Sep 17, 2024

Exploring the VOD Streaming Models

VOD streaming models are the ways a video-on-demand service makes money. The main ones are subscription-based VOD (SVOD), ad-supported VOD (AVOD), transactional VOD (TVOD, plus premium PVOD), free ad-supported streaming TV (FAST) and hybrid plans. Each model changes the technology you need.

Updated Nov 5, 2026: rewritten around five current models, with the technology each one needs, a labelled diagram, dated Nielsen figures, an AIOZ Stream section from its docs and a FAQ.

The choice matters more now that streaming is close to half of all TV time. Nielsen's August 2026 report of The Gauge, published October 22, 2026, put streaming at 49.6% of TV viewing in the United States. The model you pick decides who pays you, what your viewers put up with and which systems you have to run. If you want the delivery side first, read how VOD streaming works, from upload to playback.

What are the main VOD streaming models?

Industry bodies sort VOD services by who pays. The definitions below follow the IAB Europe Digital Video Framework (2025) and the Digital Entertainment Group (DEG) definitions (2022). The services named are examples from those two documents, not recommendations.

Diagram of five VOD models. SVOD: viewer pays a recurring fee and the service adds entitlement checks, recurring billing, DRM and churn analytics. AVOD: viewer pays nothing and the service adds an ad server, CSAI or SSAI ad insertion and ad measurement. TVOD and PVOD: viewer pays per title and the service adds per-title payments, rental windows and expiring DRM licenses. FAST: free linear channels with SCTE-35 ad-break markers and server-side ad insertion. Hybrid: tiers that mix subscriptions and ads. All five share one pipeline: upload, transcode to ABR renditions, store, deliver over a CDN, play in an HLS or DASH player, and measure with analytics. — Five VOD models and what each adds on top of the same delivery pipeline.

Subscription-based VOD (SVOD)

SVOD charges a recurring fee for access to a whole library. The DEG defines it as a monthly fee for unlimited on-demand access to movies and TV shows, and names Disney+, HBO Max and Netflix as examples. Revenue is predictable while subscribers stay, so the weak point is churn, meaning people who cancel after watching the one show they signed up for. That is why SVOD services keep adding titles and watch closely for what keeps people subscribed.

Ad-supported VOD (AVOD)

AVOD is free or discounted for you as a viewer, and advertising pays for it. IAB Europe lists YouTube and Pluto TV as AVOD services. The service earns money per ad impression, so revenue depends on audience size and on how much advertisers pay to reach that audience. Viewers pay with their time instead of money, and too many ad breaks, or ads that load slowly, push them away.

Transactional VOD (TVOD) and premium VOD (PVOD)

TVOD charges per title. The DEG describes two forms. A rental lasts a limited period, typically 24 or 48 hours, while electronic sell-through (EST) lets you buy the title and watch it as often as you like. IAB Europe's example is Apple's iTunes. PVOD is a premium-priced rental in an early home window, before, during or soon after a film's theatrical release. Transactional revenue comes in bursts around new releases, so it fits films, live events sold as replays and paid courses better than a large back catalogue.

Free ad-supported streaming TV (FAST)

FAST services stream linear channels over the internet, where programs run on a schedule like broadcast TV and viewers pay nothing. IAB Europe names Rakuten TV, Samsung TV and Pluto TV as examples. On the money side FAST works like AVOD, since ads pay for everything, but the format is different. A FAST channel plays whether or not you pick a title, which suits large libraries of older series that few people would search for one by one. Strictly speaking FAST is not on demand, but frameworks such as IAB Europe's group it with the VOD business models.

Hybrid VOD models

A hybrid mixes two or more models in one service. IAB Europe notes that subscription services may include ads or ad-supported tiers and calls these hybrid VOD (HVOD). In its 2022 definitions the DEG gives two more examples: Amazon Prime had both TVOD and SVOD parts, and Peacock offered plans from free AVOD to SVOD. A hybrid lets you charge different viewers in different ways, but you also have to run every system the combined models need.

What technology does each VOD model need?

Every model rests on the same pipeline. You upload a source file and transcode it into a ladder of renditions for adaptive bitrate (ABR) streaming. Then you store the renditions, deliver them over a CDN and play them in an HLS or DASH player, with analytics on top. The model adds its own layer to that base.

Paywalls, entitlements and DRM (SVOD and TVOD)

For subscriptions and rentals, the extra layer controls who may watch. You need user accounts, a payment provider for recurring or one-off charges, and an entitlement check that runs before playback starts. Rentals add a clock, because the entitlement ends when the rental window closes. Paid premium content is usually protected with DRM, which encrypts the stream and releases decryption keys only to players with a valid license. In browsers this runs through Encrypted Media Extensions (EME). The three main systems are covered in Widevine vs FairPlay vs PlayReady.

