The ever-expanding OTT industry offers an opportunity for OTT operators to not only deliver content worldwide but also generate revenue. Moreover, streaming companies can build a brand associated with a specific type of content.
With the OTT industry rapidly growing – as projected by Statista, video consumption is expected to reach 3,5 billion users by 2027, generating a revenue forecast of $476,6 billion by 2027.
It’s high time to set up your OTT platform for video streaming business. One of the most essential decisions you will have to make is choosing the right monetization strategy. Let’s explore your options.
How to Monetize Your On-Demand Content
When exploring OTT monetization options you have, you will come across various revenue-generating models, such as AVOD, SVOD, TVOD, and HVOD. Let’s talk about them in detail.
AVOD – Advertising-based Video-on-Demand
AVOD is one of the most popular monetization models in the OTT video industry. It is also the one that many viewers choose.
AVOD capitalization model allows users to gain free access to on-demand video content in exchange for watching ads before, during, or after the playback. Viewers usually don’t mind watching commercials for free content.
With AVOD, OTT operators make money by allowing advertisers to place their ads on the videos. They allow them to reach potential customers via their platforms.
SVOD – Subscription-based Video-on-Demand
Subscription-based video-on-demand is also a widespread revenue-generating model. Viewers gain access to all videos on your platform for a recurring fee. OTT operators charge monthly or annual subscription fees.
Large video streaming companies opt for the SVOD model to monetize their content as it allows them to build a recurring revenue stream.
However, the SVOD platform should work on its content strategy to retain viewers on the platform. It is paramount since subscription fatigue that subscribers experience.
TVOD – Transactional-based Video-on-Demand
Transactional-based VOD allows viewers to purchase a fixed fee when they want to watch a particular piece of content. OTT operator usually sets the time for access, making it limited or unlimited.
With TVOD, viewers purchase only those videos they want to watch, and the rest of the content library stays inaccessible.
HVOD – Hybrid Video-on-Demand
But you don’t need to restrict yourself to only one monetization model. OTT platforms can use a combination of several approaches that can help an OTT operator maximize revenue, decrease user churn, and increase engagement rate.
One of the most widely spread combinations is advertisements and a subscription. In this case, viewers have two options: whether to purchase an ad-free subscription or watch videos with ads for free. This helps you attract more users and entice them with high-quality content. They will be able to buy a subscription anytime or watch videos with ads, and an OTT operator generates revenue anyway.
Final Thoughts
Monetizing video content is a vital aspect of growing a successful video streaming business. OTT operators can choose from various models – AVOD, SVOD, TVOD, and HVOD, each with its advantages and disadvantages. Analyzing the benefits and potential drawbacks of each model is crucial for making a profitable decision.
