Blog

OTT Monetization: How to Earn Money with OTT Platforms

OTT platforms are said to be money-making. This happens due to their wide monetization functionality. In this article, we talk about the monetization capabilities of OTT platforms in detail.

Four OTT Revenue Models

#1 Monetization with advertisements

Ad-based video streaming platforms bring revenue with advertisements. Viewers can access videos without a fee, but they watch advertisement videos instead. This is the way the content creators earn revenue. Companies that want to advertise on the platform pay for a place on it to run commercials.

What is OTT advertising? If interested, learn more.

Here are the reasons ad-based services are popular:

No payment. People who cannot afford to pay for services like Netflix or don’t like the payment process appreciate ad-based services for not charging viewers.
Fewer ads. In comparison with television, OTT platforms have fewer ads, and as a rule, they are shorter than commercials on TV. Also, OTT ads are not so annoying because they are shown less frequently.
Personalized ads. Unlike cable TV showing ads to all people, video streaming platforms can configure the targeting. Viewers will see ads they might be interested in. Consequently, ad performance can grow.

Even though in past years, ad-based video-on-demand services were less popular than subscription-based platforms, it seems like the game is changing. Researchers observe a rising interest in those video streaming services using advertisements as a revenue generator.

#2 Monetization with subscriptions

The subscription-based approach suggests that a viewer pay a fee for a certain period for access to their library of videos. The period may vary. For example, there are weekly, monthly, quarterly, and yearly subscriptions.

There are reasons for subscription-based services’ popularity:

Ad-free. Services that use a subscription-based monetization model are free of ads. So, the experience a viewer gets is smooth and uninterrupted by ads. They get unlimited access to videos.
Easy cancellation. Customers can cancel their subscription any time they want. There is no need to sign a contract that is difficult to break further. Also, viewers don’t need to visit the office where a contract is signed. They visit a website and purchase a subscription. If they want, they can cancel it anytime.

The subscription-based model has recently been the most popular one. But there is an observation of such a phenomenon as subscription fatigue. Viewers start realizing that they have too many subscriptions and are getting tired of them.

#3 Monetization with a pay-per-view model

The pay-per-view or transactional-based model offers viewers to pay for a single video and watch only it. While the subscription-based model requires a fee for access to an unlimited number of videos, the transactional-based model charges a fee for watching every video. Viewers can either rent a video or buy it.

Transactional-based platforms are said to be effective and revenue-making due to timely access to recent releases and sports events they offer.

A transactional-based model is especially good for platforms that don’t have a huge library of videos. But it is difficult to build long-term relationships with customers for this kind of platform. It is difficult to make customers watch more and more content as they face a payment process every time.

#4 Monetization with a hybrid model

Some OTT services prefer to combine several models. For example, viewers purchase a subscription to access a library of videos. And they pay an extra fee to watch new releases. Sometimes, the service just divides videos into those available with a subscription and those requiring an extra fee. So, the service uses the subscription-based and transactional-based models.

Some services use a combination of ad-based and subscription-based approaches. They allow users to watch videos for free but with ads or pay for removing ads.

Conclusion

The monetization models can bring a lot of revenue to video content creators. It is essential to choose the one that will be better for your business goals and your platform.