When it comes to choosing the right monetization model for your video business, there isn’t always a clear cut answer. In fact, you probably won’t maximize your potential revenue if you only use one of the primary video monetization models we covered in part one of this series —Advertising (AVOD), Subscriptions (SVOD), and Transactions (TVOD).

That’s why many successful video businesses are turning to a hybrid model. This way, they can maximize revenue with a combination of two or more monetization models.

There are challenges with all of the primary models that make it difficult for content owners to rely on a single monetization model and make a sustainable amount of money. Advertising (AVOD) is only successful with a large audience that generates enough views to be profitable. There will always be viewers that unsubscribe with SVOD and it takes significant marketing efforts to continually add more subscribers. Finally, there is no guarantee of future revenue with the one-time transactions of TVOD.

With a hybrid model, these challenges are diluted with additional avenues for making money. The combinations of monetization models are endless and require some trial and error to find out what works best for your business. Here are a few examples:

If you primarily have a subscription video business, you can add TVOD to the mix and offer the option to rent or own content of your choosing. This way, viewers can get a taste for your content before committing to a subscription.

Consider adding AVOD into the mix as well, and have limited advertising on top of your subscription content. This enables you to monetize while letting viewers preview some of your content for free.

Maybe you primarily have subscription video business and use TVOD to make money on your live streams. There is no reason why you can’t have advertising or even brand sponsorships incorporated into your transactional live streams.

Think outside the box and consider all your options to make additional revenue. For example, brand sponsorships are a popular form of advertising for many podcasts and can easily be incorporated into your live stream. If your content is educational, why not take a note from PBS’ book and ask for donations—apps like Patreon can help you out with this . If you don’t have merchandise for you fans to purchase, it’s an easy way to make more money that your fans will surely appreciate.

In order for a video business to be successful, it’s important to have your content available on all the platforms and apps your fans use. If you only stream your content on YouTube using advertising to make money, you are missing out on revenue. It’s wise to avoid relying on a single distribution channel, just like it’s wise to use multiple monetization models. Have incentives for your audience to consume your content across all your channels including your website, your OTT platforms and YouTube.

Hybrid monetization is how most large entertainment brands make the most of their content including Netflix, Hulu, and Apple TV. However you don’t have the numbers of these three brands- hybrid models are just as applicable for smaller entertainment brands with more niche content.

For example, StarTalk Radio offers science-based content and they use a hybrid model to make money. They leverage all the models— AVOD, SVOD, TVOD and donation on a variety of different channels including their website, YouTube, iTunes and more. Not only are they making money on their content, they also sell branded merchandise for fans.

The hybrid model is one of the most effective ways for video businesses to maximize their revenue. Start thinking creatively about additional ways to monetize your content to help your video business grow!

Hybrid - How to Choose the Monetization Model That’s Right for Your Business: Part 2 [2021 Update]

Hybrid - How to Choose the Monetization Model That’s Right for Your Business: Part 2

In order to decide which video monetization model will be best for you, you must have a very strong understanding of your audience and your content library.

So let's dive into the three primary video monetization models and review a few examples of content and audience profiles matched with their best-fit monetization model.

** Note that “VOD” stands for “Video on Demand”, which essentially means viewers are able to choose what, where, and when to watch.

Subscription-based VOD, or SVOD, is a subscription agreement between you as the video provider and the viewer who subscribes to watch your content without viewing or access limits. Think Netflix. Subscribers make a monthly payment in order to have access to all of your content, and this monthly payment automatically renews unless otherwise cancelled.

This type of monetization model provides a recurring revenue stream but the focus needs to be not only on subscriber acquisition but also retention. Businesses that choose to pursue the SVOD model have to regularly update their content at specific intervals to justify a continued subscription from their audience in order to retain their subscribers.

A great way of understanding if subscription based monetization is right for you is forecasting your revenue. We've developed a powerful SVOD Revenue Forecast Spreadsheet based on new subscribers, monthly churn, costs and other important variables. Just copy the spreadsheet, and plug in your own numbers.

Download the SVOD Revenue Forecast Spreadsheet to understand how much money you can make with a subscription based video business.

Transactional VOD, or TVOD, involves a free sign up for the service but with an a la carte payment, such as purchase or rental, to watch specific content. This is similar to services that have a collection of movies, series, or sports offerings, like Apple iTunes or pay-per-view events.

