to an increase in content piracy, as users are more likely to download the content and share it with friends in order to save on the costs of the one-time access fee or split the one-time fees.
In contrast, subscription VOD platforms offer an ongoing relationship with the user, allowing for loyalty and repeat transactions. This has contributed to the significant decline of piracy of films. Apple also applies a DRM to movies downloaded via iTunes, preventing users from sharing the video content.
Inkrypt offers a DRM solution which can be used to implement a paywall for your TVOD content. It allows you to protect your video content from downloader plugins, and can be used in combination with a membership plugin to ensure access is only granted to authorized users. Check out the list of features to see how you can use Inkrypt for your business.
What is an example of TVOD (Transactional Video on Demand)?
The TVOD model has proven to be successful for eLearning VOD platforms. In the first half of 2021, the K12 and competitive exam prep startup Byju generated $16.5 billion after raising more than $1.5 billion during this period [1]. Byju’s, which offers year-long courses along the TVOD model, has received a total funding of $244 mn. Coursera, valued at $800 million, has emerged as the top eLearning VOD platform largely due to its course specializations which, until recently, followed the TVOD model.
Examples of TVOD platforms include Udemy, a marketplace with little content moderation which offers lifetime access to courses at a fixed price. As of May 2021, the platform had over 40 million students, and the highest-earning instructor had exceeded $2.8 mn in total earnings.
Advantages of TVOD (Transactional Video on Demand)
The TVoD model can be used to control the duration of time your viewers spend consuming your content. For example, if you have some exclusive content in your video library, you can set up a time restriction for “x” hours per day or even months, as per your preference. TVOD offers the best revenue opportunities for monetizing fresh video releases, as audiences are often willing to pay more for new content.
In the TVOD model, you can sell videos that are either single part or multipart. You can leverage your pricing strategy by defining different price points for different types of content. Also, royalties are much higher in the TVOD model, as the video creator receives a larger percentage of the transaction revenue. For example, on Udemy, video creators and Udemy each receive 50% of every course purchased organically on the platform.
Additionally, with the TVOD model, operational costs are estimated quite accurately before the start of business, so there is no risk of a single user or group of users exploiting the bandwidth. Operational costs in the TVOD business are the costs of server + CDN to stream the video of a particular size + the cost to acquire a single customer.
Disadvantages of TVOD (Transactional Video on Demand)
The major challenge of selling videos online is retaining customers. TVOD platforms need to invest more in marketing efforts in order to retain existing customers and attract new ones. Additionally, limited trial opportunities and restrictions on large content sizes (e.g. 2000+ hours) can be hindrances to success. It is not ideal to expect users to be aware of all the content available and to make a payment for a video they are not sure they want to watch. These restrictions limit the exploratory nature of the platform.
How do I find the right model for my business?
Competitor and Audience Analysis
In order to determine whether your idea will be successful, you need to understand what your competition is doing. This means researching their products and pricing structure, understanding how they promote it (e.g., through advertising or social media), the marketing channels they use (website, email campaigns etc.), and why customers choose them over other options in the market. By thoroughly analyzing this information you can gain insight into customer preferences as well as identify areas where there may be gaps that could be filled by introducing a new product or service of yours.
Set Up the Goals
Realizing a vision is not easy, and requires careful planning and the right resources to make it happen. When deciding whether or not to pursue a TVOD idea, factors such as market demand for the product should be taken into account; if there is enough interest in what you are offering then this could be an effective model. With SVOD however, you have more options when it comes to creating content that can keep subscribers engaged each month – which may mean more success in terms of revenue generation than with TVOD alone. Ultimately your choice will depend on how well your product appeals to customers and how much value they feel they get from subscribing monthly – but both models offer potential benefits that should be carefully considered before making any decisions.
Selecting Monetization Model
When it comes to streaming services, the type of content and how it is delivered are both important factors. For example, SVOD (subscription video on demand) offers more consistent revenue over time than TVOD (transactional video on demand). While TVOD typically has higher average sales values, these transactions do not recur. Therefore, when creating content for a streaming service you will want to pay close attention to how much you are offering and in what format so that your model can generate the most profitable results possible.
Craft your Offer
While creating your offer consider the below questions
- Would you offer live streaming as an upsell, part of an SVOD subscription, or a free offering?
- What is the main product you will sell (subscription or one-time purchase)?
Conclusion
Video is a powerful tool for scaling your business. When creating videos, it’s important to consider who your audience is and what goals you want to achieve with the video. It’s also essential to plan out how you will monetize your content in order to maximize growth potential. With Inkrypt, you can get access to secure video hosting solutions that come equipped with robust security technologies like DRM which protect against piracy and other malicious activities. You can try their services for free by signing up for a 30-day trial here!
FAQs:
1. What is TVOD?
TVOD is a VOD service that allows users to pay a one-time fee for a video content access. You get access to the video for a fixed period of time, indefinitely and users will be able to download the video for offline viewing.
2. What are the advantages of TVOD?
A TVOD streaming platform has several great advantages. One of those is you can offer Pay-Per-View (PPV) bundles to your end users. They can just pay for the video collections they want to view. It also allows you to set different price points for different content based on your pricing strategy.
3. What is the key difference between SVOD and TVOD?
The absence of a recurring payment in TVOD is the key difference between Transaction Video on Demand and Subscription Video on Demand.
4. What are the examples of TVOD Models?
Some of the examples of TVOD include Google Play, Apple iTunes, YouTube movies