The term ‘OTT’ has been grabbing the eyeballs of several people around the world. The growing media consumption is a prime example of this. Over-the-top (OTT) services distribute content to customers over the web instead of traditional cable or satellite systems, usually on a subscription or pay-per-view basis. As more viewers are choosing online streaming, OTT businesses have a wider opportunity to offer quality content and earn revenue with appropriate OTT business monetization models. Here, in the blog, we are going to discuss the impact of OTT business model in the current time and how the future will embrace it!
Before digging into the models, let’s understand the market overview first-
Table of Contents
The Rise of OTT Platforms
Over the course of the last four years, OTT platforms have grown in popularity. In 2021, 74% of US households had at least one streaming service subscription, up from 59% in 2017, according to eMarketer research.
The benefits of over-the-top (OTT) platforms, such as the capacity for on-demand viewing, the lack of advertising, and the ease of accessing content across numerous devices, have propelled this expansion.
Source: The Rise of OTT Platforms and the Transformation of Television
The investment made by OTT platforms in original content is one of the main ways that it has upended the traditional television industry. Original programming has been a big selling point for viewers because of the billions of dollars that platforms like Netflix, Amazon Prime, and Hulu have invested in it.
Popular OTT Business Models
1.Transactional Video on Demand (TVOD): TVOD platforms allow users to rent or purchase individual pieces of content, such as movies or episodes. Eg- iTunes and Google Play Movies & TV.
2.Subscription Video on Demand (SVOD): The SVOD allows users to pay a recurring subscription fee to access a library of content. Examples are Netflix, Amazon Prime Video, and Disney+.
3.Advertising Video on Demand (AVOD): AVOD platforms offer free content to viewers but generate revenue through advertising. Currently, YouTube is a very popular AVOD platform.
4.Hybrid Models: Hybrid model includes the combination of multiple revenue streams. For example, HBO Max offers both a subscription service and a TVOD option for new releases.
5.Live Streaming Events: OTT platforms also charge for access to live events, such as concerts, conferences, or pay-per-view sporting events.
6.Sports Streaming: Some OTT platforms focus exclusively on live sports streaming, offering packages for various sports events. Examples include ESPN+ and DAZN.
The above-mentioned ways are just a few of the popular business models that OTT platforms use to generate revenue. However, the choice of business model usually depends on the platform’s content, target audience, and strategic goals.
Advantages of OTT Business Model
If everyone can access the premium content after paying for a subscription, then adopting an OTT platform has a lot of advantages.
To a large extent, OTT services like IPTV, HBO, KODI TV, Netflix, and others are becoming more and more well-known. The increasing demand for on-demand entertainment is driving up the number of people subscribing to streaming networks.
These are some arguments in favour of streaming services available online-
- Easy accessibility
- Cost-effectiveness
- HQ streaming and sound
- Revenue opportunities
Challenges of the OTT Business Model
- For OTT platforms, security and privacy are the two most important concerns. It should not be prohibited to use user data that is saved on their platforms during sign-in or search history.
- One major problem with OTT services is that they are not censored. Unsuitable content can be presented to children in a variety of ways.
- Watching content will not be fluid for those with slow internet connections.
- Because of the abundance of content available on OTT platforms, viewers may easily develop an addiction to them and have a limited social life. Another significant problem harming the revenue of OTT platforms is password sharing.
- A staggering 30 percent of OTT companies’ yearly revenue is being lost to piracy as more people use digital platforms to stream content. As soon as digital content is available on over-the-top platforms, it can be found on these pirated websites.
- One major advantage for viewers of OTT platforms is the availability of ad-free content. This seems to be shifting, though, as Netflix is now attempting to integrate advertisements in order to boost sales. Because they are paying for premium services and won’t be able to avoid the commercials, consumers will find this alarming.
It is Time to Embrace the Change: Traditional Media to OTT Platforms
Broadcasting has always been difficult. Traditional broadcasting is hardware-dependent and capital-intensive since it requires transmission technology, licensing fees, delivery systems, and more to create and distribute video content at scale. No major changes were made to broadcasting procedures or systems for a long period.
But, then the game changed!
The media and entertainment sector has experienced a revolution in the last ten years. With the widespread use of smartphones and easy access to the internet, the demand for streaming media has surged.
With its ability to provide personalised on-demand content, the OTT wave further accelerated its growth. In contrast to 2012, when there were just two OTT providers, there are currently over 40. While advertising generates revenue today, other methods may become available in the future.
Future of OTT Business Model
In India, one of the sectors with the quickest growth is media and entertainment. Nonetheless, it can be difficult to stay on top of shifting consumer wants and changing content trends. OTT platforms are therefore just getting started, while traditional content producers and platforms are gradually disappearing.
Why?
68.9% of respondents to an Ascent Group India survey said they would rather watch over-the-top (OTT) content than traditional forms of entertainment. OTT services have been able to draw in subscribers because of their effective marketing techniques.
Almost all of the current OTT players as well as those aiming to join the market beyond entertainment have ample room in India thanks to its diversity.
Conclusion
Because OTT platforms offer benefits and drawbacks, they are better for this generation of viewers in terms of enjoyment. One benefit is that viewers can watch anything they want because there are no age limits. The fact that there is no censorship and viewers can see everything they want is another benefit.
Frequently Asked Questions (FAQ)
Ans: The OTT business model delivers content directly over the internet, giving users the freedom to stream movies, TV shows, and other media content without the need for traditional cable or satellite TV subscriptions. It offers convenience and flexibility, allowing viewers to choose when and where they want to watch.
Ans: OTT platforms primarily monetize their services through subscription fees, where users pay a monthly or annual fee to access content without ads. Some platforms offer a free, ad-supported tier to attract a broader audience. Additionally, partnerships with telecommunications companies or bundling services with other offerings can provide additional revenue streams.
Ans: Yes, many OTT platforms offer live TV streaming options. They partner with broadcasters and cable networks to provide live sports, news, and entertainment channels. Users can access these channels in real-time or through DVR-like features for time-shifted viewing.
Ans: The OTT business model presents content creators with numerous benefits, including the ability to reach a global audience, target specific demographics, and maintain creative control. By bypassing traditional distribution networks, creators can showcase their work to a broader and more diverse viewership, while also having the freedom to experiment with various content styles and formats.
Ans: OTT platforms employ sophisticated algorithms that analyze users’ viewing history, preferences, and interactions with the platform. This data is used to provide personalized content recommendations, ensuring that users are presented with content that matches their interests and viewing habits.
