Nowadays, choosing the perfect revenue model for your business is vital to identify the value proposition of your products/services and laying the foundation for a profitable future.
PPV and subscription-based models are the two most popular options for video monetization. Content creators also choose these revenue options because they provide high profits with less hassle. However, it is no surprise that you may be perplexed about which revenue model to choose. Not all kinds of businesses will suit the subscription-based business model; the same also applies to the pay-per-view monetization model.
To help you, we will explore both revenue models today and their possible upsides and downsides. So, by the end of this blog, you get a deeper insight into which revenue model (PPV vs. SVOD) you should opt for.
Without much delay, let us begin!
Subscription Video-on-Demand and Pay-Per-View: How Do They Work?
The subscription model generally provides recurring revenue for your business by charging users a subscription fee at set intervals, which can be monthly, weekly, or yearly. In exchange for this recurring payment, your users will get access to your subscription offering for that specific period.
The Pay-Per-Use model charges your users based on their usage of your product/services. This revenue model uses metered billing and charges clients in proportion to the duration of their usage.
Generally, subscription fees get charged at the beginning of the subscription period. Similarly, Pay-Per-Use gets charged after a set duration, implying that they are post-paid. It has implications for the revenue recognition protocols connected with these two revenue models.
The Subscription Model
The subscription model can crack the code, allowing businesses to change their focus from selling products to establishing robust relationships and prioritizing retention over acquisition, with the former providing a higher ROI (Return On Investment). It is because the lifespan of products and services is decreasing, and substantial changes are taking place in customer behavior and buying patterns.
As the price of customer acquisition and the growing importance of word-of-mouth marketing continues to rise, the conventional model of selling products or services via one-time transactions has become increasingly difficult. It is where the subscription model comes in, turning recurring income into recurring revenue.
1. Take Advantage of Recurring Consumer Needs
Understanding how subscriptions benefit customers and businesses is vital to their success. Subscribing to a product or service that meets a recurring demand is more convenient to customers than repurchasing a similar product or service regularly.
Moreover, recurring revenue is vulnerable to changing buying patterns, uneven customer behavior, and analytical paralysis caused by having too many options. Subscriptions provide a way out of this problem by leveraging on a recurrent need, providing convenience, and delivering constant value, resulting in robust, consistent recurring revenue for your business.
2. Big Data Makes Data-Driven Decisions Easier
Subscriptions provide businesses access to more data sets, allowing them to identify and understand their customers. It improves predictability in the demand and supply of goods and services, enabling businesses to use data insights in their business success strategy.
3. Fostering a Sense of Community
Subscriptions build a sense of community and connection that one-time purchases do not. It allows your businesses to invest in customer relationships while increasing the lifetime value of your customer base.
With this, let us move on to discuss what is pay-per-view.
What is Pay-Per-View (PPV)?
Pay-per-view (PPV) is a type of pay TV that enables users to pay to watch specific shows through a confidential broadcast. The broadcast can be public, hybrid, or private.
Pay-per-view (PPV) is what it sounds like. When you choose the PPV package, you can view shows on a pay-per-view basis, which means you will need to pay for each show you watch on that specific supported channel.
What are the Advantages of Pay-Per-View?
Some of the potential benefits of Per-Per-View are as follows.
- PPV provides creators with an audience interested in streaming their content despite the extra fee. It also helps you weed out non-subscribers.
- Instead of providing a bundle, you can offer genre-specific content under the PPV category. People who feel excited about such genres will be willing to pay separately.
- PPV allows content creators to identify which content works well and which does not. For instance, if you create genres under PPV or other types of content, such as movies, series, and live events, you will get to know which category lures the most visitors.
- People who need a single option and do not want to wade through other stuff may be interested in PPV.
When Should You Use Pay-Per-View Advertising?
PPV can be the best option for content creators who want to boost revenue potential by putting their work under multiple revenue structures. Such creators can make use of a hybrid approach in which they can select revenue models, such as SVOD and TVOD.
Moreover, if you want to watch live matches, sporting events, and other unique videos, you should maintain such content under PPV rather than subscriptions.
What is SVOD?
Like standard TV packages, SVOD offers unlimited access to as many shows for a set monthly charge. Some of the few SVOD services are Netflix, Amazon Prime Video, and Hulu.
Since users don’t get stuck into a long-term commitment with SVOD, they have more freedom to opt out. It gives users more flexibility, and SVOD providers are under constant pressure to keep and retain customers by providing exclusive new content, aggressive price strategies, or both.
Advantages of Subscription-Based Video-on-Demand
Some of the few benefits of SVOD are as follows;
- Recurring payments provide content creators with an active income stream to estimate their monthly earnings.
- Subscriptions help creators to build strong relationships with their customers. So, they return to subscribe regularly.
- Customer retention is made easy with SVOD. Once you have built trust among your subscribers, they will invite their family and friends to “subscribe” to your video content.
When Should You Make Money Using SVOD?
If you can deliver content regularly to attract viewers over time, you can make use of the subscription revenue model. You can also use the SVOD model if you are not into delivering live sports events or other exclusive events.
Subscription vs. PPV – Which is the Most Suitable Option for You?
Finally, based on the Pay Per View vs. subscription, it is up to you to select the PPV or subscription depending on the content type you provide. You can also integrate both and get many benefits. Several streaming platforms offer hybrid revenue options; selecting such platforms can increase revenue potential and upgrade your content creation strategy.
Overall, you can choose a revenue model that ensures high profits while being practically possible for you.
Both Subscription and PPV revenue models have benefits and drawbacks. However, you can select the one that best meets your content needs, ensuring you get the most out of it. Subscription provides a diverse range of content via a single subscription amount, thus becoming the best choice for users worldwide. PPV is best suited for exclusive content, where users can watch only for a specific period.
Both revenue models have grown popular among many creators. It is up to you to choose whether to use PPV or a subscription in video monetization platform. However, a creator should always consider their target audience. You can select a revenue model that your audience would find suitable.