Video on demand (VOD) systems allow users to select and watch video content over a network as part of an interactive television system. VOD systems either "stream" content, allowing viewing while the video is being downloaded, or "download" it in which the program is brought in its entirety to a set-top box before viewing starts.

All download and some streaming video on demand systems provide the user with a large subset of VCR functionality including pause, fast forward, fast rewind, slow forward, slow rewind, jump to previous/future frame etc. For streaming systems this requires more effort on the part of the server, and may also require greater network bandwidth.

It is possible to put video servers on LANs, in which case they can provide very rapid response to users. Streaming video servers can also serve a wider community via a WAN, in which case the responsiveness may be reduced. Download VOD services are practical to homes equipped with cable modems or DSL connections.

The first commercial VOD service was launched in Hong Kong around 1990. The technology was not mature, Video CDs were much cheaper, and pay TV was not common in Hong Kong. Hong Kong Telecom lost a large amount of money and the service was acquired by Pacific Century Cyberworks in 2000, who subsequently discontinued it.

VOD services were first offered in Hawaii by Oceanic Cable, January 2000, but are now available in all parts of the United States. Streaming VOD systems are available from cable providers (in tandem with cable modem technology) who use the large downstream bandwidth present on cable systems to deliver movies and television shows to end users, who can typically pause, fast-forward, and rewind VOD movies due to the low latency and random-access nature of cable technology. The large distribution of a single signal makes streaming VOD impractical for most satellite TV systems; however, EchoStar recently announced a plan to offer video on demand programming to PVR-owning subscribers of its DISH Network satellite TV service. After the programs are automatically recorded on a user's PVR, he or she can watch, play, pause, and seek at their convenience. VOD is also quite common in more expensive hotels. VOD systems that store and provide a user interface for content downloaded directly from the Internet are widely available.

In 1999, HomeChoice became the first UK company to launch VOD services, but were restricted to London. After attracting 40,000 customers, they were bought by Tiscali in 2006. Cable TV providers Telewest and NTL finally launched their VOD services in the United Kingdom in 2005 in attempt to snatch subscribers from the country's leading pay TV distributer Sky Digital whose satellite based network is unable to offer such a service. VOD services are available in many other parts of the world as well. The ANYTIME service provides VOD to cable providers in Taiwan and to TransACT Communications in Australia. TransACT also operates its own VOD services including sports and adult content.

It is possible to implement VOD using methods such as bandwidth skimming, which can deliver O(log n) scaling as the number of users increase.

Recently, VOD has been utilized in advertising, as Comcast Spotlight has begun offering On-demand commercials. These are up to 10 minute features on a particular business or event, available to consumers whenever they are looking for more information instead of the business or event trying to generalize information for the entire viewing public.