The rise of OTT or over-the-top content has become one of the most exciting developments in the entertainment industry in the past few years. If you are a media publisher or a content owner or aggregator, you may have already heard about OTT or are already implementing OTT strategies to grow your revenues. But why does OTT matter for content-based businesses, and why do customers love it?
Simply put, OTT is a distribution practice that allows these content providers to sell audio, video, and other media services and materials straight to the consumer, without the need to subscribe to traditional cable or satellite services. For the consumers, it eliminates the middle-man—the cable or satellite company—and brings them directly to their preferred content. OTT strategies allow content owners, publishers, and aggregators to monetize their products, in turn growing their client base and revenue streams.
The key to successful OTT delivery is a flexible structure that supports a range of business models. Here’s a guide on the revenue options you can use for your own business.
A subscription model charges the user a fixed fee for services or products that they receive or use regularly. Mobile apps, software and games, e-books and other reading materials, and video streaming services are among the most common subscription-based businesses. These companies often employ subscription billing software for a simpler customer experience and accurate, successful payments.
Think of an app that requires you to pay an upfront fee before being able to download it—this is the main concept behind premium products. The advantage to the consumer is that once they have already paid the premium, all future upgradesare already free of charge. Premium business models work best for established brands, as customers will have less reservations about paying a fee to access a product or service from a company they already trust.
A portmanteau of “free” and “premium,” freemium is a business model that allows the free use of a product or service. However, themore advanced features, content, and services are typically made unavailable to users unless they pay for them. This is a popular business model for games, where players can make multiple in-game purchases like bonus equipment, extra lives, or in-game gold.
As the name implies, an ad-driven business model relies on advertisements within their content—say a website or a TV network—for a significant chunk of their revenue. Most websites and mobile apps use this model, although this can also overlap with other OTT monetization options like freemium or premium, usually to provide an ad-free experience for customers who are willing to pay.
PPV or pay-per-view is a highly popular TV or digital service, where an existing subscriber can purchase content like feature films or sporting events for their personal viewing. As opposed to a video-on-demand model where viewers can see content at any time, the PPV model has a central broadcaster (usually a cable company) that shows the content at the same time to everyone who has purchased it.
A la Carte
A la carte—French for “from the menu,”—is a pricing model in which customers can subscribe to individual products and services, like TV channels or software features. This is in contrast to the bundling or “package” model, where certain products and/or services are offered as one, whether or not the customer needs (or wants) the other inclusions.
The multi-screen business model takes advantage of the fact the more and more consumers are accessing their preferred content on a host of different devices, especially mobile. For a certain fee, cable companies and other video content providers allows subscribers to access their content from multiple devices at a time. Consider Netflix, for which customers can pay $13.99 per month for simultaneous streaming on four devices, as opposed to the $7.99 rate for single-screen streaming).Such a setup is pretty valuable for a family whose members have different tastes in entertainment.
Hybrid models make use of two or more of the above strategies to make the most out of their consumer’s habits. For example, a mobile game can follow the freemium model and also run ads from time to time—say whenever the game goes to a loading screen—to increase revenue. However, the developers can also give the players an option to pay a minimal one-time fee for an ad-free gaming experience.
The main challenge for OTT platforms is discovery. As more and more players get into the field, it will become more difficult for new or small content providers to get noticed. This is why content-based companies should considering applying various OTT strategies that not only monetizes their content but also ensures the best possible consumer experience.