According to a report by Statista, OTT media revenue is expected to cross US$ 167 billion by 2025. That’s double of what it was at the end of 2019!
We’ve previously discussed the importance of having your own OTT ecosystem for your premium content. In this post, we share how one can use their OTT platform to enter that highly lucrative digital business.
There are a few terms that are thrown around when it comes to OTT — AVOD/PVOD/SOD/TVOD and HVOD. We explain each of them along with how one can utilise them.
AVOD — Advertising Video on Demand
What is it: Using advertising to monetize your content which is otherwise free to view. Depending on the length of your video content, you can add an ad to your video pre-roll (before your video plays), mid-roll (during the video), and post (at the end of the video). You can also determine if you want to keep your ads skippable or not.
When can it work: When the ads are not too long, and not too intrusive. Keep a good balance of content time versus ad time.
Advantages: Since your content is free to view, you should be able to get a higher number of viewers. You can either get one brand to sponsor the whole video, or have different brands for different segments.
Disadvantages: The user-experience is compromised. An ad at the start of a video could end up making the viewer exit your video before it starts.
Example: The ads that play within the videos one watches on the likes of YouTube, Facebook etc.
PVOD — Premium Video on Demand
What is it: Through Premium Video on Demand (PVOD) you can charge viewers to allow them to access content before it’s aired elsewhere.
When can it work: Once your OTT platform has attracted several viewers with wide enough engagement, this could be extremely beneficial. You can encourage fans to discuss this on social media. Once a person has seen the content posts about it, the others could face the fear of missing out and immediately log on to the platform to watch the content.
Advantages: It’s a win for those kinds of users who just cannot wait to watch a piece of content. You can demand a price higher for your content too, thus making it a win-win.
Disadvantages: Your content needs to be extremely engaging and premium to fall into this category. This only works well for certain genres of content — a new movie release, a certain sporting event.
Example: Disney+ charged users (even those who had a subscription pack) to watch Mulan on the first day of the release. Users who opted not to pay for it, had to wait their turn to watch it.
SVOD — Subscription Video on Demand
What is it: This is a model where you charge users a recurring fee to access your content.
When can it work: This is one common model OTT players use. One should use this model if content is being released frequently. It is primarily the right choice for businesses focusing on content with long-term value.
Advantages: One can play around with this by offering different subscription models — daily, weekly, monthly, yearly. A tip here — make your yearly subscription price much lower than what a user would pay on a monthly basis for a year. Here, the OTT benefit also comes in where one can subscribe and pay for content and then consume it whenever they wish to.
Disadvantages: Content-library needs to be addressed frequently, else, one could see users opt out of the platform and not renew their subscription. Also, subscribers could end up sharing ids with friends and family which could hurt your revenues.
Example: This is most common with the likes of Amazon Prime Video, Netflix, Disney+ etc, all using different prices.
TVOD — Transactional Video on Demand
What is it: Charge viewers for accessing on-demand videos. These could be live streams or a PPV (pay-per-view) event which is accessible only for a limited period of time. You could charge users a fee to either download it permanently and watch, or give them access for a limited time.
When can it work: Use this for contextual content, one that a viewer would simply not be able to do without. If you’re looking to offer TVOD, you could sweeten the deal for your user by providing an ad-free experience.
Advantages: You’re not changing your other models of revenue. This is a one-off and can help you measure exact interest in a piece of content.
Disadvantages: Consumers could be skeptical about paying for one piece of content only.
Example: Google Movies, YouTube movies, iTunes etc.
HVOD — Hybrid Video on Demand
What is it: This is a mixture of using two or more of the above types of video monetization. Most global OTT platforms use this method. You can offer some pieces of content for free, and then get users to pay to access a certain piece of content from your library.
When can it work: If you’re looking to mix and match a free and paid service, you need to make sure each piece of content is very different. If you do have that in your content library, then this is the way to go.
Advantages: Your user numbers increase because of the free users, which helps in promoting your platform to advertisers. And if your content is engaging, the free users can take that step up and pay for content.
Disadvantages: Offering a free and paid subscription service could see consumers picking and sticking to the former.
Example: Hulu offers differentiated offerings at different prices to consumers. There is a lower subscription fee which includes ads in their service and a premium fee for an ad-free viewing experience.
That’s a summary of all the options that you have on OTT.
But, with the popularity of OTT increasing, it’s just a matter of time before these options increase too. For all you know, you could be the trendsetter and create a new model for content creators to follow!
That’s it for the theory part and if you believe it’s time for you to get started, reach out to us at Enveu now!