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Peer-to-peer (P2P) and multicast approaches are two common transmission strategies to provide scalable and cost efficient solutions for video-on-demand (VoD) services. The former approach requires small server resources and provides a negligible delay to users, but the bandwidth requirement inside the network will be rapidly increased when more customers join the video session. On the other hand, if the system simply uses a multicast scheme to deliver a video, customers will experience a noticeable delay before watching the video whereas the overall bandwidth requirement will not be significantly increased. In this paper, a new transmission policy denoted peer-to-peer batching (PPB) policy is proposed to efficiently deliver video data in a large scale VoD system by exploiting the multicast capability of the network and P2P paradigm. To avoid the disruption of services, the fault tolerance and recovery mechanism is also developed for PPB. In addition, in order to further improve the scalability of the system, a distributed PPB (DPPP) is also proposed. We then develop a mathematical model to evaluate the performance of each of our proposed policies analytically. Based on this model, system designers are able to study various design options as well as perform system dimensioning. Both analytical and simulation results show that the proposed scheme achieves better system performance compared with existing schemes. Index Terms--Fault exception, multicast, peer-to-peer (P2P), reliability, video-on-demand (VoD).