Following the media theorist Marshall McLuhan adage that says, “The medium is the message,” OTT platforms have changed the way people view the content they demand. OTT lets people view the content that most closely matches their values and interests. This over-the-top medium is more direct, accurate, and influential than most that have preceded it. This is not just useful for consumers but also offers tremendous benefits for advertisers at the same time.
These benefits include it being able to reshape the ad experience, enable advanced targeting, access consumers that are hardest to reach, feature advanced attribution capabilities, and so much more. OTT can be a successful video monetization platform.
In this article, we will discover the various monetization possibilities with the OTT platform. At the end of each monetization possibility, you will be surprised to learn which of your favorite streaming platforms utilize these ways of earning money.
There are three primary OTT monetization models publishers can select from and the hybrid one. Your decision will depend on your budget, target audience, and business goals. Each of these possibilities has its strengths and weaknesses. Let us take a look.
Ad-Supported Monetization Or AVOD
Ad-based monetization is among the most popular video monetization models online, and this also applies to OTT. According to statistics, 51 percent of all OTT market revenue comes from AVOD. This should be a vivid indicator of how many publishers opt for this monetization approach.
Moreover, there are several reasons why AVOD is considered the most popular OTT monetization model. One of the greatest ones is that it has low customer acquisition costs since, unlike other models, it provides content for free. This makes this monetization possibility among the best choices for new OTT providers, as it also lets them draw in a broader audience.
Another promising attribute of ad-supported monetization is that OTT marketing is specifically popular among advertisers. With several people cutting the cord and switching to OTT, advertisers search for a way to reach them on their new devices. This is why OTT allows publishers to earn more from running ads on their OTT apps than, for one, on YouTube.
In conclusion, the ad-based monetization model is among the best choices for new OTT providers focused on growing their audience quickly.
Popular platforms that use this monetization: Peacock, Tubi, Pluto TV, etc.
Subscription-Based Monetization Or SVOD
Compared with other OTT monetization possibilities, subscription-based monetization is the OTT monetization model with the highest revenue-per-user currently, despite earning less than ad-based models (around 40 percent of global OTT revenue comes from SVOD). The way this approach works is that users commit to paying a monthly fee to access your content, meaning you can more reliably estimate your monthly earnings. It is also the preferred model for the biggest OTT providers in the market, telling a lot about its effectiveness.
Among the most noteworthy reasons SVOD is very popular is that it is the most lucrative model for publishers with large audiences because of its high revenue-per-user. Another appealing aspect is that it is among the best monetization models for publishers with exclusive and original content. Having exclusives locked behind a paywall is a great motivation for users to subscribe as they cannot access the content anywhere else.
SVOD, therefore, is best suited for larger, already established publishers and is a form of monetization that will pay off the most in the long run.
Popular platforms that use this monetization: Netflix, Disney Plus, Apple TV+, etc.
Pay-Per-View Monetization Or TVOD
Pay-per-view monetization is another monetization possibility for OTT platforms. This lets viewers purchase individual shows or movies they like to watch. This approach works on the principle of one-time purchases. Meaning to say, users obtain unlimited access to on-demand content that they pay for. This makes TVOD a more cost-effective monetization model for users only interested in particular shows.
Among the best ways, publishers can utilize this monetization model is to have exclusive or seasonal content. In this way, they can charge a set fee for their most popular shows or even organize remote premiere screenings of the latest cinematic releases. These factors make this monetization approach one of the best supplementary monetization models, as using the pay-per-view model for premium content while monetizing the rest of your library with SVOD or AVOD is one of the best ways to maximize your OTT platform revenue.
Pay-per-view is an invaluable addition to any publisher in search of exploring a hybrid OTT monetization model.
Popular platforms that use this monetization: Google Play, iTunes, etc.
Hybrid Monetization Model
A hybrid monetization model entails merging two or more of the models you learned about above. For instance, publishers could be using an ad-based monetization model for their entire video library except for their premium shows, which they could hide behind a paywall. There are likewise some platforms that may even combine all three of these models, such as YouTube.
Out of the many ways to monetize your OTT app, the hybrid model is considered the most sustainable and lucrative when speaking of the long-term. Why is this so? This is because it is usable at all stages of your business development. When you are at the start of launching your OTT service and need to grow your audience, you can leverage the power of AVOD while only paywalling your premium content. You can then switch to a subscription-based model to maximize your revenue once you garner enough viewership.
This monetization possibility with your OTT platform is also flexible and one of the best ways to build rapport with your viewers. Giving your viewers an option to try your platform for free and with ads and letting them decide if they want to subscribe later are good ways to build trust with your audience. Keeping a trustworthy relationship with your viewers is also a great way to incentivize them to buy your premium content later down the line.
Despite the higher initial costs in hybrid monetization, these approaches are your best bet if you are looking to build a sustainable and profitable OTT business.
Popular platforms that use this monetization: Hulu, HBO Max, YouTube, etc.