This type of monetization model offers content at various prices with the goal of keeping users as repeat purchasers on their platform. Whereas SVOD is like an all-you-can-eat buffet, TVOD is more like a traditional restaurant. The TVOD pricing strategy is contingent upon the content you are offering and the amount your viewer are willing to pay.

While TVOD businesses may earn a higher revenue per view, they don’t have the same retention and revenue security built into their service as an SVOD service

Advertising-based VOD, or AVOD, provides free to watch content for viewers that is monetized through video advertising. Instead of having your viewers pay, it’s now the advertisers or ad networks who pay, typically on a per-thousand basis.

AVOD can be a popular form of monetization because it is easy to get up and running but requires audience scale to generate significant revenues.

While the other monetization models involve a retention-based sales component, AVOD requires getting as many eyes as possible. Instead of retaining paying subscribers, AVOD retention involves volume with the goal of having a consistent stream of people watching your videos (and thereby seeing the advertisements). When it comes to premium content, the AVOD model isn’t as easily justified unless that premium content is being viewed by millions.

 Which Monetization Model Is Right for Your Business? 

If executed correctly, any of these monetization models could yield significant revenue for your business. Each business model comes with its own type of maintenance or curation requirements, as well as its own strategy for growth. There are even hybrid models where customers can watch videos with advertisements for free and then upgrade to a paid subscription for full catalog access. Read more about Hybrid models in part 2 of this series.

Here is an outline of content and audience profiles that align best with specific monetization models to help you decide which might be a good fit for your video business:

Vertical networks that have focused content and either create or publish videos on a frequent basis are excellent candidates to use an SVOD model. The format is usually longer format content; greater than 20 minutes and usually closer to an hour or more in length. Live streaming on a frequent schedule with archive VOD library also lends itself to providing access to subscribers.

Content libraries where publishing is less often or static and where the content is longer, premium content can look to leverage a TVOD model. This can either be PPV (purchase) or be providing access to videos by a time limited rental. The content focus can be either focused or broad and consist of multiple genres. TVOD can be used for libraries which are smaller but still consists of longer format premium content.

Learn more about the Hybrid model and effectively maximizing revenue in Part 2 of this series.

SVOD, AVOD, TVOD - How to Choose the Monetization Model That’s Right for Your Business: Part 1 [2021 Update]

SVOD, AVOD, TVOD - How to Choose the Monetization Model That’s Right for Your Business: Part 1

Netflix serves over 6 billion hours of content per month, globally, to nearly every country in the world.

Building a system that can scale to that volume of customers while delivering high-definition video with zero lag requires significant engineering effort. So let’s  dive deep into Netflix's technology stack and cloud infrastructure to examine what tools, processes, and architecture they use to deliver their high-quality content to viewers around the world.

Before the era of "Netflix and chill," remember when Netflix physically delivered mail-order DVDs to your doorstep?

The company racked and stacked physical servers in on-premise data centers that they owned. These data centers housed databases and applications Netflix used to track customers, maintain inventory, and store customer billing information.

By the time broadband became common and everyone owned a smartphone, Netflix needed to deliver videos to computers, internet-connected TVs, and mobile phones in order to evolve.  This meant moving away from a traditional data center and harnessing the power of the public cloud.

In 2008, Netflix started migrating its on-premise servers and applications into Amazon Web Services (AWS) after experiencing an on-premise data center outage that stopped the business for three days. Startled by the lack of resiliency, they were able to move 100% of all assets into the cloud over seven years and remain one of the pioneers of cloud computing.  

After partnering with AWS, it found that operating costs had gone down and their price per stream was a fraction of the cost. From there, Netflix passed those savings on to its customers. 

Cost reduction was not the main reason we decided to move to the cloud. However, our cloud costs per streaming started ending up being a fraction of those in the data center -- a welcome side benefit.
Netflix blog

By utilizing cloud services through the AWS architecture, Netflix had the flexibility of adjusting scale according to the services used and was (and still are) able to provide these services at a monthly charge that customers felt was reasonable.

In 2000, Blockbuster had the opportunity to buy Netflix for $50 million. When the deal fell through, it turned out to be the best thing to happen to Netflix. Over the next 17 years, Netflix had tremendous growth that took its market cap to over $242 billion. Part of this growth can be attributed to its migration to a refined cloud architecture.

When AWS teamed up with Netflix to grow its streaming service and do away with on-premise data centers, the focus shifted to engineering efforts and advancing streaming service capabilities within the Netflix AWS architecture.

