The video-on-demand (VOD) industry is booming. In 2020, the global VOD market was valued at $70.5 billion and was expected to reach $159.3 billion by 2025, growing at a CAGR of 17.4% during the forecast period (Source: Mordor Intelligence).
With the worldwide pandemic driving more people to streaming services than ever, it’s no surprise that VOD is rising. But what trends are driving this growth? Here are the top 5 VOD trends for 2021.
Trends in VOD Service Monetization
Subscription fatigue
There are so many streaming options available today that it can be hard to keep track of them all—and even harder to justify paying for them all. As a result, we’re starting to see a trend of subscription fatigue, where people are cutting back on the number of streaming services they’re willing to pay for.
The rise of AVOD
Ad-supported video on demand (AVOD) is growing in popularity as an alternative to subscription-based VOD services. AVOD allows users to watch content for free, with commercials interspersed throughout. While AVOD has been around for a while, it’s only recently that we’ve seen a significant shift towards this monetization model.
Bundling
Bundling—or offering multiple products or services for one price—is another trend we see in the VOD space. For example, some broadband providers are starting to bundle their internet service with various streaming channels. This trend will likely continue as providers seek ways to stand out in a crowded market.
Localized content
As the world gets smaller and smaller thanks to technology, there’s an increasing demand for localized content—content relevant to a specific region or culture. This trend is especially seen in Asia, where localized OTT platforms like iQiyi and Youku Tudou have become immensely popular.
Niche content
While major studios and networks still have a place in the VOD landscape, we’re also seeing a rise in niche content providers who cater to specific audiences. These niche players often produce content more cheaply and quickly than their big studio counterparts, giving them a significant advantage in today’s fast-paced market.
Subscription fees
One of the common ways to monetize a VOD platform is to charge viewers a monthly or annual subscription fee to access premium content. This type of monetization is often used by media that offer a mix of free and paid content, as it allows viewers to pay for only the content they’re interested in consuming.
Pay-per-view fees
Another popular way to monetize a VOD service is to charge viewers a fee for each piece of premium content they watch. This type of monetization is often used by platforms that offer live or on-demand events, such as concerts, sporting events, and pay-per-view movies.
Advertising
Many VOD platforms generate revenue through advertising, either by selling ad space on their website or by integrating with an advertising network such as Google AdSense. Ad-supported VOD platforms often offer viewers free and premium content, with the latter being accessible without watching ads.
Merchandise sales
Another way to monetize a VOD platform is to sell merchandise related to the content on your site. This could include anything from t-shirts and posters to DVDs and Blu-rays. Platform platforms offering original programming or developing a solid brand identity often use merchandising sales.
Crowdfunding
Crowdfunding platforms such as Kickstarter and Indiegogo can be used to finance the production of new video content. Once the content has been produced, it can be made available on your VOD platform for viewers to watch.
This type of monetization is often used by independent filmmakers and creators who want to produce new work without having to secure traditional financing.
Sponsorships
Sponsorships are similar to advertising, but instead of general advertisers, you find companies willing to sponsor specific content. It can be a way to generate revenue if high-quality content aligns well with a particular brand’s values.
Subscription-based pricing models
One of the most popular VOD trends is subscription-based pricing models. This involves viewers paying a monthly or annual fee to access your content library. This pricing type allows viewers to watch as much content as they want without having to pay per episode or film.
It’s the best way to empower customers to return for more. Netflix, Hulu, and Amazon Prime are all examples of successful companies that use this type of pricing model.
Bundling Services
Bundling services is another popular trend in the world of VOD. This involves teaming up with other companies to offer viewers a discounted rate when they sign up for multiple services at once. For example, many cable companies now offer discounts when you bundle your TV service with your internet service.
This is a great way to attract new customers and get them to try your service.
Advertisement-based revenue streams
Another way to monetize your VOD service is through advertisement-based revenue streams. This involves running ads before, during, or after your videos. This is the best way to generate additional revenue without raising prices or adding new features.
