How do Short Video Platforms make Money | Short Video Platforms' Business Model

Alan Joseph Alan Joseph
Aug 27, 2021 6 min read
How do Short Video Platforms make Money | Short Video Platforms' Business Model

The arrival of TikTok has increased the craze of making a short-form video worldwide. Short-video platforms are on the trend. TikTok was the most used Short Video Platform in India which had been downloaded over 611 million times. Β 

Ever since it got banned in India on June 29, 2020, there has been an onslaught of new short-video platforms. Instagram launched "Reels" immediately after TikTok got eliminated from India.

There are various short-video platforms that have entered the market like Josh, Moj, MX Taka Tak and many more and they are growing exponentially.

The reason being that the mobile data price has dropped since the arrival of Jio. And also, android phones with good cameras have been available for a reasonable price that led to 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.

Moreover, these platforms provide free services to their user which require experiments with the business model.

How does TikTok make money?

The main goal of this article is to understand how the business model of these platforms manages to offer free services to its user.

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 Model

Conclusion
FAQs

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.

You 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 content according to your choice.

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


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Subscription Video on Demand (SVOD)

In this subscription-based model, a customer will have to pay an amount monthly, quarterly, or yearly. Through the subscription model, you will be able to view an unlimited amount of content on their platform along with the recently released content.

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, YouTube and many more. The subscription model of YouTube 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 model, 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.

On 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 Model

This is the type of business model 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 at 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 from. You would be able to choose the model you prefer according to your budget or your likes.

Conclusion

The demand for short 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 are a lot of new apps coming up along with new features such as Reels, introduced by Instagram to promote short video content.

YouTube has become a platform where people create content as a full-time profession. The short video platforms are going to flourish in the coming future as the entertainment industry is gaining popularity.

FAQs

What is the Business Model of TikTok?

TikTok primarily gains its revenue through advertising.

Which countries have banned TikTok?

TikTok is banned in India and Pakistan only. Though Bangladesh, the United States and Indonesia have attempted a ban on TikTok but later lifted it.

Why is TikTok banned in India?

The Indian government in a statement stated that the decision to ban the app was "to protect the data and privacy of its 1.38 billion citizens".

Which is the best platform for short videos?

The best platform for short videos based on its features are as follows:-

  • Instagram
  • TikTok
  • Moj
  • Josh
  • Likee
  • Taka Tak
  • Snapchat
  • YouTube Shorts
  • Dubsmash

Which short video app is best to earn money?

The best short video app to earn money are as follows:-

  • Kwai
  • Instagram
  • Likee
  • TikTok
  • Moj
  • Josh
  • Taka Tak
  • Vigo Video

Which app is best for short video editing?

The best video editing apps are:-

  • InShot
  • KineMaster
  • Movavi Video Editor Plus
  • FilmoraGo
  • ActionDirector
  • Adobe Premiere Rush
  • Funimate.

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