VOD streaming – All You Need to Know About Video on Demand

So you want to know more about VOD streaming? Grab yourself a drink and sit comfortably. You are about to read the most comprehensive guide about VOD streaming currently available on the net (we checked it). You’ll learn what Video On Demand is, how it works, how you can benefit from it, what others have done before you, and how you can set up a successful VOD activity to benefit your business. Let’s get cracking!

Jump to:

• What is VOD streaming?
• Is VOD the same as streaming?
• Is VOD streaming the same as live streaming?
• Is VOD the same as OTT?
• How does VOD work?
• The Different revenue models of VOD
• Advantages and disadvantages of VOD streaming
• What are the streaming wars?
• VOD for enterprises
• How to get started with VOD
• How to choose the right VOD platform for your business
• Kaltura’s VOD solutions
• Summary: The future of VOD

What Is VOD Streaming?

VOD or Video on Demand refers to a way of consuming video that enables viewers to watch video content instantly, anytime, anywhere, and on any device. The name Video on Demand underscored the juxtaposition to the then-dominant broadcast television system, where viewers had to be in front of their tv set at the time the television program of their choice was scheduled.

Nowadays, you don’t have to look too far to find out what VOD is. It’s everywhere and chances are you watched a video on demand today. It’s the funny cat video you watched on Facebook recently, it’s your favorite Netflix show, it’s that product video you watched on a brand’s website. VOD is any prerecorded video on the internet that plays instantly when you click the play button. You don’t have to wait for the entire video file to download first.

My earliest encounter with VOD was the in-flight entertainment on long-haul flights. Shorter flights would offer a singular flow of video content on overhead screens for the whole cabin. This pretty much how traditional television works. But the longer flights had personal screens embedded in the passenger seats that allowed you to choose from a variety of films and series. That’s Video On Demand! Today, however, VOD refers almost exclusively to prerecorded video content streamed over the internet.

Deciding what to watch and when to watch it is not the only way VOD emancipated audiences. Thanks to the internet-based distribution of VOD and the vast improvement of bandwidth and encoding technologies, viewers now can consume video content on a variety of devices other than their television sets, including mobile phones. This has revolutionized the nature of video consumption from a location-based social affair to a very individual and personal activity, anytime, anywhere.

VOD first appeared in the early 90s. The vast improvement of video compression (DCT) and data transmission (ADSL) technology made it possible to distribute data-heavy video files through telephone lines. Since then, further developments have been made to increase the ingest capacity of data transmission on one hand and to compress video files with minimal quality loss on the other hand. As a result, providers were able to deliver increasing video quality and a reliable viewing experience without any buffering.

Today we can enjoy 4K quality video on demand on our mobile phones through an impressive panoply of VOD streaming services, from YouTube to paid services like Netflix and HBO. Industries beyond social media and entertainment are catching on to the VOD trend as well. Enterprises and educational institutions are increasingly investing in video content management systems like the Kaltura video CMS to connect with their target audiences and communities in a streamlined and effective manner. Enterprise VOD shows tremendous value in education (eLearning), corporate training, marketing, and customer tutorials. More on this later.

Market prospects show that Video On Demand is a very healthy industry with excellent opportunities. Unsurprisingly, the 2020 pandemic has been good to VOD. With consumers in confinement worldwide, the number of VOD users has increased by 12% while the revenue enjoyed a 15% growth in 2020. By 2025, user penetration is projected to reach 29% and revenue 126.5M USD (CAGR of 15%) – statista and GMInsights.

Is VOD the same as streaming?

Not exactly. Streaming is one of two ways to access Video On Demand. The other way is to permanently download video files to a device’s memory. With streaming VOD, the viewer consumes the content as it downloads, without the file being stored in the device’s memory. Netflix is a popular example of VOD streaming service. This article is focused on VOD streaming.

Is VOD streaming the same as live streaming?

No, VOD streaming is kind of the opposite of live streaming. With live streaming, the audience witnesses the action as it happens (pretty much, anyway, with a few seconds delay). So, again, the viewer has to watch the live stream at the time it is scheduled. Think live sports or live enterprise events, such as town halls.

VOD streaming uses previously recorded content. That being said, you can save a live stream as a video file and repurpose it as VOD after the live event. In fact, it’s considered a best practice to repurpose live streams to VOD because you continue to benefit from the content of your live stream.

The opposite is also often applied in virtual events. Prerecorded keynotes and event sessions (VOD) are often delivered as a live stream, where the audience joins the stream at a set time to watch prerecorded content and interact with that content in real-time. This method is called Simulive. The advantage of simulive is that you can record at a time and location that suits the speaker or talent of your choice. Of course, you also have much more control over your content and there are generally fewer things that can go wrong with prerecorded content. Meanwhile, you keep the benefit of the sense of urgency and the real-time interaction that come with live streams.

