The primary purpose of almost any business is to generate revenue by selling services or products. The video streaming industry is no exception. However, your opportunities sometimes depend on the OTT solutions for video streaming you obtain from third parties since developers implement different features.
Anyway, the three main monetization models in the OTT video streaming industry are subscriptions, advertising, pay-per-view, and hybrid. It is better to think about the monetization model you want to apply to your business. Let’s explore each one in detail.
The Main Monetization Models in the OTT Video Streaming Industry
Subscriptions
Subscription-based revenue-generating model is popular in the OTT industry, and multiple services begin their business with it. It ensures steady money flow, especially when you have a large content library and a loyal user base.
Subscription is about selling monthly, quarterly, or yearly access to your videos. People purchase a subscription and watch videos without any limitations. At the end of a subscription period, they can renew access or cancel payment.
Long-term success here requires engaging your audience by creating more content that they want.
You should know that some experts point out that there is subscription fatigue among customers. Many of them cut expenses on streaming services and turn to free platforms.
Advertising
Advertising-based streaming services allow people to watch videos without payment, and providers generate revenue by running commercials on their videos. Viewers usually don’t mind watching several advertisements during playback in exchange for free content.
Since subscription-based services require a fee, and there are many of them in the market, viewers cannot afford to pay for everything they want. For this reason, they switch to ad-based platforms.
A SSAI advertising supported business model is a win-win for all parties involved because everyone receives what they want: viewers watch content without paying for it, content providers make income by advertising, and advertisers reach their audience via streaming services.
A pay-per-view
A pay-per-view is also known as a transactional-based pricing model. In this case, viewers purchase access to every video on the service. This approach is effective for one-time payments on live events, webinars, and concert tickets.
However, retaining customers on pay-per-view-based services is difficult because they can watch only a video they want and leave.
Some platforms operating on a pay-per-view basis allow users to download a video on their devices.
Hybrid
A hybrid monetization model is believed to maximize your revenue-generating opportunities. It is a combination of several models described above. You can mix two or three however you want. For example, there are the following versions in the market:
- Subscriptions and advertisements. There are multiple embodiments of this combination. It can be two pricing plans: an ad-supported subscription at a lower price and an ad-free subscription at a higher price.
- Another option is to let users choose whether they want to watch videos with ads for free or remove commercials for a fee.
- Subscriptions and a pay-per-view. You have two groups of content: one is available on a subscription basis, and the other requires additional payment.
There is a tendency among streaming platforms to opt for a hybrid approach. Viewers’ consumption behavior is changing since people want videos at affordable prices, and companies want to generate revenue. They adapt to a new demand.
Final Thoughts
Choosing a monetization model is critical as it will define how you will generate revenue, users will purchase your content, whether it is convenient for them. It is better to research that because it might happen that your target audience prefers one-time payments instead of a subscription or any other.
