GLOSSARY / TVOD
Transactional Video on Demand

Transactional Video on Demand (TVOD)

Transactional Video on Demand (TVOD) is an OTT (Over-the-Top) video monetization model where viewers pay a one-time fee to access specific content. This differs from subscription models where recurring payments are required. TVOD has three main subcategories:

  1. Pay-per-view (PPV): Viewers pay a fee to watch a show, event, or broadcast at a set time, usually limited to one viewing. This model is ideal for time-sensitive events like sports games or concerts.

  2. Electronic Sell-Through (EST): Viewers make a permanent purchase of content, such as a movie or e-learning course, allowing unlimited access.

  3. Download-to-Rent (DTR): Viewers pay for temporary access to content, typically for 24 to 48 hours. This model is commonly used by platforms like Amazon Prime Video.

The TVOD market is expanding rapidly, with projections indicating it will reach nearly $13 billion by 2027, up from almost $9 billion in 2022.

Popular TVOD Platforms

TVOD is gaining traction on platforms like Netflix and iTunes, as well as Google TV and Sky Box Office. Even eLearning platforms like Udemy employ the EST model. The largest share of the TVOD market is occupied by media and entertainment, followed by sports and online education.

Benefits of TVOD

  1. Maximized Revenue: TVOD can generate more revenue per user compared to subscription models. For instance, Apple can earn as much from two movie rentals on iTunes as Netflix does from a monthly subscription.

  2. Monetizing Exclusivity: TVOD is ideal for exclusive content such as major sports events, concerts, or specialized courses. If your content is unique or time-sensitive, TVOD can be a profitable model.

  3. Piracy Prevention: TVOD platforms often use digital rights management (DRM) to protect content, reducing unauthorized access and piracy.

Challenges of TVOD

  1. High Viewer Fees and Low Retention: The cost per video can be high, potentially driving viewers to seek content elsewhere. Additionally, there is no guarantee that viewers will return for more content after a single purchase.

  2. Licensing Issues: Content ownership can become complicated. If content creators decide to remove their content from your platform, it can frustrate viewers who paid for access, as seen with issues faced by iTunes and Amazon Prime Video.

Comparing TVOD with SVOD and AVOD

• AVOD (Advertising-Based Video on Demand): Viewers access content for free but with advertisements. Popular platforms include YouTube and Tubi.

• SVOD (Subscription Video on Demand): Viewers pay an ongoing subscription fee for unlimited access to a platform’s library, used by services like Netflix and HBO.

The main difference between TVOD and SVOD is the payment structure: TVOD involves one-time fees, while SVOD requires ongoing payments. Is TVOD Right for You?

TVOD is best suited for exclusive, time-sensitive, or niche content. Platforms like Udemy succeed with TVOD by offering high-quality, exclusive eLearning videos. Combining TVOD with other models like SVOD can also be beneficial, as seen with Amazon Prime Video.

Choosing a TVOD Method

Consider the exclusivity of your content when selecting a TVOD method.

• PPV: Ideal for large audiences watching live events.

• DTR and EST: Better for evergreen content. EST offers higher revenue per title, but DTR poses fewer licensing risks.

Key Takeaways

• TVOD charges a one-time fee for content access, either temporarily (rental, PPV) or permanently (EST).

• Three Types: PPV for single views, DTR for limited-time access, and EST for unlimited access.

• No Ongoing Fees: TVOD differs from SVOD, which involves subscriptions, and AVOD, which provides free content with ads.

• Exclusivity: Best for exclusive, high-quality, or time-sensitive content.

• Combination Models: Mixing TVOD with other models can broaden customer reach and boost revenue.

By considering the exclusivity and nature of your content, you can determine if TVOD is the right monetization model for your platform.