VOD vs OTT: what’s the difference and why it matters for streaming strategy

Remember VHS tapes and DVD rentals? We have come a long way. Today’s digital streaming landscape has revolutionised how we consume content – no more rushing home for scheduled broadcasts or waiting for someone to return a movie to the rental store. Today, two solutions dominate the market: Video on Demand (VOD) and Over-The-Top (OTT).

The shift is massive and measurable: approximately 83% of US households subscribe to paid streaming services, while for OTT specifically, user penetration is expected to be 52.8% in 2025, increasing to 61.0% by 2029. This isn’t just a trend; it’s a complete transformation in how content is delivered and consumed.

While VOD and OTT terms are often used interchangeably, they represent fundamentally different concepts. Understanding this difference is crucial for businesses building streaming platforms, as it affects everything from content acquisition strategy to technology infrastructure decisions.

So, what’s the difference? In this article, we’ll decipher VOD vs. OTT, the main difference, and real-world examples.

What is Video On Demand? 

Video On Demand (VOD) is a media distribution system allowing users to access video content whenever they choose, rather than being restricted to a broadcaster’s schedule.

At its core, VOD means content is available “at the user’s request” – allowing viewers to play, pause, rewind, and replay content at any time. This fundamentally shifts control from broadcasters to viewers.

With VOD, viewers gain unprecedented freedom to:

1. Select their preferred content from vast libraries
2. Watch at their convenience, regardless of original broadcast times
3. Access content from virtually any location with appropriate devices
4. Control playback (pause, rewind, fast-forward) as needed

This transformation in media consumption eliminates the need to schedule life around broadcasting timetables. VOD puts the viewer in complete control of their entertainment experience.

• Technically speaking, VOD encompasses various delivery methods like:
• Streaming services accessed via the internet
• Downloadable content for offline viewing
• Cable/satellite on-demand services

Initially, VOD services were primarily offered through cable operators (as movie libraries in set-top boxes). Still, today the term mainly covers online streaming services like Netflix’s film library or YouTube videos – essentially anything that starts when you press “play” and isn’t a live broadcast.

VOD business models 

Video on Demand services operate through three primary business models, each with distinct characteristics and revenue strategies:

• Subscription VOD (SVOD) requires users to pay a recurring fee (typically monthly) for unlimited access to the entire content library. Netflix, Disney+, and HBO Max exemplify this approach, offering extensive catalogues for a fixed price with no advertisements during playback.
• Transactional VOD (TVOD) functions on a pay-per-view basis, where users purchase or rent individual content pieces without ongoing commitments. Apple iTunes, Google Play allow viewers to pay only for specific movies or episodes they want to watch.
• Advertisement-supported VOD (AVOD) provides free content access while generating revenue through advertisements shown before, during, or alongside videos. YouTube follows this model, eliminating direct viewer costs but including commercial interruptions.

Ad-supported video on demand (AVOD) saw a 10% increase quarter-on-quarter in Q2 2024, highlighting consumers’ growing acceptance of advertisements in exchange for lower subscription costs across major streaming platforms.

Source: Video On Demand Market – Industry Dynamics, Market Size, And Opportunity Forecasts To 2032; 2024

Interestingly, many platforms are now adopting hybrid approaches, such as Amazon Prime Video, which primarily operates as SVOD but also offers TVOD options for particular titles not included in the subscription.

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How does Video On Demand (VOD) work?

VOD works through a simple process that makes videos available whenever you want them, rather than at scheduled broadcast times:

1. Content storage: Videos are recorded digitally and stored on powerful computers called servers. These videos are compressed (made smaller) to save space while maintaining quality.
2. Content library: The videos are organised in a library that users can browse – this could be a website, app, or TV interface where you see thumbnails and descriptions.
3. Request and delivery: When you click “play”:

a. Your device sends a request to the server: “I want to watch this specific video”

b. The server receives this request and starts sending the video data to your device

c. Your device receives the data and displays it on your screen

The system scales efficiently because content is stored once but can be streamed to millions of users simultaneously, each watching at their preferred time and pace.

What is Over-The-Top (OTT)?

Over-the-top (OTT) content delivery method uses the Internet to distribute multimedia directly to viewers, bypassing traditional distribution channels like cable, broadcast, and satellite providers. The name “over-the-top” comes from the concept that these services go “over the top” of conventional distribution gatekeepers.

At its core, OTT delivers content through internet connections rather than through dedicated infrastructure like cable lines or satellite dishes. This fundamental shift means content providers can reach audiences directly without intermediaries controlling access or programming schedules.

The key characteristics of OTT include:

• Direct internet delivery of content to end-users
• Accessibility across multiple internet-connected devices
• Independence from traditional telecommunications providers
• Ability to deliver both on-demand and live streaming content

OTT requires only an internet connection and a compatible device such as a smart TV, streaming devices like Roku, Amazon Fire TV Stick, Apple TV, Chromecast, or any mobile device or computer equipped with the appropriate app or browser. Unlike traditional broadcasting, OTT doesn’t require specialised hardware like cable boxes or satellite dishes. However, many viewers choose to use dedicated streaming devices for convenience and a better viewing experience.

How does OTT work?

OTT delivery operates through a simple but powerful system that connects content providers directly with viewers via the internet:

1. Content preparation: Broadcasters or content creators first upload their videos (pre-recorded or live) to an OTT hosting platform, which is the digital equivalent of a TV station.
2. Distribution network: The content doesn’t stay in one place. Instead, it travels to multiple servers around the world through what’s called a Content Delivery Network (CDN). It ensures viewers can access content quickly regardless of their location.
3. Viewer interface: Viewers browse available content through an app or website as a digital program guide or content library.
4. Streaming process: When you select something to watch:

a. Your device sends a request over the internet

b. The nearest server responds and begins sending the video data

c. Your device receives and displays the content in real-time

All you need as a viewer is an internet connection and a compatible device, which could be a smartphone, tablet, computer, smart TV, or streaming device like Roku or Amazon Fire TV Stick.

The beauty of OTT is its simplicity for users despite the complex technology working behind the scenes. Unlike traditional TV, which requires specific equipment and installation, OTT works on devices you already own, making it incredibly convenient and accessible.

VOD vs OTT: what’s the difference?

The key relationship is simple: VOD describes a type of content (on-demand), while OTT describes a distribution method (via the internet).

These terms aren’t the same, though they often appear together in today’s streaming world. Here are some practical examples:

• A movie you rent from your cable box’s library is VOD but not OTT (it’s on-demand, but delivered through the cable operator’s network, not the open internet)
• A Netflix series is both VOD and OTT (it’s on-demand content delivered via the internet)
• A live sports game on Canal+ Online is OTT but not VOD (it’s delivered via the internet but isn’t on-demand – you must watch it as it happens)

OTT platforms can offer both on-demand content (VOD) and linear content (like live TV channels, sports broadcasts, etc.), whereas VOD cannot include live elements.

VOD vs OTT: comparison table

Make the right choice for your streaming platform

As you can see, the difference between VOD and OTT isn’t just technical jargon – it’s fundamental to your streaming business strategy.

With viewer habits and monetisation models constantly evolving, getting the technology right from the start is critical.

At Spyrosoft BSG, we handle all the complex technical aspects of building and running streaming platforms so you can focus on what matters – your content and audience.

Check out our media solutions to see how we can help bring your streaming vision to life without the technical headaches.

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