The OTT industry is booming as more and more consumers are abandoning traditional cable for online streaming every day. Since the video streaming industry is expected to be worth $124.6 billion by 2025, many broadcasters are responding to this growth trend.
One of the main questions broadcasters face when building OTT streaming services is how they should price their platforms. Broadcasters need an OTT platform revenue model that allows them to make money from content without alienating their target audience.
OTT business profitability models.
- Subscription Video on Demand (SVOD)
Subscription Video on Demand is the primary video monetization OTT strategy chosen by most media broadcasters who charge potential subscribers a monthly, quarterly or annual subscription fee. This gives you unlimited access to your curated top library of movies, TV shows, albums, live TV channels and other on-demand content based on the time frame you choose.
- Advertising (AVOD)
Ad-based Video-on-Demand ( AVOD ) monetizes content through sponsored ads. Basically, viewers “pay” for content by spending a few seconds to a few minutes watching ads. This is often used when you are offering content to viewers who are willing to pay less for live streaming. This is a more passive OTT revenue model because you don’t ask viewers to pay up front for access to your content.
- Pay-per-view (transactional video-on-demand)
Transaction-based, often called pay-per-view video-on-demand, indicates that access control is only provided for individually requested content after the payment process. The main highlight of launching an OTT business plan is to add value to the content you produce or own by paying for it based on video viewing patterns, and viewers can rent or purchase access accordingly.
Hybrid Payment Model
Hybrid OTT pricing models use more than one of the three models described above. Hybrid pricing models are becoming increasingly popular because it allows broadcasters the flexibility to offer their subscribers some payment options.
The combination of subscriptions and advertising is popular because it gives viewers the option to pay less per month for advertising streams. This makes streaming more affordable on the viewer side without the broadcaster sacrificing any revenue.
The hybrid model is a popular revenue model for OTT platforms because it allows access to a wider audience.
Creating an OTT pricing model is a key step in developing an OTT platform. This requires a lot of planning and evaluation before setting prices based on market estimates. In addition, you need to address realistic factors to add the desired value and determine the value of your platform.
A few factors to keep in mind when fixing OTT rates for your service are
The purpose of serving the content
The primary purpose of curating content depends on the pricing model you build. Much depends on the purpose of the video package you are offering, which may influence your viewers before they consider a purchase.
There are multiple costs associated with operating a streaming platform, all of which come into play when you determine what kind of price tag you want to put on your platform.
First, you must invest in developing your website, mobile apps and smart TV apps. Over time, these technology assets must be maintained, and these costs will depend on whether you outsource the work or whether you have a team that handles it in-house.
The comparative value of your platform
Another major factor is the comparative value of your platform. Users can subscribe to the major platforms with thousands of shows and movies to choose from for less than $10 per month.
It’s a good idea to look at your competitors and see what they are charging, as this will give you a solid starting point from which to begin jumping off.
Determining how you plan to structure your OTT platform pricing model is an important step in launching your streaming service. You must make sure it makes sense for your audience, the type of content you are streaming, and your operating costs.
Regardless of which pricing model you use, the most critical factor is to observe subscriber behavior and determine what encourages retention and what leads to churn. Based on these insights, develop a structured plan and deliver OTT content at the right price.
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