Is VOD the same OTT?

OTT is another term that VOD is regularly confused with. OTT or Over-The-Top refers to how video content is delivered (i.e., through an internet connection, rather than a satellite or television cable connection). VOD, on the other hand, refers to a way that video content is consumed (at the user’s request, rather than scheduled by the broadcaster). In other words, both on-demand and live-stream video can be watched “over-the-top”. Read this article to learn more about OTT television.

How Does VOD Work?

Here’s a short explanation of how on-demand video access typically works:

To enable the transmission of video file sizes over the internet, your video asset first needs to be compressed. This can be done by applying compression techniques such as interframe compression, image resizing, and/or chroma subsampling. All these techniques are based on the same principle: to remove inessential information from the video file, be it motion, resolution or color information.

Your video asset will also be encoded or transcoded into a format that is readable by the video player, before being stored on the servers of your Video On Demand platform. Once encoded, your video asset is packaged into a video container that holds additional information such as metadata and thumbnails. MP4 and MOV are some of the most commonly used video containers.

Upon play request by the user, your compressed video asset is then encrypted and transmitted over the internet using a streaming protocol like MPEG-DASH or HLS via a CDN or Content Delivery Network. Finally, your video reaches the viewer-facing video player where it is decoded into viewable content.

This is a high-level overview. The VOD streaming process also gets more complex as ABR technology, monetization, and user permission features are added to the mix. More on this later.

The Different Revenue Models of VOD

VOD can be harnessed as a marketing tool or an educational tool to inform and mobilize customers, employees, or other stakeholders. In these cases, VOD content is usually not published for monetary profit. But Video On Demand can also be part of your revenue strategy (or even be your primary revenue source). Several monetization models can be applied to generate revenue from video content: AVOD, SVOD, and TVOD.

AVOD

Advertisement-based Video On Demand – Example: Youtube

AVOD generates revenue from ad insertions into the video. The video is freely available to the consumer to attract as many eyes as possible to the content and ads. Some of the largest video platforms on the net apply the AVOD revenue model: e.g., YouTube, Facebook Watch, Dailymotion, and Twitch.

Advertisements are usually displayed in-video as pre-roll (ad is shown before the video), mid-roll (ad interrupts the video), or post-roll (ad is shown at the end of the video). They can be skippable, non-skippable, or skippable after a few seconds.

SVOD

Subscription-based Video On Demand – Examples: Netflix, Hulu, Disney

SVOD is currently the most popular revenue model for VOD services. With this model, consumers pay a monthly or yearly subscription fee to access the provider’s video content.

Netflix diversified this revenue model by offering its consumers the possibility to upgrade. Each subscription plan (basic, standard, premium) unlocks additional features and options.

TVOD

Transactional Video On Demand – Examples: Apple iTunes, Amazon Prime Video, Google Play

TVOD lets the consumer pay for a particular video they wish to view. (as opposed to SVOD where consumers access the provider’s entire content catalog freely for a period of time, usually a month). See it as a virtual video rental store. SVOD is also called pay-per-view (PPV).

TVOD can be broken down into two purchasing options for the consumer: download to rent (DTR) and download to own (DTO). The first option lets the consumer stream the video as they would on Netflix or YouTube, whereas the second option stores the purchased video file on the consumer’s hard drive.

Hybrid VOD revenue model (Freemium VOD)

Examples: YouTube Premium, Vimeo (Plus, Pro, Business, Premium)

Platforms like YouTube and Vimeo offer the possibility to completely remove ads from their content by upgrading from a free AVOD-based account to a paid subscription (SVOD). Upgrading can also unlock premium content and additional features such as downloadable content and background play.

Of course, you could also combine TVOD and SVOD, or AVOD and TVOD into a hybrid revenue model. The more professional-grade Video On Demand platforms like Kaltura enable customers to mix and match business models. Businesses can thus create a tailored VOD offering that will stand out from the competition.

Advantages and Disadvantages of VOD Streaming

Let’s have a look at the main benefits and disadvantages of VOD.

Advantages

VOD is not limited by time or schedule

By definition, VOD can be consumed whenever the viewer is available. This is a huge advantage for you as a streamer, too. Not only will you reach a much larger audience, but you’ll reach the viewers when they are the most receptive to your content or message.

VOD is immediate and convenient

Watching Video On Demand doesn’t require any download. It doesn’t require the user to physically pick up the video in a video store. It only requires a click on the play button, right then and there. Heck, with autoplay functionality, VOD just requires the user to stop and watch. This convenience for the user translates into a big advantage for you as the provider. The friction for the user to consume your video content (and take the desired action) is much smaller with VOD. Time, location, and effort are no longer obstacles.

