VoD and live streaming has disrupted traditional television viewing to become the go-to means for on-demand content consumption. Recent data shows that almost 40% of U.S. television consumption is now streaming-based (as of autumn 2023), with cable at 30% and traditional broadcasting at 23%. In such a competitive market, what are streaming platforms doing to ensure they not only attract subscribers, but also retain revenue?

A break-down of VoD streaming models

As streaming grows into an increasingly dominant force, platforms are competing for viewer attention and subscriptions by offering different kinds of models, such as SVOD (subscription video-on-demand), AVOD (ad-funded video-on-demand), TVOD (transactional video-on-demand), or FAST (free ad-supported streaming TV). Some models, such as AVOD, allow viewers to pay less for monthly subscriptions in exchange for advertisement, while others, such as SVOD, charge a premium for uninterrupted viewing. 

A new model has emerged that essentially combines the best of all subscription models: HVOD (hybrid video-on-demand). HVOD platforms integrate elements of SVOD, AVOD, and TVOD to offer consumers a blend of ad-supported free content, subscription-based premium access, and transactional pay-per-view options. This approach allows platforms such as Peacock and Pluto TC to cater to diverse viewer preferences, delivering flexibility, variety and tailored content within a single interface. 

Lessons from mobile apps

Mobile apps have long employed hybrid monetization strategies that combine various revenue models to cater to diverse audience preferences. For example, many apps offer a “freemium” model, which means they offer a basic version of the app for free, but charge for premium content and access, alongside in-app advertising and optional extra purchases. 

This approach allows users to choose the level of engagement and investment in the app, in a bid to enhance user satisfaction and retain users for longer. With the HVOD model, streaming platforms are mirroring this strategy by integrating subscription-based services with ad-supported content and chargeable extras. As with mobile apps, viewers are offered greater flexibility through a range of access points and personalized experiences.  

What’s in it for advertisers?

Hybrid video-on-demand (HVOD) platforms offer advertisers more valuable opportunities to target audiences. With HVOD, it is possible to precisely deliver ads to specific demographics, behaviors, interests and viewing habits, allowing advertisers to reach the most relevant audiences and increase engagement and return on investment. What’s more, the HVOD model provides robust analytics and real-time tools to measure the performance of ad placement and make data-driven adjustments. This increased level of transparency helps companies make effective campaign decisions and optimize their investments to ensure their strategy remains responsive and aligned with viewer preferences.

The rise of ad-supported streaming models 

The streaming industry is undergoing a shift towards ad-supported models, including HVOD, driven principally by customer demand for more affordable content and more flexible access, as well as platforms' need to diversify revenue streams. Leading content providers such as Netflix and Disney+  have introduced ad-supported subscription options that offer lower monthly costs in exchange for advertisements. 

This model is not only beneficial for subscribers, as it allows them to access their favorite content for less, it also opens up new revenue channels for platforms. This shift also reflects a broader trend in which viewers are seen to be increasingly accepting of advertisements in return for reduced fees or free access. The rise of FAST platforms and subscription models is an example of this increase in interest. If the trend continues, forecasts suggest that FAST is likely to replace subscription-based models as viewers’ preferred choice by 2030. 

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