What Is VOD: All You Need to Know About Video on Demand

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The online video industry is booming. Whether it’s entertainment, education, or business, online videos are reshaping the way we spend time. And much of this boom is the result of the convenience of VOD, i.e., video on demand. But what is VOD exactly and how can it help you scale your business? Today, we’re diving deep into the world of on-demand video content.

What Is VOD (Video-on-Demand)?

The term VOD stands for video-on-demand, but chances are that you already know that. But what does video-on-demand mean exactly? The term refers to any piece of video content that users can access when they want to (hence the on-demand part), as opposed to having to follow a predetermined schedule, as is the case with linear TV.

When Did Video on Demand Start — A Brief History

VOD streaming may have been gaining popularity in the past couple of decades, but it is by no means a new concept. In fact, the first VOD service was proposed as early as 1986 in Japan. However, while it was a great idea in theory, the technology to make it possible just wasn’t there yet. It wasn’t until the 1990s that video-on-demand started working in practice. Since then, it has become the favorite method of consuming video content among audiences worldwide.

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How Does VOD Work?

Video-on-demand works using a complex network consisting of a video player, compressing and decompressing technology, and a server. This is what the process looks like in more detail:

First, in order to make the content accessible to the audience, the publisher must upload and host videos on a server. The publisher should also have a library, either in the form of a website or an OTT app, from which users can pick and access the content they want to watch. 

Once a user selects a video, the HTML5 player sends a request to the server. The server sends a compressed video file back to the player, where it is decompressed. This process takes only a few moments, and the user can play the video almost instantly.

So to sum up, here’s how VOD works:

  1. The publisher uploads a video to a server and makes it available on their platform.
  2. The video on the server is compressed for easier sending.
  3. A user requests to view the video in question using the publisher’s online video player.
  4. The video player forwards the request to the server.
  5. The server sends back the compressed video file, and the player decompresses it.
  6. The user starts watching the video.

Depending on the specific streaming service, other processes might take place at the same time. For instance, if ads are enabled, the player will also send an ad call to the publisher’s ad server. If there is DRM protection in place, the player will request a decryption key.

Video on Demand vs. Live Streaming

Live streaming and video-on-demand are, more or less, complete opposites. Although both rely on the concept of streaming, the major difference between the two is the live part. In other words, in both instances, the online player receives the video file in so-called “packages”, rather than the whole file at once. However, with VOD, these packages are taken from a file already stored somewhere. On the other hand, in live streams, the packages are encoded in real time. 

However, live streaming and VOD can, in a way, overlap. Namely, publishers can host a live stream that viewers watch in real time, and afterward make that stream available on an on-demand basis. This is bound to attract a wider audience (both people who want to watch things as they happen, as well as those who can’t make the time to view content in real time), as well as open up multiple monetization options.

Video on Demand vs. OTT

vod vs ott video on demand vs ott
VOD vs. OTT

The terms VOD and OTT are often used interchangeably. However, while they are intertwined, they denote different things. While VOD is tied to on-demand access to video content, OTT broadcasting is a content distribution method that relies on the internet, rather than cable or satellite. OTT streaming services can contain on-demand content and oftentimes do. Netflix, Hulu, and Disney+ are just some examples. 

Video on Demand vs. Pay-Per-View

Another term that often gets confused with VOD is PPV, also known as pay-per-view. PPV is, actually, one of several video monetization models for VOD. It is a type of transaction-based monetization (more on that later) where users purchase one-time access to an on-demand piece of content. This is a great monetization model for premium content and pre-release access.

Video on Demand Statistics

The average person spends around 17 hours a week watching videos according to Wyzowl. Most people (almost 50%) spend time watching music videos. Comedy videos, memes, and viral video content follow, at around 35%. Other popular categories include tutorials, product reviews, educational videos, gaming videos, and sports highlights.

With such a large viewership, it is not surprising that the global VOD revenue is expected to reach $111 billion by the end of 2023, and this number doesn’t even include ad-based revenue. 

How Do You Monetize Video on Demand?

You can monetize VOD content in several different ways. In fact, one of the best things about launching a VOD business is that this content is relatively easy to monetize. However, with different types of video-on-demand monetization available, choosing the right one can have a great impact on your VOD revenue. Let’s take a look at the main VOD monetization models to help you decide. 

Advertising Video on Demand (AVOD)

avod ad based monetization
Popular AVOD Platforms

With advertising video-on-demand, also known as AVOD, users have to watch ads in exchange for access to the content. Ad-supported content is often free (although this isn’t always the case). These ads can show up before, during, or after a video stream (these are known as pre-roll, mid-roll, and post-roll ads respectively). Advertisements can also show up outside of the video stream in the form of banners or native ads

A great thing about AVOD is that it works great with other monetization models. Many publishers chose to mix AVOD with, for instance, SVOD. Netflix, for example, recently introduced a lower-tiered subscription model that includes ads. Combinations such as this one are known as hybrid monetization models.

Subscription Video on Demand (SVOD)

svod subscription monetization
Popular SVOD Platforms

Subscription video-on-demand, often abbreviated as SVOD, is based on recurring payments from viewers who want to access the content library. Publishers can designate several subscription plans at various price points and available content. An important thing to keep in mind if you choose this monetization method is that SVOD requires constantly updated content that is worth paying for on a recurring basis.

