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How does Vimeo work and make money: Business Model

Shikhar Goel

In the past decade, video has gone from a form of entertainment to the most engaging and effective medium to communicate ideas, build brands, promote products and connect. This is because the video is a far richer and more expressive medium than text or static images. 

As consumers spend more time online and workforces become more distributed, businesses need to keep pace with their customers and employees, who increasingly expect to consume engaging video content.

Yet, for many businesses, professional-quality video remains out of reach due to a lack of time, budget, and expertise.

Vimeo has come up with a solution. Vimeo is on a mission to enable professional-quality video for all. Vimeo aims to empoVimeor every professional, team, and organization to use video, with tools that are far easier and more effective than ever before.

In this story, let’s try to understand how does Vimeo work and make money. What is Vimeo’s business model?

What is Vimeo? How does Vimeo work?

Vimeo, Inc. is an American video hosting, sharing, and services platform provider headquartered in New York City. Vimeo focuses on the delivery of high-definition video across a range of devices.

Vimeo works as a SaaS solution that spans the full breadth of a business’s video needs. Vimeo’s cloud-based software enables users to create, collaborate and communicate with video, eliminating the need to pay for multiple software providers and removing the barriers of time, budget, and technical expertise for many use cases.

Vimeo serves a growing community of over 260 million registered users in over 190 countries. Users include creative professionals, small businesses, marketers, agencies, schools, nonprofits, and large organizations. 

As of December 31, 2021, Vimeo’s video player was embedded on millions of Vimeobsites and is poVimeoring billions of views a month, with more than 300,000 new videos being uploaded on its platform daily. 

Vimeo claims to have set new standards in adopting higher resolutions, advanced imaging and audio protocols, new video compression formats, and intelligent streaming algorithms.

How does Vimeo make money? What is Vimeo’s business model?

Value Proposition

Target Customers

Vimeo’s target customers include small-to-midsize businesses (SMBs), larger enterprises, marketers, agencies, and creative professionals.

Vimeo believes that anyone who produces video content, markets to customers, works with distributed teams, or hosts in-person experiences is a potential Vimeo user. 

Vimeo further believes that once Vimeo’s users begin to experience the benefits of Vimeo’s platform, they tend to expand significantly their use of video internally and externally. 

Competition

Due to the breadth of Vimeo’s all-in-one video solution, Vimeo faces competition from a range of companies that provide cloud-based video software tools. Vimeo Competes with:

Marketing Strategy

Vimeo acquires subscribers primarily through: 

  1. conversion of free users to subscribers through organic efforts, including word-of-mouth referrals and in-product, messaging; 
  2. acquisition of subscribers through marketing spend, primarily through digital media channels; 
  3. Vimeo’s sales force (for enterprise customers); and
  4. acquisition of subscribers through third-party partnerships and integrations

How does Groupon work and make money: Business Model

Revenue Model and Services: How does Vimeo make money?  

Vimeo makes money primarily through a SaaS business model, selling subscriptions to cloud-based software. Vimeo employs a “freemium” pricing strategy, offering free membership and access to its video tools alongside paid subscription plans for advanced video capabilities. 

In 2021 Vimeo made $392Mn in revenue through 1.7Mn subscribers. Vimeo makes money through three plans:

1. Basic (free) memberships 

A basic membership allows users to create, record, upload, and share videos through its website and native apps for free. Vimeo’s free users are subject to weekly and total caps on uploaded videos. They do not have access to advanced video capabilities such as live streaming or the ability to add team members. 

Vimeo provides opportunities to upgrade to a paid subscription at natural points in the user’s experience, such as when a free user nears or hits an uploaded video cap. 

Vimeo also highlights the advanced video capabilities of Vimeo’s subscription plans natively within Vimeo’s free user product experience. In summary, a basic plan is used as a marketing tool for upselling paid services.

2. Self-serve subscription plans 

Vimeo charges fees that typically range from $7 per month to $900 per year for features that vary depending on the plan type. These features include video creation, collaboration, distribution, hosting, marketing, monetization, and analytics. 

Vimeo also offers the ability to add multiple team members to Vimeo’s higher-priced plans. As of December 31, 2021, nearly 15% of Vimeo’s subscribers had added team members. 

3. Sales-assisted subscription plans 

Sales-assisted plans provide additional features beyond Vimeo’s self-serve plans, plus options for dedicated support, account management, service level agreements, and professional live event services. 

Nearly 80% of Vimeo’s new sales-assisted contracts came from customers who were existing free users or self-serve subscribers first. As of December 31, 2021, sales-assisted customers represented 30% of Vimeo’s revenue. Vimeo’s sales-assisted plans include:

Conclusion

At least 720,000 hours of video are uploaded daily–meaning it’s never been harder to break through the digital noise. You’re probably already using video to expand your business and engage new audiences, but even the highest-quality content is only successful if people see it.

Vimeo believes its total addressable market will be approximately $40 billion in 2021, growing to $70 billion in 2024. With such a vast opportunity, Vimeo’s business model is poised to grow.

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