OTT streaming has taken the world by storm. Be it movies, sports, music, live events, education, or fitness, everything has come under the OTT canopy. The convenience and the variety it offers make it the best choice for viewers, hands down. 

OTT streaming can be successful for creators only if they plan their monetization well. Since there are various streams to earn revenue, careful analysis helps platforms remain profitable in the long run. In this blog, we take you through the various means of monetization other than the regular subscription model.

What is OTT monetization?

The means by which OTT streaming platforms earn revenue for hosting content for viewers is OTT monetization. OTT platforms incur costs in various forms, including content licensing, platform design, customization, and the development of upgraded features. To earn ROI, they adopt several monetization models.

There are various monetization models to choose from. Platforms should select a model based on competition, demand, quality of content, etc. 

Types of OTT revenue models other than SVOD

1. Advertising-Based Video on Demand (AVOD)

In this revenue model, OTT platforms post content with ads in between. Viewers can enjoy the content for free, but in return, they have to watch the advertisements. This is a great means for platforms to earn without taxing the audience. Brands find this to be a great way to reach potential customers. It acts as a win-win for all.

Pros

• Customers can watch without fixed subscriptions
• Huge earning potential for platforms from advertisers
• Easy to reach more viewers

Cons

• Not suitable for audiences who get frustrated with repeated ads
• Repeated ad presence can be boring and may not bring out the desired output that brands expect
• The audience has no control over the placement of ads

2. Transactional Video on Demand (TVOD) or Pay-per-view model

This model provides access to exclusive content on a pay-per-view basis for viewers. They need not subscribe to the platform. These may be for live events, renting a movie or TV show, music concerts, or any other premium content.

This model has greater flexibility, hence more customers prefer this for premium content. 

Pros

• There is no fixed subscription fee
• No compromise in the quality of content
• Viewers can rent or buy content depending on need
• Highly profitable for the platform when demand is higher

Cons

• Unlimited access is unavailable most of the time
• It is suitable for specific events only, whose demand is high
• Premium events may be expensive, discouraging buyers
• Live events are subject to technical issues like buffering, etc.

3. Premium Video on Demand (PVOD)

The PVOD model provides early access to exclusive content even before it is available as pay-per-view. True to its name, it is available for a premium fee.

The same content may also be available at a later date on subscription or TVOD, but if viewers want access to premieres, PVOD is the means.

Pros

• High earning potential for the platforms
• Favorable model for creators as demand is high
• Exclusive advantage to the audience

Cons

• The viewing window is very limited compared to the high fee charged
• Higher revenue is possible only with a huge demand
• High costs may discourage many customers 

4. Hybrid model

This is a mixed approach to leverage the benefits of various models. These may include ad-supported content, pay-per-view content, or a tiered subscription. The hybrid model caters to various customer needs. YouTube is an excellent example of an OTT platform that follows the hybrid revenue model.

Pros

• Platforms have greater flexibility 
• Can cater to a variety of audiences
• More revenue potential

Cons

• Analysing the best-performing model can be tedious
• Involves quite high operational costs

5. Data monetization

OTT platforms collect viewer data such as viewing habits, time watched, interaction, etc., through various tools. This can be used for monetization through personalization of content, targeted advertisements, and fixing subscription rates. Viewer data analysis not only improves the revenue potential for OTT platforms but also improves individual user experience.

Pros

• It is beneficial to the platform and the viewers
• Improved revenue potential

Cons

• Usage of viewer data raises privacy concerns
• It is difficult to manage as it purely depends on analytical tools for audience identification

Factors that should be considered when choosing your revenue model

1. Audience demography

The age group of your target audience, their location, income levels, and demand for a specific content type are to be considered while choosing your revenue model. 

Audiences are primarily important for a streaming platform, and hence fixing the revenue model based on them becomes crucial. It is only based on their income levels that you can decide your pricing plans. Also, their viewing preferences dictate the content type, which then comes up as content licensing cost, all part of revenue plans.

2. Type of content

Premium content comes with a higher price tag, hence the PVOD model becomes apt here. If your platform is hosting live events, the TVOD model is better. Considering such factors is important.

3. Competition

Analyzing your competition gives leads into identifying your revenue model. Compare and evaluate the features available in your competitors and their pricing plans.

Analyzing their performance and return on investment earned helps understand the monetization strategy better.

4. Scalability

While choosing your monetization model, your long-term growth goals should also be considered. The model you choose should be able to cater to the rising number of customers, the changing demographics of audiences, technological advancements, etc.

Challenges for OTT monetization

1. Significant promotion cost

As OTT platforms are gaining attention as revenue-generating business models, more and more are venturing into this. The increase in competition forces platforms to spend more on advertisements and promotions to show their presence. 

Customer retention is even more difficult and expensive, and this impacts their ROI to a great extent. 

2. Content acquisition and production cost

The rising cost of content acquired from third parties can also be a challenge for OTT monetization, as it can impact your profitability. Production of original content is also becoming quite expensive, as creators have to concentrate on high-quality content, high-resolution streaming, originality, exclusivity, etc.

3. Technical aspects

Rapidly advancing technology can also be a challenge to OTT monetization as platforms have to equip themselves to compete better.

4. Rising number of subscriptions

More platforms have not only added to competition but have also resulted in fatigue for customers. Recurring charges become overwhelming for them, and they start to limit their choices.

Start your OTT journey and monetize with Enveu

Now that you are aware of the various revenue models, it will be an easy start in your streaming journey. The future is very bright for OTT streaming, and this is the best time to leverage it. Services like Enveu make it incredibly easier for you to start your streaming network with our team of experts. 

We help you go live within weeks, making it quicker to realise revenues. Our end-to-end service supports more than 15 platforms so that you can reach multiple audiences. You have complete ownership of your code here, and most importantly no revenue-sharing. 

Join hands with us to learn how our services can accelerate your streaming journey.