OTT Monetization Models: How to Generate Revenue on Videos?

Running a video streaming service is an attractive business opportunity for companies and organizations. The reason is multiple tools for generating revenue and building relationships with customers. A content provider decides where (locations) people can access the service and on what conditions. When talking about access conditions, we mean whether they should pay or not and how.

Let’s talk about OTT monetization models in detail.

OTT Monetization Models: Ads, Subscriptions, and Pay-Per-View

Here is the list of common monetization models in the OTT industry:

Advertisements

Advertising-based monetization model means that content is free of charge for viewers. Then, how does a content provider generate revenue? They generate revenue by running ads on videos.

Instead of paying for access to content, viewers watch ads. In case they get interested in a product or service advertised, they can click on the ad. The peculiarity of online advertising is that you can show commercial videos that viewers actually might be interested in. You can segment your audience by interests, demographics, and other characteristics. After that, it is easier to decide which ad to show to them.

Advertising-based monetization model is getting popular now because users have too many subscriptions. They cannot pay for every service they want to watch, and that’s why they are looking for free ad-based streaming services.

Subscriptions

Subscriptions are convenient because they require payment once in a limited period, such as a month, a quarter, or a year. After the purchase, viewers get constant access to the whole library of videos the provider has. TVALB usually arranges discounts so that viewers can enjoy its content for a year at a lower price.

Subscriptions also mean the absence of advertising. That’s the reason why many people prefer to use subscription-based video streaming services.

Subscription-based monetization model ensures a predictable revenue stream for a business. Viewers keep renewing their access to videos each month, and you have your revenue. Moreover, people stay longer on your service because of continuous payment. They use your service often, and you can build strong relationships with them.

Pay-per-view

A pay-per-view monetization model differs from subscriptions in terms it requires payment for each video on the platform. It is also known as a transactional-based pricing approach.

It is suitable for viewers who search for particular content. As a content provider, you are to decide whether to let viewers “rent” a video for a limited time or allow them to download a video on their devices.

Hybrid

The hybrid monetization model refers to a combination of several models described previously. There are multiple options you can do. For example, you can use advertising and subscriptions as Netflix does now. They have two plans for viewers: one is an ad-free subscription at a higher price, and another is a subscription with ads at a lower price.

However, these models can be mixed in other ways. For example, you can just offer viewers to purchase a subscription if they don’t want to watch ads during the videos.

Or you can combine subscriptions and pay-per-view in different ways. For example, you can have two groups of content: one is available on a subscription basis, and the other requires additional payment.

Final Thoughts

OTT monetization includes subscriptions, advertising, pay-per-view, and the hybrid pricing approach. You can choose the one that suits you best with the right OTT solution that supports all models. However, you can boost your revenue by covering more devices with applications and reaching more people around the world with CDN.

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