OTT business is booming thanks to customers relinquishing their traditional cable and television providers daily for cheaper and more convenient online streaming. Many broadcasters are jumping on the wave, not a very difficult decision since the industry is expected to be valued at $124.6 billion by 2025.
When creating an OTT platform, you must decide what content you will show and how much to charge for it. In this post, we will talk about how OTT platforms bring in cash with streaming and the different business models so that you may find some insights into the world of OTT.
Main Revenue generators for OTT platforms
AVOD stands for (Advertising Video on Demand). Video is delivered as a free service for end consumers. Similarly to how Youtube operates, we are asked to create an account for a personalized video experience. But, we are not charged for accessing the video content library. Advertisements are the economic engine for businesses that operate under the AVOD model. Such ads are placed at the beginning, middle, and end of the video.
Advantages of AVOD
AVOD offers incredible benefits to organizations in light of its free nature. Costs are low when contrasted with different models. Users can sign up quickly, often with their google accounts. Advertisers can use all the unique information collected by the OTT platform to better target their ads.
Disadvantages of AVOD
Advertisements can be highly corrosive to the viewer’s experience. If not well managed, they will irritate the consumers. Hence, they need to be served well, and they require the businesses to come up with a diverse revenue stream.
TVOD model is quite straightforward. Meaning, Transactional Video on Demand, TVOD businesses charge users for every single watch, every single time. It is also known by other names such as PPV (Pay Per View) or PPD (Pay Per Download).
Advantages of TVOD
TVOD’s greatest strength comes from being able to sell just one piece of content. Other revenue models make the consumer pay a base fee for unlimited content. However, TVOD allows you to watch whatever you want exclusively from the content library for a smaller price in a one-time transaction. This method is best suited for a high-profile fight or match.
Disadvantages of TVOD
Due to its disposable approach to content, TVOD has not become as prevalent as other revenue-generating models failing to capture market and consumer confidence alike.
SVOD – Short for subscription video on demand, or more commonly knows as video on demand vod, is the clear favorite among consumers. SVOD offers its users access to an entire library of video content by simply signing up for a subscription (monthly/ quarterly, annual). It is estimated that 3 in 4 US households have an SVOD service. And, the number of households with more than 1 SVOD subscription is rising. Netflix is the leader of the pack, with Amazon Prime and HULU among other top OTT services. Together with YouTube, these three services account for 79% of the total time spent viewing OTT in the US.
Advantages of SVOD
SVOD is the crowd favorite thanks to the flexibility it offers the clients and OTT platforms alike. With SVOD, a consumer pays a small subscription fee in order to access a wide range of content. While the OTT platform enjoys a steady income. The ability to choose different tiers of subscription in SVOD is also a very enticing prospect for customers.
Disadvantages of SVOD
Because SVOD implies a recurring fee, pricing often tends to be inflexible. While not a problem currently, pricing might steadily increase as the cost of creating OTT content rises.
How to choose the monetization model that’s best for your OTT platform?
In order to choose which model is best for you and your OTT video platform, there are three aspects to consider. Firstly, the content being offered, the target audience, and your long-term strategy.
If you have large, engaging, out-of-this-world content with similar shows or movies on the horizon, then SVOD is an ideal model with a high customer lifetime and a low recurring cost. However, if you don’t plan on releasing much content in the coming months or years, SVOD becomes a liability as customers lose their allure to your content and terminate their subscription.
However, content such as sports matches, musicals, or concerts, where its importance centers around a specific date or time TVOD becomes the optimal revenue-generating model.
While the AVOD model offers the lowest customer acquisition cost, it simply is not enough to capture significant market share. A combination of SVOD, TVOD, and even some AVOD with a diverse and powerful content selection will cover all your OTT ases.
How to implement these models in real life.
Thanks to independent OTT video streaming platforms like Nunchee.com, you could launch your own OTT service today and begin monetizing instantly. Nunchee supports SVOD and AVOD even allowing you to create a hybrid model with different content types.
Clear, concise, and easy to understand tutorials are available to all Nunchee customers as well as comprehensive customer service to easily facilitate any transition or initial set up.
Nunchee.com is an OTT white-label streaming service committed to providing the best in OTT live streaming. Nunchee empowers Media Creators to launch their online video website and branded apps instantly while including all tools to manage their service. You can launch your service in as little as 24 hours. Clients of Nunchee.com include The British Basketball League, ATA Football, Telefonica, and Fanatiz among many others.