There’s no denying that over-the-top (OTT) advertising is rapidly growing in popularity. OTT ads are an effective way of reaching your target audience; these highly targeted, unskippable, trackable, brand-safe ads are guaranteed to make an impact. They provide a broadcast-quality ad experience without the drawbacks of the ‘throw it against the wall and hope it sticks’ approach of traditional TV advertising.
Every day, media and entertainment companies are pouring more attention and money into OTT video solutions.
So, where do terms like VOD, SVOD, TVOD, AVOD, and other OTT apps and services fit in the overall big picture? Is Roku the same thing as Netflix? In this quick overview of the online video industry, we have organized these video content services into groups to give you insight into the different OTT services at play.
What is OTT?
OTT is the most popular term in entertainment right now as the industry navigates the inevitable and unstoppable merger between the worlds of television and digital video. But what exactly does OTT mean?
OTT is short for over-the-top, the term used for the delivery of film and TV content via the internet. OTT doesn’t require users to subscribe to a traditional cable or satellite pay-TV service like Comcast or Time Warner Cable.
An OTT application disrupts the traditional delivery billing model and is delivered directly through an internet connection. Examples of OTT include services that are replacements for traditional TV providers like Hulu and Netflix, and services that are replacements for long-distance communication providers, like Skype.
When someone refers to OTT, they are commonly referring to OTT video, which is what we will focus on in this post. According to IAB, OTT video is “video content transported from a video provider to a connected device over the internet outside the closed networks of telecom and cable providers.”
OTT content can be accessed via OTT set-top boxes, OTT devices, mobile web, mobile apps, smart TVs, Desktop devices, and gaming consoles.
What is VOD?
A typical Video On Demand (VOD) service allows users to play back any one of a large collection of videos at any time. Companies such as Roku, YouTube, and Netflix are examples of this. These VOD platforms enable audiences to pick and choose what they want to watch from their collections and access that content whenever they’d like.
VOD is broadly divided into two major categories:
- VOD that requires a cable subscription
- VOD that is delivered directly through an internet connection
According to IAB, VOD is “video content that is controlled, enabled, and consumed whenever a viewer wants after its official release date or original air date and time. VOD content can be found on set-top boxes, OTT devices, mobile web, mobile apps, and video streaming services.”
The main business models associated with VOD deal with how the content is commercialized, and acronyms like SVOD, TVOD, and AVOD reflect a growing range of options available to content owners.
Understanding the difference between OTT and VOD
OK, this is where the line can get a little blurry. VOD is sometimes referred to as OTT. While that is true, it can also be confusing, because there are two types of VOD: one that still requires users to pay for traditional TV and one that does not. The latter is OTT.
OTT is a subset of the overall VOD category and it is transmitted to the viewer via the internet without requiring users to subscribe to a traditional cable or satellite pay-TV service like Comcast. There are multiple subcategories of VOD types within the OTT/VOD category, which we will explore.
One of the biggest ways OTT differs from other streaming video is what it offers to customers. On-demand streaming is a defining feature of OTT—the ability to give consumers constant, easy access to video content. In contrast, traditional television requires users to either watch at specified times or record episodes.
OTT video streaming also has considerable advantages over downloading, another main form of online video consumption. Consumers get much more content from OTT than they get for the same price when downloading; OTT can be viewed on any device; no download time is required; and OTT doesn't take up valuable computer or device memory.
Different Types of OTT Apps And Services
What are the main types of OTT providers? What are the most prevalent revenue models in OTT? And where do providers like Netflix and advertisers like you fit in the online media and entertainment landscape?
SVOD, AVOD, and TVOD in a nutshell ------
Subscription Video on Demand (SVOD) is a type of service that allows you to access an entire library of videos for a fixed recurring fee. This fee may be charged daily, weekly, monthly, or annually.
The viewer can watch as many videos as they want on any connected device, as long as their subscription is active.
Netflix and Amazon Prime Video are two examples of SVOD OTT services.
Transactional Video on Demand (TVOD) is the opposite of SVOD. Users buy content on a pay-per-view basis. TVOD services will normally not charge anything to sign up for the service or create a user profile. Instead, users pay an amount based on the specific content they watch.
TVOD viewers have added assurance that their purchased digital content will always be available on that cloud-based provider in a "digital locker," even if they stop actively using that particular service. This is a digital equivalent of buying a DVD or other type of physical recording; once you buy it, you own it and can access it anytime after purchase.
Google Play and iTunes are two examples of TVOD OTT services.
Ad-Supported Video on Demand (AVOD) is an ad-based digital video service that is free to its users. In this model, ad revenue is used to offset production and hosting costs and monetize the content.
Viewers continue to migrate to streaming services year over year, giving advertisers a huge opportunity to leverage AVOD content for their campaigns. This viewer trend, combined with the targeting power backed by digital data, is influencing advertiser budgets to increasingly shift from traditional TV over to digital video content services like Sling TV and TubiTV.
OTT advertising revenues are quickly skyrocketing towards matching, and eventually surpassing TV ad revenues. Some years ago, that possibility was almost inconceivable.
SlingTV, Roku, and FuboTV are examples of AVOD OTT services.
There you have it: The entire OTT ecosystem in a nutshell, and AVOD is your world to live in as an advertiser.
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With the popularity of over-the-top content soaring, it is likely that business models will change as technology and consumption habits continue to evolve.
As an advertiser, you have the opportunity to incorporate OTT advertising into your mix to better segment the market, build your user base, reach a new set of customers, and offer a more diverse experience than ever before.
ZypMedia specializes in local OTT digital video advertising. We can help you and your organization place OTT ads in front of your audience while helping you drive sales and generate a positive ROI.
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This post was originally published on May 31, 2018. It was last updated January 28, 2019.