Video on Demand: What Is It and How Does It Work?

Nearly ⅔ of television viewers globally use some sort of video-on-demand (VOD) service. Anything with that widespread adoption should have the attention of marketers and advertisers everywhere. However, before you can use VOD to your advantage, you should understand what it is and how it works.

What Is Video on Demand?

Video on demand is a popular option for both residential consumers and business customers. It empowers users to choose the specific content they want to watch, where they will watch it, and how. They do this by using some sort of interactive dashboard to select the content they want from an assortment of options. This content may then be viewed right away on a TV, smartphone, computer, or another device. Users may also download VOD content to watch later.

How Does Video on Demand Work?

With video on demand, content is stored by the provider. When a user requests a particular video, that is delivered to them over an internet connection via packets of data.

Are VOD and Pay-Per-View the Same?

There are some similarities between video on demand and pay-per-view (PPV). Both give the user the opportunity to select the content they want to view. However, with PPV, you pay for each video you select to view. VOD customers generally pay to access all or most of the available content on a VOD platform. In some instances, that content is available for free.

Also, video on demand allows you to view a selected piece of content multiple times. PPV is often limited. For example, someone may purchase a live sports event using PPV. However, they won’t be able to access it again after that first viewing.

What Are Examples of Video on Demand?

There are a growing number of platforms that offer video on demand. Essentially, any service that allows the user to select and view or download video content counts as VOD. This includes:

• YouTube

• Vimeo

• Hulu

• Netflix

• Disney+

• HBO Max

• Pluto

• Tubi

Many video-on-demand platforms are also OTT. This means they are served “over the top” of traditional cable services via an internet connection. There are several VOD providers that also offer apps that make it easier for mobile users to select and view content.

How Is VOD Monetized?

VOD content may or may not be monetized. For example, a public library may offer streaming videos through its website or an app for free. A business may also choose to offer a proprietary VOD service to employees or consumers as a way to share content.

When it is monetized, providers take one of the following approaches:

Subscription Video on Demand

SVOD involves customers paying a regular subscription fee. In return, they are able to access the full library of content.

Transactional Video on Demand

TVOD allows customers to pay a fixed price for specific content. They are then able to watch that content as often as they want. For example, they may purchase an entire season of a television show.

Advertising Video on Demand

AVOD is a monetization model that allows viewers to access content for free. However, they are also served advertisements along with their content. This has contributed to the growth of TV media buying.

Why Is Video on Demand Popular?

A growing number of cord-cutters have opted to replace their cable subscriptions with OTT and other services that offer video on demand. They are doing this for several reasons.

Monetary Savings

The cost of cable has increased significantly over the past several years. In many cases, rate increases have outpaced inflation. This has been a significant driver behind the mass exodus from traditional cable to OTT.

In many cases, someone can subscribe to several on-demand services for less money than they would spend on cable. Bundling options can make this even less expensive. There are also options that are absolutely free.

More Value

It isn’t just cost that matters. Value is even more important. With VOD, consumers are better able to access the content they want while also avoiding paying for things that don’t interest them. One way to do this is to subscribe to niche OTT platforms that specialize in a specific genre. This might include documentaries, sports, children’s programming, or blockbuster movies. 

Better Customer Experience

VOD is accessible from any connected device that has the ability to play video. Viewers aren’t tied to a specific location, and the content available isn’t limited to a single viewing experience. VOD is also self-service. In the vast majority of cases, customers can start and cancel subscriptions without requiring any sort of intervention.