The global over-the-top (OTT) services market has significantly driven the growth of various streaming companies and it also impacts OTT pricing and OTT strategy. As the demand for Smart TV app development continues to rise, newer innovations are emerging. Advancements in Internet penetration, smart TVs, mobile technology, and 5G infrastructure are poised to further fuel the streaming marketplace, with a particular emphasis on original content production.
However, several Smart TV app development companies in the market offer remarkable platforms that engage consumers on larger screens, delivering an exceptional viewing experience. These apps also provide users with enhanced surround sound, resulting in high adoption rates, especially following the outbreak of the pandemic. But what truly commands attention today is the acronym “OTT,” which is making a substantial impact.
“The OTT video platform services marketplace is projected to reach nearly $1040 billion in revenue by 2027. For instance, Netflix reported that its localized OTT strategy led to a 60% increase in viewership for local originals”.
Beyond the prominent platform players like Netflix, Amazon Prime, and various competitors, traditional channel broadcasters such as Disney+, Alt Balaji, and Sony Liv have unexpectedly ventured into the fast-paced world of OTT platforms, devising innovative business strategies to stay ahead in the race
In this blog, we will take essential insights regarding how OTT channels generate revenue and sustain their success year after year. OTT Pricing factors play a significant role in shaping the performance of your streaming business. Therefore, it is crucial to select unique platform streaming features that align with your broadcasting goals.
To establish your modus operandi, let’s take a look at some of the most prominent video monetization platform models and see how they contribute to and set a path for your OTT platform price.
How Do OTT Platforms Make Money?
1. Subscription video on demand (SVOD):
Video-on-demand subscriptions are the most popular video monetization method used by media broadcasters. Your over-the-top library is free for as long as you want it to be. you may view on-demand content such as movies and TV shows as well as live TV channels.
Significant advantages:
- This results in a simple pay plan that is also effective in the long run.
- The majority of subscriptions will pay for it multiple times over.
- OTT cost awareness for the viewers before paying every month.
What Is SVOD? A Complete Guide To Subscription Video On Demand
2. Advertisements video on demand (AVOD):
The best way to make money from OTT is targeted ads on demand. Your platform’s users are being charged for seconds-based content that is seen for a few minutes. Online ads drive sales for essential items; viewers use them after satisfying ad streams.
Significant advantages:
- Using ad agreements, monetize OTT apps while on the road.
- Choose your ad placements during video broadcasts with a self-hosted platform.
- Earn per second plus revenue to cover the cost of your OTT platform management.
What Is AVOD? A Complete Guide To Advertisements Video On Demand
3. Pay per view (TVOD):
A transactional-based video on demand also known as Pay-Per-View video on demand delivers only specific pieces of demanding content, also known as Pay-Per-View video on demand. The main benefits of beginning an OTT business plan are that it adds value to your created or owned content by allowing users to rent or buy access based on the video viewing model.
Significant advantages:
- You may usually rent it out between 24 and 48 hours after hitting play.
- Many platform owners create their own rules, such as allowing 30-day access to material.
- Because of the viewer’s curiosity, immediate monetization is more likely with new releases.
How Pay-per-view concepts are applied in TVOD platforms to publish your media contents?
4. Hybrid:
While you’re researching how video platforms actually earn money, you can also look into alternate ott pricing structures that work well and provide you with more leverage. Hybrid models, combining membership and advertising, are popular due to their special benefits for consumers and broadcasters.
Significant advantages:
- Since additional income isn’t limited to one source, there are no compromises.
- Subscription payments would benefit from a flexible user payment option.
- The revenue support system is high due to the benefits of each monetization approach.
How to Create OTT Pricing Models for Your Streaming Business?
The major OTT pricing that shapes your streaming business
The Content’s Purpose:
The goal of your video package largely affects the audience’s decision to purchase a certain price plan.