Transaction Video on Demand (TVOD)

tvod transaction monetization
Popular TVOD Platforms

Transaction video-on-demand, also referred to as TVOD, is another payment-based model. However, rather than recurring subscriptions, this model relies on individual transactions. Users can purchase one-time or time-limited access to a piece of content. Once they have accessed the video or the access timeframe has run out, they won’t be able to watch the video again. TVOD is best used for premium content that cannot be found elsewhere, as well as for PPV live streams.

What Is Hybrid VOD Monetization?

Hybrid monetization encompasses two or more basic monetization models in one platform. For instance, a publisher can choose to offer limited, ad-supported content for free, while also allowing users to subscribe to bypass ads and get access to an even larger library. 

5 Reasons You Should Use VOD in Your Video Strategy

Are you still on the fence about introducing VOD streaming to your business? Then let’s take a look at the top 5 benefits of VOD that will, hopefully, help you reach a final decision:

  • More Engagement — VOD allows you to make your library as versatile as you like so that everyone can find something for themselves there. This, along with the any time aspect of VOD, makes on-demand videos highly engaging.
  • More Users — Due to its ease of access, VOD has great potential to attract a wide audience. Nowadays, people prefer to consume content when they want to and from any device they have at their disposal, and that’s exactly what VOD offers.
  • Fewer Costs — Producing VOD content can be as costly or as affordable as you want it. This is especially true if you find a reliable VOD platform that will streamline the entire process. 
  • More Revenue Opportunities — As evident from the versatile monetization options, VOD can generate significant revenue, be it through ads or transactions. So be careful when choosing the right monetization method for your business.
  • Tracking and Analytics — A good VOD platform will also provide you with detailed analytics, allowing you to track the performance, growth, and revenue of your video library. This will be valuable when building a long-term strategy for your business.

How to Start a VOD Platform?

So you’ve decided to launch a VOD business. The process ahead won’t be easy, but if you take the right steps, your VOD service will take off in no time. Here is what you need to do to start a VOD platform:

1. Source Engaging Video Content

You can’t really launch a video business without videos. That is why you will have to come up with a video sourcing strategy to ensure you have quality content to offer to your future audience. You can either invest in production, purchase the copyrights to someone else’s content, or lease the license to stream someone else’s content.

For publishers who are looking to put videos on their websites, but don’t have any content on their own, TargetVideo offers Video Content for Publishers — a rich media library of original videos from an array of niches.

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2. Find a Reliable Video on Demand Hosting Service

The first order of business is finding a secure and reliable video hosting provider. Of course, you can always host your library on your own server, but that is bound to run up the costs and even slow down your website. With an enterprise video hosting platform, you will only incur a fraction of the cost.

3. Build a Video-on-Demand Website and App

Building a VOD website is a process similar to building any other website, especially if you’re using third-party hosting services. However, an important thing to keep in mind is monetization service integration. Depending on your chosen monetization method, you might need to integrate a paywall and invest in extra security.

On top of a VOD website, you might also want to consider launching apps for mobile phones, tablets, and CTVs to truly maximize your audience reach. However, keep in mind that launching an OTT app is a more complex process. That is, unless you find an OTT platform with white-label OTT solutions.

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4. Get a Video Player for Your VOD Website

The last — and, arguably, most important — item on the checklist is having an online video player. Your audience will need a way to view your content, and the player will make that possible. In addition to this, if you choose to monetize videos through AVOD, the player will be tasked with showing ads.

If you have the know-how and the time, you can create a video player from scratch. Alternatively, there are many ready-made white-label solutions on the internet that you can use. While there are free video players available to those who need them, a premium player usually has additional (and often necessary) features such as security measures, video ad serving capabilities, customization options, and so on.

Another major perk of high-end premium video players is analytics. A good player will provide a publisher with in-depth data on video consumption, audience behavior, and so on. This information helps publishers correctly estimate and improve the performance of their content.

Start a Video-on-Demand Business With a Reliable VOD Platform

If all of this sounds a little too complicated, don’t worry — there is another way. Instead of looking for all of these third-party services or building everything from scratch, you can find a reliable video-on-demand platform

These platforms come with all the necessary solutions for launching a video-on-demand service. This includes secure video hosting, library management, monetization integrations, a white-label player, analytics, and even app builders for your OTT apps.

Launch a VOD Streaming Service With TargetVideo

Finding the right VOD provider for your business doesn’t have to be hard. TargetVideo is an online video platform that has the complete infrastructure necessary for you to build OTT apps, host videos, and distribute your library to the world. 

Our state-of-the-art, lightweight HTML5 player comes with adaptive bitrate streaming, an array of customization and branding options, engaging content units, and ad-serving capabilities. What’s more, through TargetVideo’s Premium Demand, you can access high-quality display and video ads from high-quality partners.

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FAQ

1. What is video-on-demand (VOD)?

2. How does video-on-demand work?

3. What is the difference between video-on-demand and streaming?

4. Is YouTube video on demand?

5. Is video-on-demand free?

6. What are the best video-on-demand platforms?