Video on Demand (VOD): Definition, Types, and Examples

Gone are the days when people had to plan their days around their favorite TV show or movie. Renting DVDs to watch a blockbuster multiple times is also a thing of the past. Video on demand (VoD), in conjunction with the widespread availability of high-speed broadband internet, has transformed how we consume media and entertainment content.

 

Over-the-top (OTT) content, which earlier reached customers through cable and via a set-top box, has also lost momentum with many users choosing to opt out of it in favor of online streaming services that offer them a more extensive choice of content along with the advantage of accessibility on a variety of devices and from almost anywhere. Instead of watching an episode of a show and then waiting a week for the next one to air, customers can now binge-watch one season of their favorite show after another.

 

Video on demand (VoD) is a system that enables users to choose and watch video content on their televisions or computers. One of the dynamic features provided by Internet Protocol TV is a video on demand. VoD offers users a selection of available videos from which to choose. The video data is sent using the Real-Time Streaming Protocol. 

 

What is Video on Demand? 

 

VOD is a technology that allows video content, such as movies and television shows, to be delivered directly to individual customers for immediate viewing.

 

Video content in the form of compressed digital files is stored on a centralized server in a cable television VOD system. A customer uses the cable set-top box to navigate a programming menu and select an option that is either free or for a fee. The program is immediately streamed by the server. The viewer can pause, fast-forward, rewind, or stop and resume the program at any time. 

 

Sometimes a program will only be available for viewing for a limited time. VOD systems may also use a download-based model, in which the program is stored on a hard disc in the set-top box, or they may use a subscription-based model. Satellite television services, which broadcast the same signal across an entire service area, are unable to support true VOD, though they frequently provide Internet VOD.

 

Cable providers experimented with VOD in the 1990s, but the services were not very successful until the following decade when equipment and bandwidth became less expensive and content providers began allowing VOD to offer more programming. By the middle of the decade, VOD had largely supplanted schedule-driven pay-per-view service on cable systems, and by 2010 most television networks were offering many of their programs on VOD. 

 

During the same period, Internet-based VOD became more prevalent in the video-rental market, providing customers with instant access to a vast library of programming with the click of a button. 

 

New research and development efforts focused on bridging the gap between the Internet and television sets, allowing online rental services to compete with cable providers in delivering content to customers' television screens. Users could stream videos for a monthly fee through subscription services such as Netflix and Amazon Prime.

 

Also Read | A Gentle Introduction to Video Streaming Technology

 

How does Video on Demand work? 

 

As we discussed in the previous section, VOD stands for "video on demand." This means that anyone can open a VOD app (such as Netflix), select a movie, press Play, and the movie will be played! There is no schedule or EPG to tell you when you can watch a movie!

 

Companies must maintain large libraries of assets and ensure that their architecture is designed for anytime-anywhere viewing to enable on-demand access to content. The architecture of a typical VOD provider is depicted below.

 

The primary components of a VOD service provider are -

 

1. Uncompressed video or mezzanine files are stored in a Content Library.

 

2. A transcoder compresses uncompressed video into multiple bitrate-resolution combinations for ABR video streaming. If you are new to ABR, read this article that explains ABR video streaming in layman's terms.

 

3. Packaging - At this stage, the compressed video is ready for delivery via popular ABR streaming protocols like MPEG-DASH and HLS (click for a deep-dive into HLS or HTTP Live Streaming).

 

4. Encryption - Typically, DRM technologies such as Widevine, PlayReady, and FairPlay Streaming are used to protect the streams.

 

5. CDN delivery - The packaged videos are stored on origin servers and served by CDNs (Content Delivery Networks).

 

6. VOD players are used, which are special applications that can stream video using the ABR streaming protocol.

 

What we've just seen is a very simplified view of the video engineering that goes into VOD. It is obviously more complicated, as it includes ad insertion, splicing, thumbnail generation, user authentication, monetization, and so on.

 

Netflix, Amazon Prime, and Hulu are some of the most well-known VOD services, providing subscription video-on-demand services (SVoD). However, the scope of VoD extends far beyond entertainment and can include, among other things, education, health and fitness, live events, and sports.

 

According to Statista, current SVoD revenue will be US$27,628m in 2020, rising annually by 4.1% to US$32,447 by 2024. By 2024, the estimated number of users will be 1,395.7 million.

 

Also Read | Using Data Handling and Digital Marketing to maximize customer experience: A Netflix Case Study

 

Types of Video on Demand: 

 

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Types of VOD

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1. SVOD: 

 

SVOD, or Subscription Video on Demand, is a method of earning money by giving your audience access to your entire content library for a monthly or annual fee. These subscription plans are automatically renewed until the user opts out. Consider getting paid on a monthly or annual basis for your entire collection of audio or video content.

