VOD stands for Video On Demand and is a video streaming and delivery technology that enables people to watch videos instantly – anytime, anywhere, and on any device. There are multiple types of VOD – AVOD, TVOD, SVOD, PVOD, Freemium VOD based on different monetization techniques. VOD uses a different architecture when compared to linear television in order to satisfy the “anytime-anywhere-any-device” paradigm.
In this article, let’s take a look at
- The definition of VOD and what it is
- How does VOD work?
- Difference between VOD and OTT
- VOD Monetization via AVOD, SVOD, TVOD, PVOD
- Future of VOD.
Table of Contents
What is VOD – Why Is It Popular?
As mentioned earlier, VOD stands for Video On Demand and is a video streaming technology to enable people to watch videos – anytime, anywhere, and on any device
With traditional cable or Linear television, you are restricted to a programming guide (EPG) that dictates when your service provider will telecast a movie or series. You had to be in front of your television at a particular time and place to be able to catch your favorite show. And you were always restricted by the need to have a physical cable connection to your TV.
However, with VOD, you could be at the mall, on a bus, or eating lunch at your workplace, and as long as you had a good Internet connection, you could watch your show on any device and at any time.
Simply amazing, right?
Next, the VOD streaming ecosystem has evolved to enable video streaming on a large variety of devices such as Android-based phones, tablets, SmartTVs, iOS, tvOS, Roku, ChromeCast, HTML5, Samsung Tizen, LG webOS, and more! In contrast, with linear television, you are generally restricted to Set-Top-Boxes (STBs) that are distributed by the TV companies/service providers.
VOD’s popularity, in my opinion, comes down to one thing – convenience of being able to access your media (songs, movies, shows, podcasts, etc.) – anytime, anywhere, and on any device.
The freedom that VOD offers has caught the public’s interest and has led to the likes of Netflix, Hulu, HBO, DAZN, YouTube, TikTok, Vimeo, etc., becoming insanely popular leading to large-scale cord-cutting or canceling of traditional linear television.
Next, let’s take a look at the differences between OTT & VOD (often confused) and then move on to understand how VOD works.
OTT vs. VOD – What’s the Difference?
To understand the difference between OTT (Over The Top) video streaming and VOD, let’s see what falls under the umbrella of OTT, shall we? Typically, the following can be classified as OTT –
- Streaming video on websites or apps like Netflix, Hulu, YouTube, DAZN, Sky Sports, etc.
- Internet-connected devices like TVs (smart TVs) or devices like the Amazon Fire TV stick, Google Chromecast, or the insanely popular Roku streaming device.
- Watching live TV using internet streaming: Popular examples are DirecTV, Sling TV, Hotstar (in India), and the list goes on.
On the other hand, VOD or Video on Demand is generally restricted to content that is not being live-streamed, and can be watched at anytime, anyplace.
As you can see, the lines that differentiate OTT and VOD are pretty blurred. You can consider OTT to be a term that describes “how the video content is delivered” to the public. And VOD describes how the user can consume the content.
How does VOD Work?
As we discussed in the earlier section, VOD refers to “video being available on-demand.” This means that anyone can open a VOD app (like Netflix), choose a movie, press Play, and the movie is expected to play! There is no schedule or EPG (Electronic Progam Guide) to tell you when you can watch a movie!
To enable on-demand access to content, companies have to maintain large libraries of assets and ensure that their architecture is geared for anytime-anywhere watching. Below, you can see the architecture of a typical VOD provider.
The main building blocks of a VOD service provider are –
- A Content Library that contains uncompressed video or mezzanine files.
- A Transcoder takes the uncompressed video and compresses it into multiple bitrate-resolution combinations for ABR video streaming. If you are new to ABR, then read this article that explains ABR video streaming in a beginner-friendly manner.
- Packaging – at this step, the compressed video is prepared for video delivery using popular ABR streaming protocols such as MPEG-DASH and HLS (click for a deep-dive into HLS or HTTP Live Streaming).
- Encryption – typically, the streams are protected using DRM technologies such as Widevine, PlayReady, and FairPlay Streaming.
- Delivery via CDNs: the packaged videos are stored on origin servers, and CDNs (Content Delivery Networks) are used to serve them to the public.
- VOD players – special applications that can stream video using the ABR streaming protocol are used.
What we just saw is a simplistic view of the video engineering behind VOD. It is obviously more complex and involves ad insertion, splicing, thumbnail generation, user authentication, monetization, etc.