VOD requires short set-up time and low cost

As opposed to other video distribution models, the budget and time needed to set up a VOD platform are fairly low.

VOD has a wider reach

VOD can reach your audience on a variety of devices. Viewers can choose to watch your content on their desktop computers, smartphones, tablets, Roku, Chromecast, HTML5, or even on their smart tv. Gone are the days when watching video content confined the viewer to the family TV set in the living room. Today’s viewer is almost always connected from a personal device.

VOD enables efficient targeting and detailed analytics

Because viewers are connected from a personal device, your video content returns detailed personal data about the viewer. You can learn about their preferences and demographics, and about how they engage with your content. This valuable information will help you improve your video content and marketing strategy. It will also help you efficiently target user groups and tailor your content to the user. VOD streaming services like Netflix and Hulu, for instance, suggest content through personalized libraries that the individual user is likely to click, based on previous choices and preferences.

VOD converts better

This goes hand in hand with the previous targeting and analytics benefits. As a VOD provider, you can use analytics data to tailor your video content to the needs of your audience and target the right viewer. Internet technology then enables you to reel that viewer in with conversion tools like “Buy Now” buttons, links to the relevant pages on your website, or other calls-to-action, depending on what you are trying to achieve with your VOD content.

Disadvantages

Bandwidth limitations

The main disadvantage is that the viewing experience depends on the viewer’s connection speed. Your audience needs a minimum of 3Mbps for HD video and 25 Mbps for 4K UHD video. Slower connection speeds will result in suboptimal experiences, such as pixelation or buffering. Luckily these speeds are possible with most connections.

What Are the Streaming Wars?

You can’t explain VOD without mentioning the streaming wars. It’s important to know that this phenomenon is specific to the Media & Telecom industry. Other areas of the VOD landscape, such as social media or enterprise VOD, are not directly affected by the streaming wars.

The benefits that Video On Demand presents to consumers and providers alike haven’t gone unnoticed in the media and telecom industry. Many have adopted the format to get their piece of the cake. This has led to the sudden rise of new giants like Netflix, HBO Max, Amazon Prime, and Hulu. The strong competition between these VOD streaming services received the dramatic name “streaming wars”, which many say kicked off in November 2019 with the launch of Disney+.

The biggest losses in these streaming wars have been suffered by traditional Pay TV providers and cable companies. They have seen many consumers switch to VOD in a move known as “cutting the cord.” But as the streaming wars are settling, Pay-TV providers are adapting to the situation through successful transformations such as Cloud TV and super-aggregation.

VOD for Enterprises

The core promise of VOD —to give audiences the content they want, whenever they want, and on their preferred device — is resonating in the corporate world as well.

The convenience and efficiency of VOD enable businesses to reach their individual viewers at a time where they are most receptive to the message of the content, whether it be for branding, educational, or sales purposes.

The viewer can then immediately take the desired action during or at the end of the video, such as clicking through to the company website, submitting personal details, or even buying company products or services online.

Data feedback in the form of video analytics is an invaluable source of information for the Marketing department. Information such as views, clickthrough rate (CTR), conversion, etc., enable the exact measurement of the video campaign’s return on investment. User data like demographics, used devices, preferences, interests, etc. help marketers understand their audience and adapt their strategy accordingly.

This is obvious for VOD content targeted at customers or users, such as product videos, courses, tutorials, conferences, and marketing and sales events. But companies increasingly use Video On Demand for internal purposes, too —and this is especially the case since the Covid-19 pandemic. It is commonly used as a format for employee training modules and internal communication.

VOD for business has a whole different set of requirements than for entertainment. We’ll discuss this in the following section:

How to Get Started with VOD Streaming for Your Business

Here’s a checklist of things you need to do to get your VOD Streaming activity going.

1. Set up a VOD content strategy

As with most business activities you should have a defined objective for your on-demand content and a strategy that will achieve this objective. Setting goals and KPIs will help you answer many questions such as the type of videos you should create or the software and hardware solutions you will need.

2. Choose the right VOD streaming platform for your business

Your video strategy and campaigns will be defined by the quality and robustness of the platform you use. A VOD platform will help you create, organize, publish, and monetize video content in a unified and efficient way. Choosing the right platform for your business is mission-critical, so we’ll cover this topic in-depth in the next section of this article.

The better enterprise-grade VOD platforms will let you build a branded landing page through which your audience will interact with your content. It should also enable you to easily embed video content on your website with a simple copy/paste function that will integrate the iframe code into your home page, product page, or blog post.

3. Produce your content

If you defined a video strategy, you could essentially start creating or commissioning content. Depending on your purpose, it would be good practice to populate a video library with enough content to enable viewers to browse and consume more. An empty library is a bad signal to the visitor and will cause many people to click away. Of course, don’t let this put quantity over quality. You need both. If you’re shooting for high volumes, it might pay to look into a VOD streaming platform that enables bulk upload.

