What Is TVOD? Transactional Video on Demand, Explained

by The MNTN Team

8 Min Read

These days, the video distribution industry offers consumers more options than ever. Among the most popular of these viewership options is transactional video on demand (TVOD), which allows consumers to purchase individual pieces of content.

Below is a closer look at both the good and bad aspects of TVOD, as well as how the medium might fit into the digital marketing strategies of today’s brands.

What Is TVOD?

Transactional video on demand, akin to pay-per-view (PPV) models of old, is a content streaming model through which consumers buy movies or episodes of shows on an individual basis.

Unlike traditional PPV, which was primarily offered via satellite and cable TV providers, TVOD is available via OTT platforms like Amazon Prime Video and Apple TV. Many of these also allow consumers to purchase entire seasons at a discounted price. Prime Video and a few others offer rental options, as well, giving users anywhere between 24 and 72 hours to finish a piece of content once they start it.

There is no question that transactional video on demand has become incredibly popular over the last few years, but it’s not the only on-demand viewing option out there.

Here’s how TVOD compares to two of its top competitors:

TVOD vs. AVOD

Whereas TVOD is purely pay-per-view, ad-supported video on demand (AVOD) allows users to watch as many shows and movies as they like for free. The tradeoff is that commercials appear before, during, and after each piece of content.

Nevertheless, AVOD platforms do benefit everyone involved: Providers generate revenue via streaming ads, businesses have an opportunity to target key consumer demographics precisely, and users enjoy free content.

AVOD models have evolved over the last few years, with many subscription video-on-demand (SVOD) platforms offering a combination of ad-supported and subscription-based content.

For instance, the free Prime Video TV subscription included with Amazon Prime memberships includes limited ads, and customers can upgrade to an ad-free option for an additional fee.

TVOD vs. SVOD

Subscription video on demand provides users with access to a library of movies and TV shows for a flat monthly fee. Many SVOD providers offer multiple tiers, some of which include ads. Higher tiers are typically ad-free and allow users to stream on more devices simultaneously.

TVOD, by comparison, does not include any recurring fees or tiers. Once purchased, TVOD content can typically be viewed via any supported device. If you were to buy a movie on Prime Video and begin watching it on your TV, for instance, you could finish or rewatch that video through the Prime Video mobile app or its website.

Learn more about AVOD vs SVOD vs TVOD

How TVOD Works

Transactional video on demand is arguably one of the simplest streaming models. You find the video you want to watch, choose a purchase or rental option, pay the set price, and enjoy your content.

Advantages of TVOD

Transactional video on demand offers a few advantages compared to its contemporaries and traditional cable TV, including the following:

1. Pay-Per-View Flexibility

People who rarely watch TV will enjoy the flexibility that a PPV model offers. They can purchase movies or TV shows that they love and rewatch them any time. Older shows and films are generally available for a few dollars each, save for some select classics and premium content.

2. Access to Premium and New Release Content

Perhaps the biggest reason why consumers may use TVOD over SVOD or AVOD, aside from its flexibility, is early access. During the widespread theater closures of the early 2020s, many movie studios began doing home releases via TVOD. Purchasing these movies would often cost as much or more than a single monthly subscription to a streaming service, but viewers could see the movie weeks or months earlier than anticipated in the comfort of their own homes.

Even today, TVOD provides users with access to the latest movies (and TV shows) from home. Movies that are in theaters may be released on TVOD channels simultaneously. In other cases, studios may release new movies to TVOD after they’ve given their projects a few weeks to rake in the box office bucks.

On a smaller scale, consumers who don’t have traditional cable or satellite subscriptions may also use TVOD to buy episodes of new shows before they are available on SVOD or AVOD streaming platforms. They can watch the latest hits without committing to a monthly bill.

3. No Recurring Subscription Fees

Transactional video on demand does not involve any recurring subscription costs. Consumers are only charged when they rent or buy video content. As such, those who are on a tight budget or who simply prefer not to pay monthly streaming bills may find the PPV model appealing.

Disadvantages of TVOD

Despite its upsides, transactional video on demand is not without its share of a few drawbacks, which include the following:

1. Higher Cost-Per-View

Avid TV watchers and die-hard movie buffs will find that their costs per viewing are a lot higher with TVOD. They’ll have to buy every single piece of content that they want to watch, which can add up fast. On the other hand, AVOD offers unlimited low or no-cost streaming, and SVOD, beyond a single monthly price, allows users to binge their favorite content with no commercials.

2. Limited Long-Term Customer Retention

Streaming providers rely on original content, platform bundles, and competitive monthly pricing to differentiate themselves. In comparison, there aren’t many ways for transactional video-on-demand platforms to compete. The price of PPV movies and TV shows is about the same on all of the major TVOD platforms, which makes it difficult for any one provider to “win” and retain customers.

3. Dependence on One-Time Transactions

The biggest downside to the TVOD model is that it relies on one-off purchases. Just because someone purchased a movie last month doesn’t mean they will do so again next month. That’s why most streaming platforms offer PPV content as an additional feature, and none of the major internet-based video content providers rely solely on TVOD revenue.

Popular TVOD Platforms

The top transactional video-on-demand platforms include the following:

Amazon Prime Video

Individuals with Amazon Prime accounts enjoy a free subscription to Prime Video. That “built-in” user base has helped Prime Video compete with some of the largest streaming platforms, including Netflix and Hulu.

However, Prime Video is more of a hybrid platform as opposed to a standalone PPV service. Consumers can watch AVOD content as part of their “free” membership, upgrade to an ad-free SVOD subscription, or purchase individual movies and shows on a transactional basis.

iTunes/Apple TV

Apple has a vast customer base composed of millions of iPhone, iPad, and Mac users, each of whom can purchase or rent movies and shows via iTunes. They can also sign up for Apple TV, which offers a mix of subscription-based and PPV content options.

Google Play

Google Play offers a true TVOD platform. Individuals with Android devices or Google-powered smart TVs can purchase PPV content via the Google Play store.

YouTube (Movies & Shows)

YouTube is best known for its ad-supported viewing options, but it also offers SVOD alternatives via YouTube TV as well as PPV purchase options. Consumers can go back and rewatch any purchased content via their YouTube accounts.

Fandango at Home

Fandango at Home offers PPV and ad-supported content options, usually featuring the latest movie releases and the hottest shows. Consumers can check out older movies and shows via the platform’s ad-supported library.

Why Advertisers Need Performance TV

Transactional video on demand reached a peak penetration rate of 29% in the U.S. back in 2021. However, that rate has since dipped in subsequent years as theaters have reopened across the country. While millions of Americans still watch PPV content, their purchasing habits are just too inconsistent to provide reliable reach for marketers.

However, AVOD and hybrid, ad-supported platforms are experiencing a consistent increase in penetration and reach. And if you want to capitalize on that trend, you need MNTN Performance TV.

As the hardest-working software in television, MNTN gives your brand all the tools it needs to reach its target audience. Our proprietary technologies, like Verified Visits™ and MNTN Matched, pair you with the ideal audience while providing actionable attribution data.

Tap into premium CTV advertising inventory and modernize the way you advertise with MNTN Performance TV.

Transactional Video on Demand: Final Thoughts

Transactional video on demand remains a popular viewing option for consumers who want early and easy access to the latest shows and movies. However, most households have since started to rely on a mix of AVOD, SVOD, and TVOD when consuming content.

With that in mind, buying ad space on TVOD platforms should be part of your marketing strategy. However, ad-supported streaming services offer great reach and can help take your business to the next level.