However, while Netflix found a solution to scaling, it still needed to find solutions for bandwidth and lag-free video streaming. In the early days of the web, the bandwidth required for video streaming was challenging to overcome when developing these platforms. AWS had the solution that Netflix engineers were looking for, and it came in the shape of a cloud.

We have this insight because Netflix is prominent in the cloud community for sharing their knowledge during the migration to the cloud, as seen on their blog:

We rely on the cloud for all of our scalable computing and storage needs — our business logic, distributed databases and big data processing/analytics, recommendations, transcoding, and hundreds of other functions that make up the Netflix application.
-Yury Izrailevsky, Stevan Vlaovic and Ruslan Meshenberg of Netflix

Taking a peek into their architecture, Netflix maintains hundreds of AWS accounts that isolate the various parts of their business, from Subscriptions to Content Delivery to Personalized Recommendations.

Netflix can quickly develop features because all of its engineers are empowered to launch resources in their appropriate accounts without getting approvals from various parts of the company. By utilizing AWS Organizations and Account Units, Netflix can organize their engineering teams' applications, providing engineers autonomy and speed.

Within these AWS accounts, engineers use a myriad of technologies to deliver high-fidelity video streaming.

Let's start with how Netflix can serve videos. All content is stored in object storage like Amazon S3 and cached using AWS CloudFront. This enables Netflix to distribute video content all around the world with low latency speeds.

Videos need to be ultimately transcoded into various formats for optimal viewing based on the device used for watching. Connected TV and mobile video is transcoded differently from desktop videos because of the different screen sizes, resolution, and network availability.

Take, for example streaming from a phone. You will go in and out of signal depending on where you live, and in order to continuously deliver video, the service needs to adjust and buffer so you dynamically have a consistent viewing experience. This transcoding is called H.264, and Netflix can do this by harnessing the power of AWS Elastic Transcoder, which takes videos and formats them appropriately.

Video streaming, however, is only a small part of the picture.

Customers have a smorgasbord of choices when watching videos on Netflix. To keep customer engagement and retention high, Netflix employs a personalization algorithm to help uncover videos that a customer may be interested in based on their previous viewing history. This means that all interactions when watching a video must be recorded.

Netflix does this by utilizing data streaming technologies like Kafka and storing data in NoSQL databases like DynamoDB – a key-value and document database achieving single-digit millisecond performance at any scale. It's a wholly managed, multi-region, multi-active, robust database with fixed security that can handle over 10 trillion requests per day. During peak viewing, this tech stack can support over 20 million requests per second.

Netflix engineers can then write applications deployed on AWS EC2 or AWS Lambda that accesses this data to compute personalized videos to show. For this reason, many of the fastest-growing companies such as Airbnb, Lyft, and Redfin, also industry-leaders such as Capital One, Samsung, and Toyota, depend on the scale and execution of DynamoDB to maintain critical workloads.

In all areas, Netflix's tech stack wins out above its competition. J.D. Power and Associates published a survey that found Netflix customers reported fewer service problems than other popular streaming services. 

By eliminating its need for a large data center of its own, which would require costly upgrades over time, Netflix had a fluid infrastructure that was easy to adjust as needed for more beneficial uses of data resources. 

However, not all data is stored in a database and some is better suited to be stored on disks. Netflix is known to employ Hadoop to aggregate various data types and move them into data warehouses or other databases across the company. Netflix has data science teams that sift through this data to conduct business analytics, like determining how many customers are watching a specific movie or how likely someone will unsubscribe from the service.

While it is impossible to analyze every part of Netflix's business, the above describes a few major components for delivering online video.

To enable these features, developers need to quickly deploy their code, which is tested and can be rolled back if a bug is introduced. This is no easy feat, and Netflix has developed a very sophisticated Continuous Integration & Continuous Deployment (CI/CD) pipeline for providing a mechanism to deploy cloud applications.

Netflix invented and open-sourced their tool, called Spinnaker, which allows developers to make small changes, roll them out with automated tests, and then get them live to a small subset of users. When the confidence level that a bug has not been introduced increases, the changes then automatically rolled out globally over time.

One of the major discussion points when moving to the cloud is security and Netflix has publicly documented its security practices. It locks content by region, so a movie that the company only has rights to in The United States, for example, does not make its way to other regions. Netflix does this by employing DRM solutions in the cloud.

Internally, Netflix uses AWS IAM to lock permissions for employees and applications with the least permission privilege. Even if a user becomes compromised, the damage they can do is minimal, as they would not have access to the entire set of assets in the cloud.