Investigate Operating Costs in More Depth:
When it comes to determining how popular OTT platforms earn money, operational costs are the most important factor to consider. Aside from that, numerous elements come into play when it comes to growing your platform base, such as the end-to-end development cycle, the use of streaming software, third-party collaborations, and developing original content. All of the information aids in determining what kind of price tag you should expect.
What are the preferences of your target audience?
How well your audience understands your popular content will determine the cost of your OTT platform. As previously said, the rising importance of video’s purpose will put your users’ willingness to pay to the test. For an OTT pricing model that combines single or hybrid plans, the costs can vary depending on whether you choose a basic platform or a more specialized one that includes everything.
The Most Recognized of All Brands:
Do you have a significant fan base or are you just getting started with setting and approaching? This question is crucial in determining whether or not your users are willing to choose in the first place. Basically If your platform is the third or fourth-best OTT service, customers are unlikely to spend a lot of money at your location. As a result, a branded platform boosts your subscriber count because it’s been around for a while.
Exploring OTT Strategy through Examples of the Best OTT Pricing Models:
Netflix:
In the past ten years, Netflix has been an important part of making many people use over-the-top (OTT) streaming. Also, they use a payment plan where you can choose from three options: Basic, Standard, and Premium.
Viewers can watch unlimited content on one screen at a time for $8.99 per month. This is upgraded to unlimited viewing on two screens at once in full HD for $13.99 per month. For $15.99 per month, the top tier package includes limitless viewing on four screens at once in full and super HD.
Disney+:
Disney+ is a brand-new streaming service from the Walt Disney Company. Basically, this platform employs subscription video on demand (SVOD) and charges $6.99 for unlimited access to its video library.
Disney+ makes a strong pitch for $12.99/month bundles that include Hulu and ESPN+.
Hulu:
For an ad-free experience, viewers can subscribe for $14.99/month.
This plan provides access to live TV channels along with Hulu’s streaming library. It costs $69.99/month with ads or $82.99/month for the ad-free version, both of which also include access to Disney+ and ESPN+.
Subscribers can access a wide range of on-demand content for $7.99/month, supported by advertisements.
Amazon prime:
Prime Video employs a novel strategy. Amazon Prime members have access to a limited selection of on-demand videos through their online marketplace.
Viewers can rent or buy films, episodes of a series, or seasons of a series using the pay-per-view model. Prices vary, but a movie may cost $2.99 to rent and $7.99 to purchase.
Final thoughts:
Watch how your users behave and understand what makes them stay and what makes them leave, regardless of the price you charge. Also, make a structured plan based on those data and have price-fit OTT content.
This helps you answer the main question of how OTT makes money, and you can do it by using a one-stop solution of a branded video streaming platform.
This will allow you to stay ahead of the curve as the OTT business advances day by day with fresh innovation, raising the bar for customer care time and time again!
Frequently Asked Questions
1. What are some top OTT strategies to set up a successful streaming service?
Some top OTT strategies for a successful streaming service are:
A. Offering high-quality and engaging content.
B. Providing a seamless user experience.
C. Utilizing data analytics to understand your audience.
D. Adopting a flexible OTT pricing model.
These strategies can help attract and retain subscribers, as well as increase revenue for your streaming service.
2. How important is it to offer high-quality and engaging content?
It not only helps attract subscribers but also to retain them. Make sure your content is related to the interests of your target audience and is both original and relevant.
3. Why is it important to have a flexible OTT pricing model?
You can meet your audience’s different needs and preferences by offering flexible OTT pricing. It also helps your service stay competitive and adapt to market changes.
4. What factors should be considered when deciding on a OTT pricing model?
Consider the following factors when determining OTT pricing:
A. The type of content you offer.
B. Your target audience.
C. The OTT pricing models utilized by your competitors.
D. Your revenue goals.
5. What is a seamless user experience and why is it important?
A seamless user experience refers to a platform that is easy to use and navigate for users. It is important because it can help increase user satisfaction and encourage repeat usage.
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