The streaming of the content on TV and over-the-top (OTT) has changed the game of video streaming over the recent years. Traditional methods of streaming the content are superseded by the OTT platforms.
Some studies say that the OTT platforms will be worth $160 bn by the end of the year 2020. You must be wondering about how these OTT platforms generate revenue and the common business models. Do you own a video streaming platform and are looking for ways to monetize it? To help you in this, Enveu is a platform that helps in OTT app development in Europe and other locales to scale your OTT business while giving global recognition to your business, and gaining engagement of the users.
In this article, you’ll be acquainted with the different types of OTT revenue models. Let’s dive in to know the fundamentals.
OTT Business Models: A Sneak Peek
Currently, there are thousands of OTT businesses, so, we have enlisted a few here:
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AVOD (Ad-Based Video on Demand)
As the name says, these types of OTT businesses generate revenue through ads. When the customers opt for AVOD, they watch the video content for free. Subsequently, OTT is the best way to advertise a brand. When a brand reaches these platforms, OTT service providers charge to place commercial ad breaks in their content. Ads can take the form of video ads, sponsor screens, sponsored content and more.
AVOD business models have a great potential of finding new users on the platform. With little or no barrier to entry, viewers can get hooked on your content, thereby being loyal users of your platform. This allows you to start your channel and grow faster with strong user support. Moreover, if you serve a niche demographic or interest group, you are more likely to charge a higher amount of money from the brands.
Coming to the drawbacks, such business models generate less revenue per view than other models. So, before turning it into a profitable business, you need to gain a substantial audience. You must be able to serve enough ads to be profitable without driving away potential viewers.
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SVOD (Subscription Video on Demand)
SVOD business model is profitable on the basis of subscriptions from the users. Charging the accessing fee to their video platform, users watch fresh and unique content. After subscribing to the platform, the users can access unlimited video content. This model came first with Netflix and now continues to reign over the popular businesses today.
SVOD is now a familiar and a favorite business model among the customers. Studies say more than half of the population in the US pay for an SVOD subscription and the numbers are increasing in India as well. Being an efficient business model, an effort for OTT platform development in Europe, this type of business model brings revenue from every customer. By offering pricing incentives, you can lure new customers.
Contrarily, SVOD business models can’t retain the customers for the long term.
Frequent changes in the content, pricing, and economic fluctuations in the market lead to the end of the subscriptions from the users. Also, if you charge higher for the content access, the users may not be interested in your business. Simply put, the content has to be really good to attract and retain customers.
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TVOD (Transactional Video on Demand)
TVOD is one the most straightforward business models as in this, the customers buy or rent videos one at a time. This model is also referred to as pay-per-view (PPV) or pay-per-download (PPD). TVOD is a pretty simple model. As a service provider, if you want to sell one video or don’t have to launch a platform, this is just a great model. It is considered great for film debuts, one-time sporting events, instructional videos, etc.
If you think of getting consistent revenue, unlike SVOD and AVOD, TVOD may disappoint you here. Moreover, many users like to use the services consistently but this may not offer a regular service. If the users have to pay individually for each video, it may cost them more and can be frustrating as well.
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Hybrid Business Models
Hybrid business models are not really business models. To generate more revenue, many businesses have found ways to structure their content innovatively. If you combine the elements of the above three business models, the new-age OTT businesses can enhance their user experience to generate higher revenue.
Some of the OTT giants such as Disney+ are blending SVOD with TVOD business models. Low-level subscribers pay a small fee to access the content of their preference with ad interruptions. High-level subscribers pay more for subscriptions and watch content without ads.
Irrespective of the existing OTT app development in Europe, many OTT businesses put their unique spin on the OTT industry. Experimenting with the twists and turns in broadcasting the content, the OTT service providers are finding their way to succeed.
Wrapping Up
The OTT service providers face challenges to broadcast the content, be it in terms of generating revenue or broadcast-quality content. For OTT platform development in Europe, the professionals of Enveu give you the best solution to scale your OTT business. Most businesses fail due to the technical complexities of the platform. However, their team potentially brings glory to your OTT business and you generate higher revenue.
