OTT Monetization: Choosing The Best OTT Revenue Models In 2023

OTT Revenue Models

The trend of over-the-top (OTT) services, which offer a wide range of entertainment options, has gained widespread acceptance among the general audience, presenting significant advantages for everyone involved.

This new wave of entertainment allows the target market to have unlimited choices and a seamless viewing experience all in one place. Whether it’s sports events, Q&As, social gatherings, or product launches, potential customers can access tailored content bundles from renowned content providers or video publishers at affordable prices.

As a result, there is a surge in user demand, as people can comfortably watch their preferred content and enjoy uninterrupted streaming through the power of internet technology. In fact, video streaming is projected to account for 82% of the world’s internet traffic, surpassing traditional favorites like blogs and articles.

The cord-cutting trend, driven by the popularity of OTT platforms, is here to stay and offers significant return on investment for businesses operating in the industry.

But what exactly is OTT, and what are the benefits of shifting to these platforms? OTT content platforms deliver video content over the internet to smart TVs, phones, and other streaming devices, capturing a significant share of viewership and market dominance.

One of the major advantages of OTT platforms is the availability of multiple monetization models for content marketers and video publishers across various industries. These platforms make it easier to segment audiences based on viewership demographics, attracting a large volume of users.

Today, the majority of people are subscribed to at least one OTT platform such as Netflix, Amazon Prime, or Hulu. Content marketers and advertisers are recognizing the untapped potential of these platforms’ audiences and utilizing them to market their content online, thereby diversifying their revenue streams and expanding their video streaming platform options.

When it comes to selecting the ideal OTT monetization model for your business, there are several factors to consider:

  • Content Offered: The type of content you provide to your viewers will influence the most suitable revenue model. Subscription models work well for regular content, while pay-per-view models are suitable for one-time or exclusive video content. It’s essential to identify your overarching content genre and topic before narrowing down the revenue model.
  • Target Audience: Your target audience plays a crucial role in determining the revenue model you choose. Subscription models are effective for retaining regular viewers, while pay-per-view systems can attract new and shifting target audiences.
  • Business Strategy: Your business strategy and objectives will define the revenue model that aligns best with your goals. Some businesses prefer a steady revenue stream from subscriptions, while others opt for pay-per-view models to engage viewers who are more likely to invest in their video streaming services or products. We provide VOD Solution in India

Now let’s explore some popular OTT revenue models:

  • AVOD (Ad-based Video On Demand): In this model, video content is free for consumers in exchange for strategically placed advertisements. Ad revenue covers production and distribution costs. Examples of AVOD platforms include YouTube and Hulu.

Benefits of AVOD:

  • User Acquisition: Offering free video content attracts a large viewership, as viewers consider watching a few minutes of ads a fair trade-off for unlimited free content.
  • Easy Revenue Distribution: AVOD platforms provide various options for monetization, such as pre-roll ads before the selected video, midroll ads at strategic points, and in-video ads that can be closed by viewers. We provide VOD Solution in India
  • TVOD (Transactional Video on Demand): TVOD allows users to buy content on a pay-per-view basis. Instead of gaining access to an entire catalog, users are charged for each video they choose to watch. Examples of TVOD platforms include iTunes and Google Play.

Benefits of TVOD:

  • Higher Income Generation: Regardless of video length, income is generated as users pay for each video individually.
  • Niche Range of Videos: TVOD models enable distributors to connect with theiraudience by offering specific video content that caters to their interests, resulting in a well-segmented audience and a niche range of videos. how to launch my ott platform
  • Profitability: If there is high demand for a particular video category, TVOD models can be highly profitable, as users pay for individual videos.
  • SVOD (Subscription Video on Demand): SVOD models currently generate the highest revenues, making it the most popular monetization model for OTT platforms. This model charges a recurring fee for unlimited access to an entire catalog of films and shows. Examples of SVOD platforms include Netflix and Amazon Prime. how to launch my ott platform

Benefits of SVOD:

  • High Retention: With the ability to access premium content anytime by paying a monthly fee, users are more likely to stick around and use the platform frequently.
  • Recurring Revenue: Subscriptions are automatically deducted once set up, eliminating the need for users to enter their payment details each time and reducing the need for businesses to follow up.
  • Diversified Revenue Streams: Alongside SVOD, businesses can offer pay-per-view or ad-based VOD options, broadening the monetization options and appealing to a wider market.
  • Coupons & Promotions: Coupons and promotions are enticing revenue-building models. They involve offering discounts on specific products through coupon codes, allowing businesses to broaden their viewer base and generate higher returns. Examples of platforms implementing this model include Amazon and Netflix.

Benefits of Coupons & Promotions:

  • User-Friendly Approach: Platform owners can make it easier for customers to access unlimited coupons for various video marketing campaigns, including seasonal offers.
  • Unexpected Options: By strategically planning promotional discount strategies and providing additional payment flexibility, such as cash or discount percent purchases, businesses can captivate and engage customers.
  • Computerized Coupons: Leveraging advanced technologies, businesses can generate custom-designed coupon codes, including one-time use or reusable codes, to provide attractive discount offers and enhance brand popularity.
  • Catchup TV: Catchup TV allows users to catch up on movies or TV shows they might have missed. Users can download their favorite shows for a limited period of time at certain prices. Examples of Catchup TV platforms include the Amazon Fire TV App and Roku Devices.

Benefits of Catchup TV:

  • Flexible Viewing: By offering a catchup TV model, platforms can provide users with the flexibility to watch shows at their own convenience, eliminating the need to adhere to fixed programming schedules.
  • Timely Viewing Passes: Platforms can offer different view-package passes that are valid for a specific amount of time, allowing users to catch up on specific content within the designated period. This can be charged at particular costs based on the audience’s viewing interests.

In addition to selecting the appropriate monetization model, businesses in the OTT industry should consider the following revenue-generating best practices:

  • Payment Security: Ensuring secure payment portals is crucial to gaining user trust. Users will be more likely to pay on a platform that guarantees the security of their confidential information.
  • Secure Video Delivery: In an era where online security is paramount, users expect OTT platforms to provide a safe environment for watching videos, free from hackers and unauthorized access.
  • Server-side Ad Integrations (SSAI): Implementing server-side integrations allows for seamless ad experiences without interrupting the viewers’ content. This technique ensures smooth video playback and enables cross-platform monetization while avoiding ad blockers.

In conclusion, it is important for businesses to choose the OTT monetization model that best aligns with their content, target audience, and business strategy. Mogi, for instance, offers flexibility in implementing various revenue models, enabling businesses to set up subscription plans, increase viewership through pay-per-view options, and strategically place ads.

Want to Build the Next Big OTT Platform? Book Your Free Demo Today! See how Mogi works through a 1-to-1 demo with our product experts.

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