Business Model of Short Video Platforms Explained

Alan Joseph Alan Joseph
Mar 01, 2021 5 min read
Business Model of Short Video Platforms Explained

The consumption of Short is increasing Worldwide. Short video Platforms are on the trend. As TikTok was the most used Short Video Platform in India which had been downloaded over 611 million times in India.

With the introduction of Jio, the mobile data prices have dropped, the android phones with good cameras have been available for a reasonable price and all these would be the major reason for the increase in the consumption and creation of short video content in India.

Now, anyone with a good internet connection and a good camera phone can create and upload short video content. The short video platforms have a wide range of business models and it differs from one company to another.

The business models of Short Video Platforms are:

Transactional Video on Demand (TVOD)
Subscription Video on Demand (SVOD)
Ad-supported Video on Demand (AVOD)
Hybrid
FAQ

Transactional Video on Demand (TVOD)

In this type of business model, a customer normally pays a one-time fee or rent it to watch videos or live events. It is more commonly known as pay-per-view. This helps you to choose the entertainment videos you want to watch; you can just pay for the content you require and that increases the popularity of this model. It is considered cost-effective as you can choose what type of entertainment you want to watch rather than subscribing to everything in bulk.

TVOD helps to concentrate and offer content to a specific market. You won’t be getting unwanted or unrelated video suggestions and would receive video suggestions according to your likes.

We can find video platforms like YouTube or Instagram using this method to suggest videos. The platforms would keep a track of your activities and give you suggestions on contents according to your choice.

That’s the reason most of the time you would be able to find contents according to your choice. The only difference is that you can view videos and contents for free in these video platforms.


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Subscription Video on Demand (SVOD)

In this process, a customer will have to pay an amount often monthly or yearly. Through the subscription model, you will be able to view an unlimited amount of content on their platform and you can watch all the content as soon as they have released it.

There will be different subscription models. The services you receive would be better as you pick the most premium version of the models.

Netflix Subscription Plans
Netflix Subscription Plans

The main difference between different subscription models would be that there would be a difference in the prices, you would be getting added services and certain advantages. Most of the time the in-demand videos would be available for premium subscribers.

This Revenue model is mostly followed by major OTT platforms such as Netflix even YouTube has its subscription model which is known as YouTube Premium. The main advantage here is that you can choose what you want to watch on these platforms.


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Ad-supported Video on Demand (AVOD)

In this process, a customer can view the content for free. It is a platform where you can view the content for free but would receive ads in between your content. The platforms get their major revenue from the ads.

The platform would charge different rates from the advertisers according to what time they would want to play their ad. For example, an ad played at the beginning of the video would cost more than the ad played at the end of the video. The main example of this type of model is YouTube.

In certain Platforms like YouTube, even the content creators would receive a specific amount for the ads being played in between their videos. This would encourage the content creators to make and promote more of their content which will indirectly improve the financial position of the platform as well as the content creators.

Most used Social Platform (2020)
Most used Social Platform 

Hybrid

This is type of model is normally adopted by companies who want to increase their reach. It is a combination of all the above methods.

The platform would want a customer to view it for free in the beginning where they would play some ads and later convert the customers into the subscription model or transactional video model.

The company would generate revenue from the beginning stage and it would attract a lot of customers as well. This model would provide the customers a lot of options to choose. You would be able to choose the model you prefer according to your budget or your likes.

FAQ

What is the Business Model of TikTok?

TikTok primarily gains its revenue through advertising.

Which Countries have Banned TikTok?

TikTok is banned in Pakistan, Bangladesh, and India.

Why is TikTok banned in India?

The Indian government in a statement stated that the Β decision to ban the app was "to protect the data and privacy of its 1.3 billion citizens".

Conclusion

The demand for shot video platforms would keep on increasing in the coming years. We would be able to see a lot of content creators and a lot of viral videos being uploaded. With the ban of TikTok in India, there a lot of new apps coming up and new features such as IGTV and reels introduced by Instagram to promote short video content.

YouTube has become a profession where people create content as a full-time profession. The future of the Short Video platforms is going to flourish in the future as the entertainment industry is gaining popularity.

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