By 2020, OTT video streaming will be a $5 billion industry. As more TV viewers cut cable, many businesses are turning to Subscription Video on Demand (SVOD) to make revenue. But what exactly is SVOD, and how can you get started making money with it?
In this guide we’ll take you through the definition of SVOD, show you how companies like Netflix are making money with it and how you can start or dramatically improve your video business today.
What does SVOD mean?
SVOD stands for Subscription Video on Demand. This refers to video streaming services that users must subscribe to in order to access. For example, users of Netflix must pay a monthly subscription fee in order to watch their content because it is an SVOD.
This is different from AVOD services, which generate revenue from ads, and TVOD services, which generate revenue from single transactions (pay-per-view). Some services like Hulu use a hybrid model, combining different types of revenue models.
What are the advantages of starting an SVOD business?
Subscription Video on Demand is a booming industry for many reasons. It empowers consumers to pay for only the content that they want, a major reason why audiences are turning away from cable and other traditional providers. Also, it provides businesses a direct line of revenue from consumers without having to consult or sell to advertisers. This has the added benefit of relieving users from annoying ad interruptions.
SVOD businesses can also take advantage of OTT platforms like Roku, Apple TV, Amazon Fire TV and more to make their content more accessible than ever. For businesses with a dedicated audience that is willing to pay, SVOD is an excellent solution.
What are some examples of successful SVOD businesses?
Netflix is the golden example, but here is a short list of SVOD platforms:
ESPN+, Disney+, YouTube TV, Sling TV, DirecTV Now, and Fubo TV are just a few major players in the space. Some like Sling TV and DirecTV Now are interested in recreating the traditional TV experience through the web. Others like ESPN+ and HBO Go represent pre-existing, popular channels. Others focus on aggregating as much content as possible into one platform. Perhaps the most exciting space in SVOD right now is the rise of niche channels.
Niche channels like American Kennel Club and Crunchyroll are making it possible for superfans of a certain topic or genre to congregate in one place. This gives a highly dedicated audience a concentrated, convenient place to binge the type of content they love. While enterprise channels like Netflix and Hulu continue to dominate the conversation, be sure to keep your eye out for smaller channels as well.
How can I start an SVOD platform? The basics.
To start a Subscription Video on Demand platform from scratch, you need a few things:
First, you need the right technology. Your online platform needs to have user profiles, easy sign up and login capabilities, paywalls, and an overall experience that justifies the price. Many basic TV app builders and channel creators will not give you the proper tools to monetize from subscribers. For a more business-grade SVOD provider, explore options like MAZ’s OTT channel creator.
Next, you need an audience. While SVOD channels don’t need as large of an audience as ad-based channels, you will still need to generate revenue greater than the cost of your platform and content’s maintenance. Building an audience can be difficult, but should revolve around finding a core group of followers that you can serve better than any existing VOD platform.
Lastly, you need a pricing and business plan. Think of your SVOD business as a two-sided marketplace, with content as the product and subscribers as the customers. Leasing more content may gain you more subscribers, but will likely cost you more money. Raising prices may increase revenue or cause subscribers to leave the platform. For a personalized business consultation, get in touch with an expert from our team here.
Conclusions on SVOD, and further learnings:
While SVOD may seem simple, it’s a highly competitive space with lots of players. With opportunity comes a great challenge, and that’s exactly what we’re seeing today as more and more businesses are launching Video on Demand platforms.
If you think an ad-based VOD service may be a better fit, be sure to see our guide on AVODs here. For more information on OTT at large, see our article here. Or for one-on-one advice on VOD channel creation and how you can start your business on the right foot, schedule a demo with our team here.