For more information, read this article for a great overview of video engineering for OTT written by a Principal Engineer with 15 years in Video Engineering. You’ll gain an appreciation of the complexity and depth of engineering needed for successful OTT and VOD Video Streaming.
Types of VOD – AVOD, SVOD, TVOD, PVOD, Freemium
There are several different types of VOD, and the difference is the way these models generate revenue. They are AVOD, SVOD, TVOD, and PVOD and the abbreviations stand for –
- AVOD – Advertising-based VOD
- SVOD – Subscription-based VOD
- TVOD – Transactional VOD
- PVOD – Premium VOD
Now, let’s look at each of these briefly.
AVOD or Advertising-Based Video On Demand is a monetization strategy in which advertisements are inserted into the video to monetize it. Users can consume the content for free without paying or subscribing to the service. The VOD company derives all its income from ad insertion. An example is YouTube that generates almost all of its income via ads inserted into the content.
SVOD or Subscription-based VOD is where users are required to pay a subscription fee to get access to the content providers’ library. The fee is usually a recurring fee – either monthly or yearly. A great example of SVOD is Netflix!
TVOD or Transactional Video On Demand is a rental-based VOD monetization business model where the user rents the content or has access to the service for a short period of time by paying a fee. This is also referred to as “pay per view.” DAZN has several pay-per-view boxing matches – this is a great example of TVOD.
PVOD or Premium Video on Demand is a form of TVOD or SVOD where the user can pay to get access to content sooner than other SVOD or TVOD customers would! Movies are released as PVOD first and then are made available to the rest of the subscribers/users via either SVOD or TVOD. Disney’s Mulan was a prime example of PVOD where it was first released as a PVOD film, and it skipped the theaters due to the COVID-19 pandemic.
Typically, “Freemium VOD” combines AVOD and SVOD business models. For example, a user can watch content with ads inserted for free. But, if the user chooses to upgrade to a paid subscription, the ads go away. Or some portion of the content library is made free-to-view with ads inserted, and the rest of the library is locked for paying subscribers.
Note: For a deep-dive into the different VOD monetization models, please read this article on OTTVerse for a detailed discussion of AVOD, TVOD, SVOD, and PVOD.
Examples of VOD Companies
After understanding the definition of VOD, how VOD works, and the differences between OTT, Live Streaming, and VOD, let’s now look at some VOD companies in the world.
Frankly, there are literally hundreds of VOD companies today – for every region of the world, every genre, every language, and every price that it is impossible to list them all.
However, let’s take a look at some of the famous ones, shall we?
fubo, YouTube, Vimeo, TikTok, Disney+Hotstar, Peacock, SonyLIV, A&E, Netflix, HBO, Discovery+, StarzPlay, Hulu, Peacock, Voot, HOOQ, Youku Tuduo, iFlix, Viu, Paramount Plus, AltBalaji, Zee5, Jio Cinema, and so many more can be considered VOD companies.
Future of VOD
VOD is extremely popular because it allows consumers to choose and watch content wherever & whenever they want. Over the past few years, data has indicated that VOD and OTT are winning against traditional linear television. Statistics from Comcast indicate that in Q4 2019, they lost 133K Residential Pay-TV Subs and Gained 424K Broadband Subs.
But, VOD comes with a lot of engineering complexity and problems. It requires a complex ecosystem consisting of multi-bitrate transcoding, packaging, ad insertion, CDN-based delivery, and user-side problems with bandwidth issues, buffering, startup delays, and crashes.
However, make no mistake – these engineering problems will be solved over the next few years and with the advent of 5G connectivity, increased download speeds, and improvements in video compression and delivery, VOD will be poised to rule the video delivery wars!
Note: if you want to understand how live streaming works, then read our super-guide to live streaming – everything you need to know!
Krishna Rao Vijayanagar
Krishna Rao Vijayanagar, Ph.D., is the Editor-in-Chief of OTTVerse, a news portal covering tech and business news in the OTT industry.
With extensive experience in video encoding, streaming, analytics, monetization, end-to-end streaming, and more, Krishna has held multiple leadership roles in R&D, Engineering, and Product at companies such as Harmonic Inc., MediaMelon, and Airtel Digital. Krishna has published numerous articles and research papers and speaks at industry events to share his insights and perspectives on the fundamentals and the future of OTT streaming.