The OTT (over-the-top) and streaming video market has completely transformed the landscape of the modern entertainment industry. Globally, the OTT market is projected to reach $462 billion by 2027, more than doubling in value since 2022. Success with OTT, and effective planning of your content and advertising strategies, will depend on your understanding of the various OTT models — FAST, AVOD, SVOD, TVOD, and the like — as well as their associated monetization strategies.
In this blog, you’ll gain understanding of the evolving landscape of video content streaming and the ability to make informed decisions for your content monetization strategy.
So, first things first…
What is OTT?
OTT means “over-the-top” and refers to technology that delivers streamed content via internet-connected devices — think smart TVs; phones; tablets; streaming devices such as Apple TV, Roku, and Amazon Fire Sticks; as well as gaming consoles (to name a few).
You may be thinking, “Isn’t that basically everything?” Well, these days you’re not that far off. But it wasn’t all that long ago that we were watching everything as it was broadcast “over the air” or OTA.
What’s the difference?
If you’re watching an episode of The Office on your TV via cable (or your antenna), that’s OTA. But if you turn on your Apple TV, open the Peacock app, and start binge watching The Office, you’re watching OTT.
It’s about how you access the content, not the content itself.
So, let’s take a look at the various ways OTT content can be delivered. While the differences in some cases may be subtle, the approach to monetizing FAST, AVOD, SVOD & TVOD channels can vary and impact your ability to maximize your content’s value.
What is Free Ad-Supported Streaming Television (FAST)?
The FAST model offers free programming/video content in a linear, scheduled format like OTA/cable TV, presented with ad breaks. The benefit to the end user is the ability to watch the ad-supported programming without any cable fees or contracts. It looks like cable, and works like cable — but it’s served up over the user’s internet connection.
Market research from Statista shows that the FAST market’s compound annual growth rate (CAGR) is 9.30%, meaning the market will reach ~$11.83B by 2027.
The benefits of advertising on FAST include:
- Distribution to a broad audience — “free” always draws a crowd, and in many markets, FAST viewership is outpacing other models
- A familiar viewing experience appeals to those accustomed to linear programming
- Ad placement in this linear format generates substantial revenue streams, especially in emerging markets such as Asia, India, South Korea, and the U.K.
Advertising on FAST channels does present some challenges, however:
- The ad experience can be disjointed due to issues with the placement of ad breaks, as well as inconsistency in the length of the breaks
- It’s sometimes difficult to know, with certainty, where ads will appear in terms of exact channel, program, and placement
- There are a growing number of alternatives, meaning the market is highly fragmented
What is Advertising Video on Demand (AVOD)?
Unlike FAST’s linear and scheduled format, AVOD allows viewers access to the content they want, when they want it (hence “on demand”), but also supported by ads. The content is usually a higher quality than what’s available on FAST channels, and the ad model is much more customized to the user’s preferences and demographics — meaning advertisers can more easily target and personalize ads.
Popular AVOD channels include YouTube, Amazon Prime (Freevee), Tubi, and Plato TV (among many, many others).
Advertisers benefit greatly from the AVOD model:
- AVOD provides powerful insights such as viewer behavior, preferences, and detailed demographics
- Analytics and data tracking for advertisers on AVOD are much more rich and dependable than other channels
- The dynamic nature of digital ads on AVOD allow for real-time feedback and the ability to make adjustments much more quickly than other channels
Of course, there are downsides as well:
- With a more premium interface, user experience, and higher-quality content, users find ad breaks to be intrusive and disruptive
- Depending on how consumers are engaging with AVOD content — via a web browser, for example — ad blockers may impact advertisers adversely
- Highly-customizable and targeted advertising leads to the inevitable concerns around user privacy and data protection
What is Subscription Video on Demand (SVOD)?
Whereas FAST and AVOD channels are supported by ads, in the SVOD model users pay a subscription fee (usually monthly) for access to a library of content. While the category is called “subscription video on demand,” the content doesn’t necessarily have to be delivered on-demand. Increasingly, SVOD channels are serving up linear or scheduled programming (think YouTube TV), and may also include advertising as AVOD channels (such as Hulu and Netflix) look for creative ways to provide lower-cost subscription options.
Monetization via SVOD channels looks different than its ad-supported counterparts because SVOD works best when there’s a diverse and high-quality library of content available that can attract and — more importantly — retain a subscriber base.
While the average revenue per user (ARPU) for FAST channels is projected by Statista to be $9.01 in 2024, the ARPU for SVOD channels is projected to be $241.70. A substantial difference, driven in large part by a competitive landscape littered with SVOD channels establishing their own studios and catalogues of original programming.
What is Transactional Video on Demand (TVOD)?
Transactional Video on Demand or TVOD allows users to pay for individual access to content through electronic sell-through (EST), download-to-rent (DTR), and pay-per-view (PPV). The most well-known TVOD channels would include the Google Play store, Apple TV (previously the iTunes Store), Vudu, and Amazon Prime Video, where users can either rent or purchase movies or shows.
While the PPV content delivery method goes at least as far back as 1951’s heavyweight match between Joe Lewis and Rocky Marciano, the newest iteration within the TVOD monetization method is the emergence of “premium video on demand” (PVOD), or current-release box office titles which are simultaneously made available through a TVOD channel.
Choosing the Best Monetization Model
As technology, access to broadband, and media and entertainment companies rapidly evolve, one thing is increasingly clear: the opportunities for content owners and advertisers to launch or expand their streaming services have never been more compelling or lucrative.
Whether you choose to monetize via ad-based services, subscription-based services, transactional models, or a combination, embracing technology which allows you to quickly and cost-effectively customize each piece of your library’s content to meet the unique requirements of each model is key to maximizing your content’s earning potential.
With Time Tailor, our innovative, AI-powered software product, your content can be ready for new markets, channels, and monetization opportunities 90% faster than relying on traditional methods. Combined with the ability to save 60% or greater on editing costs, while generating more space for ad inventory, Time Tailor’s benefits more than pay for themselves and unlock unlimited potential for your library’s earning potential. Contact us for more information on how Time Tailor can increase revenue, a demo or no-obligation proof of concept, or support for enhancing your content or streaming service’s monetization efforts.
