With technology development and digitalization, OTT video streaming services are in great demand. They provide convenience and flexibility to viewers while a business can reach customers. A video streaming service allows a company to create a brand name and share its expertise with people.
Along with these benefits, a business can generate revenue by producing video content and sharing it with viewers via a video streaming service. In fact, a video streaming platform has functionality for bringing money to you. What are they? Let’s observe.
Four Business Models for a Video Streaming Service
Generally, there are three basic business models for video streaming services: advertising, subscriptions, and a pay-per-view.
OTT advertising platforms generate revenue by running ads on videos. They are usually free of charge for viewers as a content provider makes money via advertising.
Ad-based video streaming services offer free content to viewers. But viewers, in turn, watch advertisements during the video playback. It seems that people don’t mind watching some ads in exchange for free original content, as ad-based video streaming services are gaining popularity.
Such a business model can be used when your target audience is people willing to pay less for video streaming.
Subscriptions-Based Streaming Service
Subscriptions are popular thanks to huge video streaming providers such as Netflix. They sell access to a large library of content for a limited period of time. Viewers purchase once a month or year to be able to watch all videos the service offers.
Subscriptions are usually less expensive than cable or satellite television – that’s one of the reasons why people are turning to online video streaming services. While traditional television can cost around $50 and more, a subscription costs $10-$20, depending on the plan.
Low-priced access to videos allows people to have subscriptions to several streaming services. They can have more varied content to watch.
Pay-per-view Streaming Service
While a subscription gives viewers access to all videos, a pay-per-view model requires the purchase of every single piece of content on the service. When a customer pays for one video, the rest of the content is still inaccessible. A viewer needs to pay extra to watch other videos on the platform.
A pay-per-view model is suitable for services that don’t have a huge library of content. Also, it can be effective for one-time events, such as concerts or webinars.
Hybrid Streaming Service
A hybrid monetization approach allows a provider to combine several models that we described above. It is up to you to decide how to mix them.
There are some examples of a hybrid revenue-generating mode:
- Subscriptions and advertising. It is a model that Netflix is currently adopting. The company now has two plans: one is lower-priced but includes ads during the video playback, and another is more expensive but ad-free.
- Subscriptions and pay-per-view. You can allow people to purchase either a subscription or each video separately. Another format of this combination is two groups of videos: content available on a subscription basis and Premium content that requires an additional fee.
You can come up with your own combination of monetization models.
When choosing an OTT solution for your video streaming service, check if it can provide you with multiple monetization functionality. There are many solutions in the market, but they have different features. If you want to test all revenue-generating models, you need to obtain a solution that supports that.
Choose one pricing model or come up with a combination. Ensure you make an informed decision.