 

Users typically enter into a monthly or yearly subscription agreement with SVOD platforms, which deliver TV and/or movie content for a flat monthly fee. When it comes to the distinctions between AVOD, SVOD, and TVOD, AVOD services earn revenue through advertisements, whereas TVOD services earn revenue through single transactions (pay-per-view). Some services like Hulu use a hybrid revenue model.

 

2. AVOD: 

 

Advertising-based video on demand or Ad-based revenue model is a type of service in which consumers must view advertisements in order to watch the actual content that they choose to watch.

 

Simply put, the most popular form of AVOD or name an example of AVOD is YouTube, DailyMotion, MX Player, and so on. AVOD is most useful for people who have a large fanbase or a targeted audience because ad views require little investment and generate massive amounts of actual revenue.

 

In 2021, AVOD increased, and more are expected in 2022. The pandemic is beneficial to the on-demand streaming industry. Indeed, more broadcasters are acquiring vast scope to bring something new to audiences.

 

Indeed, this trend has been rising throughout putting the growth drive into high gear despite COVID-19 pandemic implications in other industry streamlines.

 

3. TVOD: 

 

TVOD is an abbreviation for "transactional video on demand." The term "transactional" comes before "video on demand" because this revenue model involves charging users a one-time fee for a set number of views, whether that is one view, a set amount of time to view, or unlimited views.

 

TVOD video streaming is diametrically opposed to the SVOD model. Unlike the SVOD model, which requires users to pay a subscription fee to access a large pool of video content, TVOD requires users to pay a fee for each piece of content they wish to view.

 

4. Push VOD:

 

Push video-on-demand service providers ``push" movies or shows to the customer's set-top box without any prior purchases or selections. PVOD also employs a system that allows users to preload the most popular content onto the set-top box. It is quite different from the majority of the other "streaming" types mentioned on this list.

 

5. Transactional VOD: 

 

Transactional video-on-demand requires you to make a separate purchase for each show or movie you want to watch. For example, if you want to watch the most recent episode of the TV show Westworld, you'll have to pay a fee to gain access to that single episode. TVOD is further classified as electronic sell-through (EST) and downloads to rent (DTR).

 

The former allows you to watch the purchased content whenever and as many times as you want (permanent), whereas the latter has time constraints once you've opened it (temporary).

 

Top Apps using Video on Demand:

 

1. Netflix:

 

Apart from having one of the most impressive content catalogs, Netflix's popularity has grown due to the frequency with which new content replaces old. It is also well-known for its unique content and high-quality films. It can also be downloaded on a variety of devices and includes features such as parental controls.

 

2. Prime Video on Amazon:

 

Amazon, in addition to streaming content from leading networks such as HBO, Cinemax, CBS All Access, and Starz, has curated original content, some of which is as good as that available on Netflix.

 

3. Hulu:

 

It's one of the best all-in-one options for users in the United States who don't want to sign up for multiple VoD services. In addition to a library of movies and classic shows, Hulu offers Live TV with over 60 channels for news, sports, and entertainment.

 

4. Fubo Television:

 

Fubo is the best option for sports fans because its content catalog includes a wide range of live sports as well as entertainment. While it is a 'Sports First' service, users can also watch popular networks like National Geographic, The Food Network, FX, and AMC.

 

5. YouTube Television:

 

YouTube TV is another popular service for live sports and news. It also offers popular entertainment options from networks such as ABC, CNN, ESPN, Fox, and NBC. Subscribers can also add packages like Showtime and Starz.

 

Conclusion:

 

With more and more consumers cutting the cord from traditional cable TV services, trends point to Video on Demand via OTT apps being the way of the future. However, as OTT video streaming becomes more popular, the ecosystem has become overcrowded.

 

To survive in a highly competitive environment, companies must decode the complex consumption and behavioral patterns of their users in order to develop new strategies and offer innovative products that aid in increasing subscriber base and customer engagement.

 

As the VoD market evolves and matures, OTT apps must implement new strategies to stay competitive, whether it's user management strategies, hybrid monetization models, or customization that provides a superior user experience.

 

Our experts at TechAhead have the domain knowledge and expertise to develop streaming VoD solutions on SaaS platforms, having previously created OTT solutions for clients. We offer comprehensive VoD and OTT development and maintenance to help you get your app to market faster, from built-in subscriber management solutions to cross-platform app development to reach users across multiple platforms.