The global over-the-top services market has significantly driven the growth of various streaming companies.
As the demand for Smart TV app development continues to rise, newer innovations.
And advancements in Internet penetration, smart TV, mobile, and 5G infrastructure are set to further fuel the streaming marketplace, with a particular focus on original content production.
Nevertheless, a number of Smart TV app development companies in the market offer a remarkable platform that engages consumers with bigger screens, delivering a grand viewing experience.
Also, these apps provide users with enhanced surround sound, leading to positive adoption rates, especially after the outbreak of the pandemic.
Sum Value The Most!
The big word of today is none other than “OTT” which is on high rise casting a big difference!
OTT video platform services marketplace is almost set to reach nearly $1040B in revenue by 2027.
Apart from top platform players like Netflix, Amazon Prime & varied competitors, traditional channel broadcasters just like Disney+, Alt Balaji, Sony Liv set an unexpected OTT platform business plan and entered into the rapid-paced coining race!
Today, we will take you through essential insights, all that you need about how OTT channels earn money and keep minting year after another…
OTT pricing factors play a mighty role in your streaming business performance. So it is important to choose your unique platform streaming characteristics that help you to set your broadcasting goals.
To set your modus operandi, let’s look into these popular video monetization platform models and learn how these contribute & set a path into your OTT platform pricing
OTT Business Models:
1.Subscription Video on Demand (SVOD)
Subscription video on demand is the prime video monetization OTT strategy, chosen by most of the media broadcasters who charge their prospective subscribers with a monthly, quarterly, or yearly subscription fee. This provides unlimited access to your curated over-the-top library based on the chosen timeframe & views on-demand content such as movies, tv shows, albums, live tv channels, etc.
- This brings a straightforward pay plan & effective in the long run
- Majority subscriptions will cover its cost multiplied times over
- Viewers know the OTT cost before paying every month
2. Advertisement Video on Demand (AVOD)
What does AVOD stand for? Advertising video on demand is the next-best OTT revenue-striking pricing model which gives you a sure shot of investment returns for the targeted base. Basically, your platform consumers pay for seconds-based content that is showcased for a couple of minutes. They are none other than online advertisements. In today’s scenario, keeping in mind, many viewers leverage digital ads, for buying things that are most essential, after viewing a satisfactory display ad streaming.
- Monetize OTT app on the go with the help of ad partnerships
- With a self-hosted platform choose your ad placements during video broadcasts
- Earn per second plus revenue to take your manage OTT platform cost
3. Pay-Per-View (Transactional Video on Demand)
Transactional- based which is commonly known as Pay-Per-View video on demand indicates that only individual pieces of demanding content after a payment process are provided with access control. The key highlights of starting an OTT business plan add value to your produced or owned content with pay as per the video viewing model & viewers can rent or buy the access accordingly.
- You can typically rent it out between 24 & 48 hrs from the time of hit play
- Many platform owners set their own parameters, like 30-day content access
- Immediate monetization is more likely with fresh releases, due to viewer’s curiosity
4. Hybrid Monetization Models
While you venture into a detailed study of how online video platform really make money, you can also look into alternative pricing models which work effectively well, and benefit with added leverage. Hybrid models such as a combination of subscription and advertisement are distinctively popular as it gives privilege attributes to both users and over-the-top broadcasters.
- There are absolutely zero sacrifices on surplus revenue since it isn’t one-tracked
- With flexible user payment option, subscription pays would impact positively
- Having benefits of each monetization model, the revenue support system is high
Okay, readers! Moving forward, in the next segment we will look into.
How to Create an OTT Pricing Model?
Creating an OTT pricing model is a key step in the development of your OTT platform. This requires significant planning and evaluation before setting the prices as per the market’s estimation. Moreover, you need to work on realistic factors to add desired value and determine the worth of your platform.
Few factors to keep in mind while fixing OTT rates to your services are:
Serve the Purpose of Content
The main purpose of your curated content depends on the pricing model with which you structure. And this depends largely on the purpose of your video package offered, which can influence your audience before considering buying them.
Delve deeper into Operating Costs
When we look into how popular top OTT platforms make money, operational costs play a dominant role to establish as the #1 player. Besides that, when you think to flourish your platform base, many factors come into play such as end-to-end development cycle, streaming software utilization, 3rd party partnerships, or producing original content. All of this helps to decide what sort of price tag you would estimate.
What’re Your Audience’s Preferences
Your audience understanding of your popular content will determine the sustenance of the cost of your OTT platform. As mentioned above, the increased importance of the purpose of videos will take a test on how much your users are willing to pay. Budget right from supplementary platform to all-inclusive specialized platform comes into major play to have a single or hybrid-based pricing model.
Biggest of All Brand Recognition
Are you just starting to set and approach, or do you carry a large fan following? This question makes a lot of difference which decides if your users are willing to choose in the first place. Let’s say if your platform is in the 3rd or 4th recommended OTT service, definitely, people are unlikely to shell out tons of cashback at your place. So, a branded best OTT platforms elevates your subs count since it’s been popular for a while.