Being in the cloud also means using SaaS products internally to improve the productivity of the workforce. Netflix uses Jira software for managing engineering tasks and Confluence for documentation requirements.

With a large workforce, managing passwords is difficult, so Netflix employs single-sign-on technologies like OneLogin to allow access to various SaaS products without remembering hundreds of different passwords. SaaS tools are constantly changing, and knowing Netflix, they will be adapting to be more efficient.

The Netflix tech stack incorporates multiple programming languages, including Java, JavaScript, Python, Kotlin, and Swift. Netflix's scalability and security are the results of its use of Python. Kotlin comes in handy with other programming languages by granting necessary tooling support. 

Python is one of the world's fastest-growing programming languages and is used for everything from operations management/analysis to networking and security. Netflix utilizes Python throughout the entire content lifecycle. Netflix’s  OTT architecture also supports Machine Learning (ML) and Artificial Intelligence (AI) for innovations like data-economical encoding and user personalization – giving each user a unique experience and ensuring the content presented to them is personalized to their preferences.

The Netflix tech stack also contains fully comprehensive libraries that improve user experience (UX) and acts as a highlight for the development process. Netflix secures its user-friendly interfaces with React (also known as Reactjs/React.js/ReactJS), the JavaScript UI library, and applies NodeJS as a framework and WinJS to aid in Windows applications development.

The user never sees the technology stack that goes into streaming their favorite content, but the Netflix engineers are constantly working to improve its platform. For this reason, Netflix has been able to remain the global leader in streaming video.

In fact, Netflix is so synonymous with streaming that the word “Netflix” has become a verb in our daily vernacular.

Netflix has worked continuously to improve video quality for its members worldwide. One significant breakthrough in its continuous attempts to improve UX has been what Netflix calls its Per-title Encode Optimization. Introduced in December 2016, Per-Title Encode Optimization introduced the idea of customizing encoding based on the complexity for better resolution and bitrate selection for each video sequence. 

This coding language provides a significant improvement over previously framed resolution and bitrate generation. It does this by taking into account the characteristics of video and optimizing coding performance by selecting parameters. 

Another remarkable milestone has been Per-Chunk Encode Optimization as part of the Mobile Encodes for Downloads initiative - the concept of equalizing rate-distortion slopes that work and provide notable enhancements. 

GitHub is another application Netflix uses for code collaboration and version control. They also use LogicMonitor for execution monitoring and Apteligent (previously known as Crittercism) for mobile error monitoring.

The ambitious team at Netflix is the perfect example of how a company can keep pace with technological advances while still remaining core to its primary deliverable. For consumers, the technology powering the backend is unknown, but the amount of streaming it deploys showcases that they have a winning service that continues to achieve remarkable growth.

Building Netflix's Backend… The Easier Way

Developing video on demand requires a large engineering staff, hundreds of millions of dollars in cloud computing (if you are going to operate at a Netflix scale), and a decoupled architecture that allows applications to scale so that they are resilient in the face of performance issues and outages.

For most companies, building this infrastructure is either too expensive, too time-consuming, too resource-intensive, or too risky. For many, emulating the Netflix tech stack is like a pipe dream; even if you know how they have built things out, it doesn’t make it easy to imitate.

This is why Zype was created. We’ve developed a  powerful suite of products that allows you to manage your video across every channel from a single platform with all the built-in tools you need to build or augment your existing OTT video tech stack. From VideoMeta CMS, Video CRM, encoding, playout, and content delivery tools, Zype leads the way for companies to use pre-existing technologies to build and scale their video infrastructure. 

Zype can help offload many of the heavy lifting operations required to deliver OTT video. I encourage you to check us out.

Netflix Tech Stack: Breaking Down Netflix's OTT Architecture

We dive into Netflix's technology stack to examine what tools and architecture they use to deliver their high-quality content streaming services.

Happy November! Zype is excited to announce a few amazing new product launches to help customers understand their audiences better via new and improved Video Analytics APIs and generate more revenue through native in-app purchasing unlocked by our Marketplace Connect service.

Video Analytics APIs to Understand Your Audience Engagement

Our Video Analytics APIs help you understand how your viewers are engaging with your video products. You can use the Video Analytics APIs to create custom views around video stream hours, impressions, devices, and more.