A well-stocked video library doesn’t mean you can put your feet up just yet. It’s important to consistently create new content to give viewers a reason to come back and see that you are active. New videos also have the knack of feeding new life into older videos, as viewers click through to watch more content. This snowball effect can work wonders for your VOD content ROI.

4. Promote your content

“If you build it, they will come,” said no one ever in the history of online video. Promotion is a key factor in getting your content noticed. Promotion can range from notifying the relevant employees within your organization with a link to large-scale mailing and paid advertising campaigns. Social media can play a big role here, too, depending on where and how your target audience can be reached.

How to Choose the Right VOD Platform for Your Business

The quality of an Enterprise Video Platform (EVP) boils down to three (not so) basic features: security, reliability, and flexibility.

1. Security and privacy

An EVP first and foremost handles company information and assets. Sometimes this information is public, but some video content might be confidential. Enterprises should be able to rely on digital rights management (DRM) and robust encryption to protect their VOD content. Permission-based access control and SSO authentication (Single Sign-On) give the enterprise the possibility to really fine-tune who can view the VOD content on a per-case basis.

2. Reliability

The basic task of an enterprise-grade VOD platform is to deliver a 100% reliable stream.  Features such as top-tier CDNs and Adaptive Bitrate Streaming (ABR) will ensure an optimal viewing experience through any bandwidth, on any device, and at any scale.

3. Flexibility

An enterprise-grade platform should have the flexibility to “do it all”. This means enough transcoding options to be as democratic as possible (i.e. your content is accessible to anyone, regardless of their device or software) and access to CMS and media player APIs and SDKs (developer tools) to enable deep customization. APIs are essential for more complex video projects.

An enterprise-grade platform should operate behind the scenes. This means the platform should be white-label. A business should be able to create a 100% branded experience for its audience. That’s why YouTube doesn’t cut the mustard for most companies. A business channel on YouTube is still branded YouTube (and it will display ads and promote competing videos alongside the company’s content, too).

A fourth factor to measure an EVP by is the abundance of features, from video editing tools to captioning, translation, analytics, search, and indexing. Make sure your plans and goals for your VOD content are covered and enabled by the relevant tools and features of your platform.

Kaltura’s VOD Solutions

Used by some of the world’s biggest companies, the Kaltura MediaSpace Video Portal is a highly flexible and reliable VOD platform for your business. Kaltura’s EVP is designed to power any video use case for businesses, live or on-demand. Set it up as a corporate YouTube, or use it for employee training, executive messaging, or public-facing product video catalogs.

Kaltura MediaSpace protects your content with robust and enterprise-grade security and privacy features: HTTPS delivery, domain and IP-based authentication, SSO-based user permission management, Digital Rights Management (DRM) and AES encryption, and password protection.

Kaltura has longstanding expertise powering the video needs of multinational corporations, making them the go-to solution for large-scale deployments. The MediaSpace video portal has all the technology under the hood to deliver a highly reliable stream to any user on any device. Cloud-based encoding and transcoding and Adaptive Bitrate Streaming (ABR) will make sure your audience enjoys a seamless viewing experience.

With flexibility as a core value, Kaltura maintains an open-source philosophy. Your developers can customize the MediaSpace platform to your company’s needs with full video API access and SDKs for both iOS and Android. Your viewers will never know they’re using Kaltura. The audience-facing user interface is fully customizable under your branding.

Kaltura MediaSpace Video Portal has a wide array of features that will help you create, enrich, organize, and publish your VOD streaming content. Popular features include captioning, interactive video quizzes, interactive video paths, chaptering, video CTAs ads, bulk uploading, video search, advanced metadata and playlists for organization, collaboration and engagement features, accessibility features, video analytics, and so much more.

The best way to find out how the Kaltura MediaSpace Video Portal can improve your business is to try it yourself for free.

Start Your Free Trial Today

Summary: The Future of VOD

It quickly became the new norm, but if you compared video consumption then and now, the ability to watch video content without the limitations of a broadcasting schedule is nothing short of revolutionary. It totally disrupted media consumption and led to the infamous streaming wars.

The VOD industry is still evolving. Tech companies are constantly researching ways to improve video encoding technology, monetization models, bandwidth, and hardware, to the benefit of consumers and industry players alike.

But that doesn’t mean you should stand by and wait for the technology to peak. VOD is hot at this very moment, and any business can tap into video on demand as a powerful tool for growth.

I hope this article helped you get a better view of what’s needed to kick off a successful video strategy that will benefit your business. The next step is to start a free trial of Kaltura’s MediaSpace Video Portal and peruse our Knowledge Center to get a more practical grasp on the matter.