The alphabet soup that represents the various flavors of on-demand video programming is funnel that will, over time, lose its one-letter prefixes based on the increasingly popular notion that young consumers are allergic to commitments of any sort.
It begins with an understanding of the various VOD types. There is subscription VOD (SVOD) where Netflix, Hulu and Amazon Prime dominate. You pay a monthly fee of 10-ish dollars, and it’s all you can eat from a preselected buffet of programming. Next is AVOD, which is ad supported on-demand programming and represented by YouTube, with Twitter, Facebook, Instagram and others nibbling at the corners. For the record, we cannot overlook your parents VOD which is the ability to watch (primarily) movies at any time and is/was generally available through the friendly MVPD or, while traveling, companies such as Spectravision who serviced hotels. Technically, there is one more — NVOD — near video on demand, which is a service offered by some MVPDs which allows you to restart a show when you join mid-way.
Just as on-demand programming has evolved, the manner in which video content owners and providers charge for their services has dramatically changed. The take-it-or-leave, mismatched programming tier mentality of cable and satellite has given way to more sensible approaches. This is not to say there is a magic formula or that clever entrepreneurs have come up with a foolproof alternative to classic big bundle approach to video services.
In speaking to industry leaders, two key points emerge: the single shot approach — that is lock into one business model (SVOD, AVOD) is a non starter, and the wise use of data can make the difference between success and failure.
Nick Shore, Chief Creative Strategist at Astronauts Wanted, points out the need to avoid a single focus when it comes to the monetization of video. “In a market that is experiencing this much fluidity and systemic disruption it is more dangerous to have one business model than to look at multiple,” he says.
“However, it’s a fine line between a carefully calculated number of hedges versus spinning too many plates, creating a lack of focus and just chasing flavor-of-the-week-models.”
Alec Shankman, Vice President, Alternative Programming & Digital Division, Abrams Artists Agency, believes there that it’s important to view each video or series separately, and to keep a careful watch on audience reaction via data. “We’ve successfully leveraged popular digital series into myriad revenue streams simultaneously including traditional television, brand integration, publishing, and licensing, “He says. “Not all content warrants as broad of an approach, but when content and/or talent really resonates, shoot for the stars.”
The crucial last quarter mile between creators, content networks and consumers is in the hands of providers who operate these various on-demand and streaming services. The YouTubes, AT&Ts, Netflixs, Vessels and Vimeos are the ones carrying the risk and the ones hoping to land the magic formula where the magic alchemy of price, choice, experience and value coalescers into mucho eyeballs and big-band profits. Let’s face it, the online video business is a high-risk, high-reward gamble. What remains to be seen is whether the online and streaming video businesses will reverse the historic media mantra where decisions driven by profits outweighed the needs of hungry content consumers. It’s certainly about time.
This weekly column is part of VideoInk’s new research group — Cognito. Cognito releases monthly “Sweep” reports as well as “Pulse” reports each quarter. Click here to get data and research updates into your inbox.
Subscribe below to up your intelligence and become a Cognito member.