With this latest release we've made all of Zype's core video analytics metrics available via the Video Analytics API, so you can slice and dice data however you'd like. We also understand the power of integrating video analytics from Zype along with your other data sources, so it's now easier than ever to export data from Zype and consolidate in your own data warehouse using tools like Tableau, Google Data Studio, Looker, and more.

Use Marketplace Connect to Convert More Sales and Grow Your Revenue

Zype’s Marketplace Connect service takes away the complexity of managing and selling subscription and transaction video products across different set top and mobile marketplaces such as iTunes, Google Play Store, Roku, and Amazon Fire TV. With Marketplace Connect, Zype provides a turnkey authentication and entitlements management service, which means you can sell the same paywall video products across all these different marketplaces.

Send over questions or hellos to csmith@zype.com.

What's New at Zype: Announcing Video Analytics APIs and Marketplace Connect

Zype is excited to announce the launch of our latest social media integration, Publishing Videos on Facebook - and we think you’ll be excited too. Publishing content directly on your Facebook business page allows yet another way to share videos instantly with your audiences on the web.

Social media goes a long way in promoting content and ensuring it reaches viewers faster; as a video business owner, this endeavor is paramount.

We don’t need to go through Facebook’s analytics to convince you of the eye traffic on their platform - chances are, you already have a Facebook business page and you might already be promoting your content there. Reach a wider audience by distributing on social without messy redirects. Publish the video you want, trimmed down to the moment you want to share, in a clean, digestible format.

Trim your video, edit metadata, and publish...hassle-free!

Zype’s Publish to Facebook tool already has Facebook’s publishing requirements covered, so you don’t need to worry about any complex configurations. Additionally, Zype provides the opportunity for you to easily update video titles, descriptions, keywords, and even the duration of the video clip being posted (protip: trim tool!) - baked right into the publishing process. Once you’ve connected your Facebook account, you can start publishing in moments.

Connect to Facebook from your Zype account

Now that you’re as excited about publishing on social media as we are, the next step is to visit your library and connect to your Facebook account. What’re you waiting for?! Why are you still reading this? Go! Try! Test! And give us feedback, we love hearing from you.

Review the steps to publish to Facebook >

Send over questions or hellos to anna @zype.com

What's New at Zype: The Easiest Way to Publish Videos on Facebook

Looking for ways to increase traffic to your webpage and drive revenue? Zype's got your back. Zype's affiliate marketing integrations are engineered to provide your affiliates with useful information they require, helping you reap the full benefits of their program. And not only that, but Zype's automatic redirect from subscription embeds can help direct your audience to the pages you want them to see most.

You can use Zype's subscription or transaction embed to display an invisible tracking pixel that will capture valuable information from your viewers that you can return to your affiliate. Adding this tracking onto the embed is simple and crucial in providing your affiliate program with the information they require.

Zype allows you to add an auto redirect URL into the platform that will direct your audience to your page of choice upon a successful subscription purchase. In addition to providing this functionality to help guide your audience experience, you can also add macros onto the end of your redirect URL to capture additional information to return to your affiliate. We support dynamic value fill for the following macros:

The Zype consumer ID for the consumer who just completed a purchase

The Zype subscription ID for the consumer who just completed a purchase

The email address of the consumer who just completed a purchase

The Stripe ID for the consumer who just completed a purchase

The Braintree ID for the consumer who just completed a purchase

Dollar value of the purchase that was just placed, returned in '7.99' format (no symbols)

The 3 letter currency code of the purchase that was just placed

The Zype subscription plan ID for subscription sign ups

Already have your affiliate tracking code URL and auto redirect URL?  Simply visit the Subscription Settings page and scroll to see both options. We’ve outlined some more specifics in our Help Center article linked below in case you need it.

Learn more about Zype's Affiliate Marketing options >

We love hearing from you! Give me a shout by emailing anna @zype.com.

What's New at Zype: Supercharge Your Affiliate Marketing

Zype Wins Third Stevie Award for Customer Service and Support

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Hybrid - How to Choose the Monetization Model That’s Right for Your Business: Part 2 [2021 Update]

SVOD, AVOD, TVOD - How to Choose the Monetization Model That’s Right for Your Business: Part 1 [2021 Update]

Netflix Tech Stack: Breaking Down Netflix's OTT Architecture

What's New at Zype: Announcing Video Analytics APIs and Marketplace Connect

What's New at Zype: The Easiest Way to Publish Videos on Facebook

What's New at Zype: Supercharge Your Affiliate Marketing

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