The OTT industry is one of the rare segments that grew exponentially even during the global pandemic. OTT is the buzzword in the modern-age media industry, given its growing popularity among the audience across the world. It’s hard to find someone who hasn’t heard of OTT giants like Netflix or Amazon Prime. Over the past decade, there has been a tectonic shift in the entertainment and media industry. This revolution has been brought by the OTT biggies like Netflix and Hulu that have changed the way people consume video content. Today, there are plenty of new video streaming business ideas to bank on
Did you know that the advertising video streaming revenue model contributes over 45% of all online video revenues in the contemporary? Well, this number is further expected to grow to 60%, over the next decade. Revenue generated from the OTT video segment is expected to have an annual growth rate (CAGR) of 11.26% between the period 2021 to 2025. Also, the average revenue per user in the OTT video space is expected to reach approximately USD 57.79 by the end of 2021. This can be accredited to a growing subscriber base of giants like Netflix, which has over 150 million subscribers worldwide.
There are plenty of factors that have led to this huge popularity and adoption of OTT channels by the users. The first and most important thing here is that the users have the flexibility to only pay for the type of content they want to consume. In addition to this, there are no restrictions on how one can use the platform to access the content. You can watch what you like at any time of the day. One of the major drawbacks of traditional cable TV was that it didn’t provide much flexibility in terms of timings. You had to watch what was being broadcasted or wait till you could watch it again later, in case you missed out on something.
Most Popular Revenue Models for Video Streaming Platforms
The growing demand for OTT video content by the online audience has created an exciting opportunity for content creators to deliver something unique and monetize video streaming. Video creation endeavors in the contemporary period are highly rewarding as more people are inclined towards watching OTT content. People don’t mind paying subscription fees for obtaining access to the content they like. This has eased the monetization process for video streaming solutions. A majority of reliable platform service providers will offer multiple monetization options for your video streaming business model.
Here are some of the most popular revenue models being used by OTT platforms across the globe to bank on their talent.
- Advertising Video on Demand Model (AVOD)
The Advertisement Video on Demand (AVOD) model helps online video streaming platform owners to monetize video content and generate revenue by placing a wide range of advertisements. The owner publishes ads and usually gets paid based on every 1000 ad impressions generated. However, it might vary depending on their agreement with the advertisers. This revenue model doesn’t directly charge from the customers but instead generates income through ads being shown by different brands. It is free for the users to access the video content library on platforms that solely rely on the AVOD model for monetization.
- Subscription Video on Demand Model (SVOD)
The subscription-based video monetization platforms allow content creators to monetize their video content by charging different types of subscription fees from the viewers based on the plan they select. The subscription fees might vary depending on factors such as the number of screens that can play at the same time, user’s geography, device preference, etc. For example, the OTT giant Netflix has a cheaper plan for mobile-only subscriptions as compared to the all-device subscription option. The popularity of this revenue model can be evaluated by the fact that almost 3 in 4 US households have at least one subscription service.
- Transactional Video on Demand Model (TVOD)
If you are searching for ‘how to monetize streaming’ that allows you to charge based on each content, TVOD is your answer. In the case of a Transactional Video on Demand (TVOD) model, the viewers purchase either a lifetime or limited access to particular video content. This can be a movie, a documentary, a TV show, etc. It is also popular as the Pay Per View (PPV) model. In this case, the viewers purchase the license for watching specific video content, the license might or might not have an expiry date. The TVOD model usually provides a higher average revenue amount per user than other revenue models. It’s also a good option for movie studios to generate added revenue after their initial broadcast, which they used to do by selling DVDs earlier.
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- Server-Side Ad Insertion Model (SSAI)
The Server-Side Ad Insertion (SSAI) revenue model is based around the Dynamic Ad Insertion (DAI) technology that helps advertisers to show a wide range of advertisements based on their audience insights data. To understand the concept better, imagine a scenario where the same ad is being broadcasted on television to millions of people who are very different from each other. The marketers might not be able to generate the best returns using this approach. However, with SSAI they can choose the type of advertisements they want to show a specific audience to maximize returns. Using SSAI, you can also bypass any ad blockers as it combines the ad with the video on the CMS level. This helps to eliminate any ad block request to external servers.
- Third-Party Ad Integration Model
The third-party ad integration revenue model gives you the flexibility to sync your online streaming platform with third-party ad vendors to monetize your OTT website or application. You can easily integrate with popular third-party ad vendors like OpenX, Adzerk, Verizon Media, AdGear, etc. depending on the service provider you choose to work with.
OTT players are leading the entertainment and media industry, there is no doubt about that. The global OTT industry is growing at an exponential pace, especially after the pandemic started and people switched to this entertainment source amidst the lockdown. This is the perfect time to bank on your video streaming business plan by using a service provider that offers multiple monetization options to choose from. This will provide you with the needed flexibility to deliver quality content without compromising on your revenues.