Streaming is rapidly overtaking traditional cable TV as the number one choice for consumers. In fact, by 2024, more than 46 million households are expected to “disconnect” – abandoning cable in favor of streaming and over-the-top (OTT) platforms. In addition, viewing on mobile devices such as smartphones accounts for a large portion of this market; in 2020, 30% of premium content is viewed on cell phones – up from 23% in 2019.
These trends aren’t slowing down, so now is the time to enter the OTT market. But just how do OTT platforms work? We’ll go over the basics here so you can decide if you should build your own OTT platform.
What is OTT?
OTT platforms skip the traditional cable or broadcast infrastructure and instead offer streaming or on-demand video over the Internet. Think of Netflix or Disney+ as examples. Using OTT services, content providers can deliver content more efficiently and at a lower cost than traditional broadcasters.
In turn, users can consume content on multiple devices, such as tablets, TVs, cell phones and streaming devices like Chromecast or Roku. Users can stream content on-demand or watch live streaming broadcasts.
Creation and setup
Creating an OTT platform can be as simple as working with a partner like Xmediacloud who specializes in homemade OTT platforms. If you don’t have a partner, there is some work to be done, but it’s still not as resource intensive as creating a broadcast network. Your development team will need to write an application using an SDK like Android Studio or xCode, connect the player and video APIs, and choose a hosting platform. This could be an on-premise server system, or a cloud-based solution.
The fastest and more robust approach is to work with a “do-it-yourself” service provider like Xmediacloud.Once you have the structure in place, all you have to do is upload the content to your library, tell your audience about it, and decide how you want to monetize it.
How OTT platforms make money depends heavily on the companies that provide them with services. The flexibility of the medium allows for creativity, allowing you to decide how best to serve your audience and monetize. That said, there are several common methods of monetization for OTT.
Ad-based video-on-demand (AVOD) Platform owners make money by selling highly targeted online ad time or banner ads.
Subscription-based video on demand (SVOD) – The most common method because it generates the most money per customer. Subscribers can get unlimited access for one price, or you can set different price points and offer different levels of service – even including low-level ads.
Transactional Video on Demand (TVOD) – also known as pay-per-view. With TVOD, the platform charges customers a one-time fee for renting or purchasing content.
Of course, you are not limited to one way to monetize your OTT platform. Many OTT providers offer a free tier for subscribers to get free content and familiarize themselves with the platform. Later they may purchase a subscription to remove ads or get access to premium content not available in the free version.
Pay-per-view campaigns can be promoted regularly to supplement revenue from subscriptions and/or advertising, and since you can control the ads served, you can even use this feature to sell products or promote other platforms.
Stepping into the OTT space
If you’ve been considering an OTT platform, there’s no better time than now. Streaming and video on demand are on the rise, and profitability isn’t hard to come by. Not to mention, building your own OTT platform has never been easier.
If you’re ready to learn more, contact Xmediacloud today and we’ll walk you through the process.