Aug 7, 2019 Partner Solutions
Video on Demand: How Technology is Transforming Traditional TV Viewing
Consumers’ increasing ability to watch content where and when they want is a massive opportunity for marketers.
Break It Down is a series where we dissect the topics, technologies, and jargon that matter most to marketers and advertisers.
Video on demand, or VOD, is a rapidly growing way to consume content. Thanks to its convenience and availability, it’s become increasingly popular among consumers.
By 2023, the global VOD market is expected to be worth $93.99 billion, up from $56.3 billion in 2017, according to MarketWatch. That’s because VOD, which is online video content accessible with the click of a button on a smartphone, TV, or laptop, has granted consumers unprecedented choice in what to watch, and where and how to watch it. For advertisers, that creates massive opportunity for greater control and flexibility in reaching and impacting viewers. They know exactly who saw the ad, where they saw it, and what they did next.
Here's everything else you need to know about VOD:
When most people think VOD, they think Netflix, Hulu, or Pluto TV—and they’re right to do so. Their apps and websites let consumers choose TV shows, movies, documentaries, sports, educational programs and more, to watch wherever and as often as they want. VOD, however, first arrived in the early 1990s, when Time Warner and Bell Atlantic experimented with on-demand for films. Offerings eventually expanded to include TV programs and other content. Netflix - which launched as a DVD rental service in 1997 - jump started the streaming revolution when they diversified into streaming in 2007. Since then, streaming services have proliferated as smart TVs have arrived with built-in internet connectivity to access VOD without a laptop or mobile device.
VOD is distributed through set-top boxes (STBs) and over-the-top (OTT) devices—smart TVs, Google’s Chromecast, Amazon’s Fire Stick—that enable viewers to wirelessly stream video from any connected device to their TV set.
Some VOD content—Netflix, Amazon Prime Video—requires a subscription (SVOD), while other services, such as Pluto TV or The Roku Channel, are free for consumers, but supported by ad revenue (AVOD). A third model—transactional video on demand (TVOD)—provides a pay-as-you go experience.
Watching a Wild N’ Out #WildStyle clip posted to YouTube Red (SVOD)—is a different experience than binge-watching Forensic Files on Pluto TV (AVOD), which in turn differs from the the pay-per-download model of buying episodes of RuPaul's Drag Race in the Google Play Store(TVOD).
Many popular services also operate with multiple tiers. Hulu, for example, offers a free ad-supported (AVOD) plan and a subscription-fee based (SVOD) plan, as does YouTube.
As adoption of what-you-want-when-you-want-it VOD services increases, cord-cutting is on the rise. Advertisers, in turn, are shifting more of their budget to AVOD, which is a native environment for addressable, or targeted, TV ads.
VOD has revolutionized viewing habits by allowing people to watch content of all kinds when and where they want, while offering advertisers more opportunity to target specific demos with addressable and programmatic ads. It only continues to grow. The number of SVOD subscriptions in North America is set to climb by 110 million this year, while AVOD ad spend is outpacing dollars spent on other media, and is projected to be worth $47 billion by 2023. As convenient and easy-to-use VOD services multiply and TV viewing becomes more personalized, if content isn’t available where and when consumers want it, they’ll go somewhere else.