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What Is TVOD and Why It Is Growing in Popularity

what is tvod

With more and more cord-cutting happening by the year, the traditional cable or satellite TV services are losing market value. Throughout 2019 alone, over six million American consumers canceled their subscriptions to TV services. That has mostly been happening thanks to the rising popularity of streaming services. The primary culprit of this is the slow but steady global transition from traditional TV services to video on demand (VOD). Transactional video on demand (TVOD), in particular, has seen substantial growth throughout 2020. But what is TVOD, and why is it growing in popularity? Let’s find out!

What Is TVOD?

Transactional video on demand (TVOD) is a video monetization model that allows publishers to sell their content on a pay-per-view basis. Тhis revenue model is nowhere nearly as popular as its two counterparts, AVOD and SVOD. Still, many publishers found an excellent use for it in their efforts to maximize video revenue.

TVOD has proven particularly effective as of recent due to its similarities with the traditional box office monetization method. This model allows publishers to sell new film releases online like they would sell cinema tickets. TVOD also opens up a variety of new possibilities for publishers, like renting video content online, exclusive offers, and introducing various pricing options.

Some of the most notable examples of TVOD services are Amazon’s Video Store, Apple iTunes, and Sky Box Office.

The Growth of TVOD

As we have mentioned above, TVOD is not the most popular video monetization model out there, but it has seen unprecedented growth throughout 2020. As you can see from the graph below, TVOD usage has grown by around 20% between Q2 and Q3 of 2020 alone.  

graph illustrating the popularity of video streaming by service type in Q2 of 2020 vs Q3 of 2020

Experts also predict that TVOD will continue seeing an annual growth rate of around 1.9% and that its market value will reach $5,138 million by 2025. Why? Because of the growing shift from traditional video to video streaming. 

This year’s COVID-19 pandemic only further facilitated this shift, as the need for alternative monetization options became more prevalent than ever. The movie industry has been the most affected by the pandemic since most cinemas worldwide had to close, and that is where TVOD truly found its place. 

TVOD, as a business model, truly shines in conjunction with other video monetization models, and it’s best used accordingly. On the example of the movie industry, many giants complemented their existing subscription-based VOD services by incorporating TVOD for new film releases. That way, this model effectively substituted cinema box office sales during this year’s lockdown.

An excellent example of this would be Disney+, who integrated their new film releases into their streaming platform under a TVOD model. The company made these movies available as a one-time purchase for the first several months after their release. After that, Disney decided to make the films free under the monthly subscription fee for their streaming platform.

This type of pseudo-TVOD model is likely its future, as it has seen immense success. That is why more and more publishers complement their existing SVOD models by introducing timed premium content into their offers. 

Advantages of TVOD

TVOD brings various unique options to the table that ad-based and subscription-based models don’t. Despite its being best used as a supporting monetization model, its potency is still nothing to scoff at. Quite the contrary — TVOD has enormous revenue potential despite its being less popular among audiences. But what exactly are TVOD’s advantages over other models? Let’s take a look at some of them:

  • Exclusive Content — One of the most notable advantages TVOD has over other monetization models is that it allows publishers to gate their content behind a paywall. That leaves plenty of opportunities to provide exclusive content only to your most loyal or premium viewers. 
  • Publishing Single-Videos, Series, or Films — Although you could monetize original content with other monetization models, TVOD allows you to drive the most profit from it. Also, it provides full control over its distribution by minimizing the risks of piracy and copyright infringement.
  • Renting Content — Renting content is a unique feature of TVOD models as it allows you to set various prices for a piece of content or make it accessible for a time limit. This feature fits TVOD like a glove since it will allow users to check the content out before deciding whether to go through with their purchase or not. Having this option on your website is sure to boost your customer satisfaction and retention rates.
  • Excellent Support for Hybrid Monetization Models — As we have already mentioned, TVOD is best used in conjunction with other video monetization models if your goal is to drive the most revenue. Using TVOD to lock your premium content behind a paywall while getting your audience hooked with your free content is the optimal way to drive the most revenue in the long run.

Is TVOD Worth It?

It should be clear by now that TVOD is a far better monetization option than many make it seem. And considering the tumultuous changes in the online video world, it’s safe to say that TVOD will only grow in popularity.

But is it a better option than AVOD and SVOD, and is it worth using it in the long run? There is no straightforward answer to these questions, so take our opinion with a grain of salt.

To address the former question, we’d say that it depends. TVOD is in no way superior to SVOD and AVOD as a standalone monetization model. However, it is the best supporting monetization model, as we have illustrated above. So if you can find a way to integrate it into your existing business plan, it is sure to provide excellent ROI. But if you’re just looking for something to get started, it’s not a wise choice.

When it comes to the latter question, the answer is no different. Whether or not using TVOD will pay off mostly depends on your audience. If you are a new video publisher, you likely won’t have enough loyal viewers to leverage TVOD to the fullest. Locking your content behind a paywall too soon is more likely to be a deterrent for your customers than encouragement to pay. So we wouldn’t advise starting with TVOD before you gain a substantial following and are sure your audience knows your content is well worth the investment.

So how do you detect the right moment to start with TVOD? Unfortunately, that is something you have to answer for yourself. It will mostly depend on the publisher, your services, and audience. But one thing is for sure — you are the one who’ll have to make that call. Just remember that TVOD is on the rise, and it is an excellent model to have in the pipeline. So take your time, wait for the right moment, and don’t miss out on the opportunity to grow your business with TVOD!

Best of luck to you!

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