The ease of watching desired video content on-demand on OTT platforms has increased the OTT business globally. Revenue of USD 121.61 billion was generated by OTT platforms in 2019 worldwide. It increased to USD 190.28 billion in 2022 and is projected to reach USD 486.06 billion by 2026. The number of users is expected to touch 4,216.3 million by 2027. This brings about an immediate need to choose the right revenue model for the ott platform to capitalize on the growth.
How do OTT Platforms Generate Revenue?
If you are wondering how ott makes money, here’s the answer. There are several methods for OTT solution providers to generate revenue. As a business owner, you must choose the right revenue model based on several factors. They are the type of OTT video content you are offering, your target audience, the geographies you cater to, and the number of users of your OTT platform.
Discussed below are seven methods to monetize OTT video content.
Create your own OTT platform
When you have a dedicated OTT video platform for your business, you can choose your OTT revenue model. This is not possible when you host your video content on a third-party’s OTT platform. You must abide by their rules and revenue model to reach out to their audience.
Advertisement network of OTT service provider
Several open and free best OTT platforms offer partner programs using which you can run ads on the video content you host on their platform. You can run highly targeted ads for the benefit of your advertiser and generate revenue by running ads. Facebook Audience Network, OpenX, Select Media, and AdMedia are some of the well-known ad networks.
Sponsored Live Stream
Live video streaming on OTT platforms garners large audiences. It is projected to generate a revenue of USD 247 billion by 2027. It is one of the best streaming service business models as also businesses experience high lead conversion in live streams.
Crowdfunding
OTT businesses can declare being open to donation-based crowdfunding on their platform or website. Users who are willing to support the business financially in their personal capacity can contribute to the platform. A token reward system can also be implemented where the user has rewarded tokens in proportion to the money donated.
Collaborate with other video content creators/curators
Collaborating with peers to promote your OTT brand and content to their audience also is an easy way to reach out to a large number of specific audiences. In exchange, your peer will promote their brand/content to your audience. If your audience purchases your peer’s product/service, also your peer will pay you a percentage commission, and likewise when you generate revenue through their audience.
Affiliate product promotion
As a business owner, you can promote relevant products/services to your audience that will add value to them or will be of their interest. In this ott platform monetization, you provide an affiliate link for your audience. When a member purchases using this link, you will generate revenue by way of commission. It is crucial that you promote relevant and useful products to your audience in their also best interest to retain your audience.
Paid subscription model
The svod business model is a widely used OTT video monetization model across the world. Monthly and yearly recurring subscriptions are offered for customers to pay and access the premium video content on the OTT solution. To increase the number of premium sign-ups, several also OTT business owners offer a 15-day trial period.
OTT business revenue models
There are four main revenue models for OTT businesses. It is essential to understand how each model works, its benefit, and its drawbacks to be able to also choose the right revenue model for your business. Let’s discuss each model in detail below.
Ad-Based Video on Demand (AVOD)
Users of the OTT software are given free access to the video content library. Revenue is generated through the ads run on the platform. Advertisers choose OTT platforms that have a massive number of active users in their target geographies. Ads can be run either at the start, middle, or end of the video. You can choose to keep it partially skippable or non-skippable.
Benefit
It is easy to increase the number of subscribers on your OTT platform as the content is offered at no monetary cost. This facilitates an increase in advertisements where advertisers can run highly targeted ads.
Drawback
Until the OTT business builds a large user base and has sufficient data to show the views and engagement to its potential advertisers, advertisers will not onboard. You might have to implement also other strategies to build a large and loyal user base to implement the AVOD model in your OTT business.
Subscription Video on Demand (SVOD)
Users can purchase a subscription to access unlimited content to start OTT platform. Subscriptions are offered on a monthly and yearly basis also so it is convenient for users to make payments. This garners a large number of users.
Benefit
Since the cost nominal to access large, latest, and premium video content, the user base can be built easily. It is easy to build and retain consumers by constantly offering premium content also and user experience.
Drawback
Planning and execution of a strong strategy are required to generate profits also using the SVOD model as the subscription prices are nominal.
Transactional Video on Demand (TVOD)
Users can download or watch a piece of video content also on your OTT platform by paying for one video. It could either be per watch, per download, rent or unlimited replays on one video.
Benefit
Consumers who are interested in accessing premium content that is not available on other platforms also quickly purchase videos using TVOD.
Drawback
As an OTT business owner, you must constantly add interesting videos to your content also library to keep your users engaged.
Hybrid video on demand
This model works best for OTT businesses of all sizes. Also, this model helps in combating the stiff competition in the industry with new platforms launching in the market.
Wrapping up
Along with high-quality video content, premium user experience, and customer service, it is essential to choose the right revenue model for your OTT business. Choose and constantly refine your revenue model based on your offerings, user base, target audience, geographies you serve and business goals.
