OTT platform can be quite a profitable business as it offers many opportunities for video content monetization. OTT monetization can come in various forms with different results. It’s hard to conclude which one is better and guarantees high revenue.
In this article, we will cover the main advantages of OTT monetization models. Keep reading to learn more.
What is OTT technology?
OTT is a widely used method of delivering content to a user. Unlike satellite or cable TV, OTT uses the Internet to bring videos or music directly to a consumer. Due to that peculiarity, the convenience rate of using a platform increases. It gives many advantages both for businesses and consumers.
Business benefits due to monetization capabilities OTT platforms provide. Also, OTT allows a business to grow the number of viewers as it is easier due to the Internet and all under-the-hood infrastructure.
Consumers love the fact that content is available any time they want because OTT services aren’t tied to a schedule. Sometimes OTT platforms show more diverse and interesting video content than users can watch on TVs. Moreover, OTT apps allow users to view videos on any device wherever they are.
No wonder OTT is popular.
But let’s explore the OTT monetization and OTT subscription management capabilities they offer.
OTT Monetization Models
OTT services are commonly used to create a VOD (Video-On-Demand) platform. Video On-Demand platforms offer videos for users to watch whenever they want and wherever they are.
According to a monetization model of a platform, there are SVOD, TVOD, AVOD, and hybrid.
TVOD stands for Transactional Video-On-Demand. It is a monetization approach when a customer pays a fee-only for a video or a season they want to watch. Also, the platform can define whether users will pay each time they access a video or only once.
The TVOD monetization model is good for those providers that don’t have a huge library of videos and can sell only several of them. It’s a good choice for one-time releases and videos with instructions.
AVOD stands for Advertisement-based Video-On-Demand. AVOD platforms offer videos for free but earn money on advertisements. The advertiser purchases to reach the audience that a platform has. If a platform focuses on niche content, the fee can be even higher.
Due to its nature, AVOD attracts many people and, consequently, more advertisers. That’s why it can be profitable. The advertisement cost usually covers all expenses on hosting, production, and OTT platform fee.
But the ad insertion should be done carefully as users can feel frustrated due to them and leave the platform.
SVOD stands for Subscription-based Video-On-Demand. It is a monetization model when a consumer pays once a month or once a year for access to all videos available on a platform. When the subscription period ends, the access ends, too.
Often, platform owners create Premium content and take an extra fee for access to it.
SVOD is often related to a high profit: customers pay for access at an affordable price, and the business receives repeated revenue. It’s also considered the one with regular income.
Important To Consider — Subscription Fatigue
Subscription fatigue is a recent phenomenon that points out that customers are less and less interested in subscription-based services. The reasons are the number of subscriptions they already have and the increasing quantity of these services.
More specifically, it gets harder for users to decide what platform to sign up for with such a wide range of services.
What is more, the streaming services boomed during the coronavirus outbreak, but as the world is turning back to normal life, people have less time for watching movies and serials. So, the growth of subscriptions slowed.
However, the study shows that subscription-based services still rule the game, as 81% of respondents use SVOD platforms.
A hybrid revenue model combines the approaches of two or more models described above. For instance, a service can offer free videos with ads and a fee for a subscription without ads. Additionally, it can create videos that will be Premium and available for an extra fee. Or combine these monetization models in the way you think is more profitable for you.
A hybrid model can be even more beneficial than one monetization model alone. As customers can use the platform before purchasing with AVOD, then they can make a more deliberate decision about whether to buy a subscription or not. As a content owner, you don’t lose anything due to ads inserted in videos.
An OTT subscription system can help manage all subscriptions and purchases.
There are multiple possibilities for monetization on OTT platforms. Whether you choose AVOD, SVOD, TVOD, or Hybrid, make sure it meets the audience’s needs and brings the highest revenue.