However, it’s essential to ensure that the ads are relevant to your audience so that they don’t become annoyed and stop watching altogether.
In-App purchases
You can also generate revenue through in-app purchases. This allows viewers to purchase additional features or content from your app or website. For example, you could offer viewers the ability to buy ad-free versions of your videos or access exclusive bonus content.
This is the best way to give viewers what they want while generating additional revenue.
Pay-per-view pricing models
Last but not least, pay-per-view pricing models are becoming increasingly popular. With this pricing, viewers pay to watch each video or film individually. This pricing allows you to generate revenue from one-time viewers who may not be interested in subscribing to a monthly or annual service.
Advertising-based model
The advertising-based model is a monetization model in which advertisers pay to have their ads shown alongside the video content. This is how YouTube earns revenue from its AdSense program.
Ad-supported revenue streams are declining
Viewers becoming more accustomed to paying for their entertainment are less likely to tolerate ads. This is especially true for younger viewers who have never known a world without on-demand content. As a result, VOD providers that rely heavily on advertising revenues are struggling to keep up with their subscription-based counterparts.
New ways of measuring viewership re emerging
In the past, ad-supported VOD services could charge higher rates to advertisers based on the number of eyeballs they reached. However, this metric is no longer relevant with the rise of ad-free services. Instead, VOD providers are now focusing on metrics like minutes watched and completion rates to measure viewer engagement.
Subscription revenues are skyrocketing
As more and more people cut the cord and ditch their cable packages, subscription revenues for VOD providers are skyrocketing. It’s estimated that by 2022 subscription revenues will make up nearly 80% of the total global market for online video services.
This trend is driven by the availability of high-speed internet connections and the proliferation of handheld devices like smartphones and tablets that make it easy to watch TV anywhere, anytime.
Bundling is becoming more popular
VOD providers are increasingly bundling their services with other content platforms like broadband internet and music streaming services to compete with traditional cable television providers. By offering customers a comprehensive package of entertainment options, VOD providers can stay ahead of the curve and keep their subscribers happy.
Original content is key
VOD providers need to offer original content that they can’t find anywhere else to attract new subscribers and keep existing ones engaged. This is why we’ve seen such a boom in original programming from Netflix, Hulu, and Amazon Prime in recent years.
By investing in exclusive content, VOD providers can differentiate their offerings from their competitors and generate additional revenue streams through DVD sales and international licensing deals.
One of the biggest trends in VOD monetization is subscription-based models. Netflix, Hulu, and Amazon Prime are all examples of this model. With a subscription-based model, viewers pay a monthly or yearly fee to access a content library.
This model attracts content providers because it provides a steady revenue stream. It appeals to viewers because it is cheaper than buying individual episodes or movies outright.
Another trend that we are seeing is à la carte models. This is where viewers can buy individual episodes or movies without subscribing to a service. This model is attractive to content providers because it allows them to monetize their older or less popular content that might not be performing well enough to justify keeping it on a subscription-based service.
It is also attractive to viewers because they only have to pay for the content they want to watch. We are also seeing an increase in ad-supported models. This is where viewers can watch content for free, with commercials interrupting the show regularly.
This model is attractive to content providers because it allows them to generate revenue from advertisements instead of subscriptions. It is also appealing to viewers because it is free. However, many viewers find commercials annoying and prefer not to see them if they can avoid them.
Conclusion
The VOD market is booming and shows no signs of slowing down anytime soon. With so many choices available, providers need to find ways to stand out from the crowd—whether it’s by localizing their content, catering to niche audiences, or offering bundled packages.
As we head into 2025, it will be interesting to see how these trends continue to shape the VOD landscape. The monetization of VOD services is evolving, and there are many opportunities for service providers to increase their revenue.
Our team at [company] can help you identify the best ways to monetize your VOD service and maximize your profits.
Contact us for more information about our VOD Service Monetization Consulting services, and let us help you take your business to the next level.