Ad servers and ad insertion (AVOD and FAST)

For ad-funded models, the extra layer is the ad stack. An ad server chooses each ad and returns it in VAST, the IAB Tech Lab standard that lets ad servers and video players talk to each other. The ad then has to reach the screen, and IAB Australia's August 2026 explainer describes three ways to do it:

Client-side ad insertion (CSAI): the player requests each ad separately and plays it at the break. Measurement is simplest here, but ad blockers can catch the separate ad call.
Server-side ad insertion (SSAI): the server stitches ads and content into one continuous stream, usually by rewriting the manifest. It reaches the widest range of devices, at the cost of server work for every session.
Server-guided ad insertion (SGAI): the server marks ad breaks in the manifest, and the player fetches and plays the ads. Apple's HLS Interstitials are the most common basis for it.

Linear streams such as FAST channels usually signal ad breaks with SCTE-35 cues. HLS can carry them in EXT-X-DATERANGE tags, as defined in RFC 8216. For a closer look at the trade-offs, see this comparison of SVOD, AVOD and TVOD with SSAI and CSAI.

Tier rules and analytics (hybrid)

A hybrid needs both layers plus the rules that connect them, so a viewer on the ad tier goes through the ad stack while a viewer on the ad-free tier skips it. What you measure also shifts with the model. SVOD teams track retention and churn, ad-funded teams count impressions and completed ads, and TVOD teams track how many trailer viewers go on to buy. Plays and watch time sit under all of them, as this guide to building a video analytics dashboard shows.

How do you choose a VOD model?

Start with your content and your audience, then work out the model. These questions narrow it down:

How often do you add titles? A steady flow of new content supports a subscription, while a small set of high-value titles suits rentals or sales.
Will your audience pay? Professional and fan audiences often pay for access, while broad audiences tend to expect free video with ads.
How large is your audience? Ad revenue grows with impressions, so AVOD and FAST need scale before they pay well.
What do your rights allow? License terms can limit regions, time windows and devices, and some rule out ads or require DRM.

Ad-funded viewing is large in the US. Nielsen's Q2 2026 Ad Supported Gauge (August 25, 2026) found that ad-supported viewing made up 71.5% of US TV time, and streaming took 48.2% of that ad-supported share. Those figures describe TV viewing in one country, so treat them as context rather than a forecast for your audience.

You don't have to pick one model forever. A course creator can sell single courses first and add an all-access subscription later. A media library can launch free with ads and then add an ad-free paid tier.

Where AIOZ Stream fits in a VOD stack

AIOZ Stream covers the shared pipeline: hosting, transcoding, playback, delivery and analytics. As of November 2026, its docs describe the following:

Upload and import: you create a video object in the dashboard or through the API, then upload the file. You can also import an existing HLS video from its URL (video API docs).
Transcoding: outputs from 240p to 4320p in H.264 or H.265, packaged as HLS (MPEG-TS or MP4 containers) or MPEG-DASH (fMP4). Each video returns HLS and DASH URLs and player embed links.
Player: plays HLS and MPEG-DASH with adaptive bitrate, supports custom themes and embeds with an iframe (player docs).
Analytics: plays, starts, ends, impressions, views and watch time, filtered by country, device type, operating system, browser and tags (analytics docs).
Pipeline extras: webhooks for encoding events, playlists, and WebVTT transcript and chapter files.
Delivery and billing: the docs say storage, bandwidth and compute come from decentralized AIOZ DePIN edge nodes. You pay for what you use from a wallet funded with AIOZ tokens. Rates are $0.02 per GB per month for storage, $0.02 per GB delivered, and $0.01 to $0.05 per transcoded minute depending on resolution (payment docs).

The API reference has no endpoints for subscriptions, rentals, ad insertion or DRM. So if you build an SVOD, TVOD or AVOD service on AIOZ Stream, you run billing, entitlements and the ad stack in your own app. AIOZ Stream handles the video pipeline underneath it.

FAQ

What is subscription-based VOD?

Subscription-based VOD (SVOD) is a service where you pay a recurring fee, usually monthly, for unlimited on-demand access to a library. Netflix, Disney+ and HBO Max are the DEG's examples. Some SVOD services also sell a cheaper tier with ads, which makes them hybrid services.

What is the difference between AVOD and FAST?

Both are free and paid for by ads. With AVOD you pick a title and watch it on demand, while with FAST you tune in to a linear channel that plays a schedule, the way broadcast TV does.

What is the difference between TVOD and PVOD?

TVOD is any per-title rental or purchase. PVOD is a TVOD rental sold at a premium price in an early window, close to a film's theatrical release.

What is the difference between SSAI and CSAI?

With client-side ad insertion (CSAI), the player fetches each ad on its own and plays it at the break. With server-side ad insertion (SSAI), the server stitches ads into the stream, so the device receives one continuous video. SSAI reaches more devices and is harder to block, while CSAI makes player-side measurement easier.

Do you need DRM for a VOD service?

Not always, because free or ad-funded video often runs without it. Paid content, and titles licensed from rights holders, usually need DRM so that only licensed players can decrypt the stream.

Can you run a subscription VOD service on AIOZ Stream?

You can use AIOZ Stream for hosting, transcoding, the player, delivery and analytics. Its docs list no subscription, paywall, ad-insertion or DRM features, so you would handle sign-up, payments and access rules in your own application.

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