Cross-collateralization keeps it on
Decide for yourself if your platform would solely make its journey in a competitive marketplace or drive real-world sales to use as a promotional tool! If you offer normal packages just as defined before, you can club models like advertisements & cross-collaborate to manage your platform expenses & get to offer low-cost subscriptions to your valuable customers.
Types of OTT Content Pricing Strategies
Businesses price their over-the-top (OTT) services in a variety of ways. While there is no one-size-fits-all approach to pricing, it is quintessential to keenly understand the fundamental needs of your target audience before devising strategic pricing plans.
Freemium Plan Pricing
Initially, when you welcome your consumers, determining an optimum pricing strategy can be quite tricky! When we analyze the same question, as to how does ott platform earns money, one of its rising factors show us the right subscription price depends on user expectations, cost factors, etc. Here, if you provide the leveraging zone for your customers by offering freemium pricing at the start, that can do wonders!
Many OTT businesses charge their users based on the number of devices accessed in a specific platform to their users. This helps to encrypt digital security & great means to grow revenue. But, this can’t be adaptive for platform users who want to access their content through varied devices on the go!
This strategy which can suit businesses is based on the duration of the platform, where users can be charged & you can get real-time analytic study. But, the twist is when users aren’t using the platform, due to other means, charging them may not sound useful! Also, if consumers have leftover shows or movies, payment procedures might get tedious which leads them to move to another platform.
User-based niche pricing
One of the popular pricing methods which are widely implemented by the pioneer leader of OTT subscription, none other than Netflix. Diverse plans are beneficial for content owners, based on the number of users utilizing the same subscription package. At the user end, it’s quite flexible in terms of different user interfaces & personalized recommendations. Many find it convenient to pay for family watch time plans too.
As previously said, setting your pricing requires an awareness of your platform’s comparative worth!
Let’s take a look at some of the best video streaming services to get a sense of how the OTT industry impacts when they make money through their classic pricing strategies.
Real-Time Big Shot Examples
Over the past decade, Netflix has majorly contributed to the popularization of OTT streaming development and has been enticing its users with three-tier models like Basic, Standard & Premium. Viewers get to access the content for limitless viewing at $8.99 per month on a single screen at a time. Plans get paid on a monthly basis which includes 100+ shows, movies with varied networks & content originals. Check out the overview about how does Netflix makes money through streaming.
Disney+ is another added streaming service powered by Disney. The key highlight is, when an OTT app or VOD platform is utilized by its viewers, the subscription price is better valued at just $6.99 facilitating unlimited access to the ardent collection of videos in the library. Also, it seeks a major revenue push, when Disney + pairs up with Hulu and ESPN+ bundling up their subscription with just about $12.99 per month.
Hulu is another major streaming service partner that focuses on using a hybrid pricing plan. They uniquely set their modus operandi by offering many “add ons” in order to give a variation for the user-end. They facilitate accessibility for the content owned by different networks, inclusive of live television. Hulu’s pricing range as per monthly basis is around $5.99, which includes digital ads. Consumers can also upgrade their subscription plans without any ad streams, as per their choice.
Whatever pricing model you adopt, the most crucial element is to observe your users’ behavior and identify what encourages retention and what causes churn. Based on those insights, make a structured plan & have a price-fit OTT content.
This helps you to answer the basic question of how OTT makes money all in all and you can answer it with just a one-stop solution for the best video streaming platforms
This will allow you to stay ahead of the curve as the OTT industry evolves with new innovation day by day, elevating the standards of customer service time & again!
If you already have an idea about starting an OTT business,
Schedule a free demo and we’ll help you implement it with a perfect pricing strategy for your content!
Frequently Asked Questions(FAQ)
An OTT platform is a business website or application that uses over-the-top media distribution protocols & technologies to stream various kinds of video/audio content to an online audience. OTT streaming is planned to compress content into simpler files in flexible formats received from servers to video players which is then broadcasted on consumer’s devices using internet connectivity.
Most of the OTT entertainment platforms look into how to productively earn maximum money in a variety of ways. Some monetization methods like subscriptions, ads, pay-per-view, premium on-demand, and hybrid-based models help to achieve streaming objectives. Certainly, the model that you choose will be determined by the particular brand persona of your platform as well as its broadcasting purposes.
A realistic or data-driven look at your OTT platform’s current value from a customer’s perspective, as what kind of rates are fixed. In other words, they will decide to complement the offerings that businesses serve. The OTT business initiatives that they implement will decide on cost factors & are the purpose of content, niche of the audience, rising competition, etc.
Creating OTT pricing models is a key step in the development of your OTT platform. As previously said, when it comes to pricing, the competition – particularly large players – set high market expectations. Unless you find your distinct niche, approachable audience, content variations, regular content availability, it would be a bit hard to have enough clout to set your own price. And once they are finalized, you can match them with competitive prices in the market.