Over-the-top or OTT describes any content that is streamed directly from the Internet (e.g., not via broadcast radio, network television or cable TV). The streaming audience has grown rapidly over the past few years, making OTT platforms one of the most fertile advertising segments in the market. As SVOD matures globally, OTT platforms for global expansion will need to cater to different regions and audiences in different ways. This could be creating subscription packages with different content packages as well as setting up tiered pricing structures and payment provider integrations.
When it comes to OTT advertising, it’s important to understand how each service provider works. All OTT content is accessed in one way – over the Internet, but not all OTT platforms allow access in the same way. In order to open up content to customers, all streaming services choose one of three pricing models.
- AVOD Profits from Advertising
The ad-based video on demand or AVOD model generates revenue through advertising. Content aggregators or content search platforms provide content to users for free. But there’s a catch, because the content is served to users along with ads.
- Broadcasters make money by charging advertisers in exchange for the placement of ads on the content platform. Ads are usually shown in the form of video ads, sponsored screens, sponsored content, etc. A recent Deloitte survey showed that 55% of U.S. residents use ad-supported video streaming services.
- Premium Video-on-Demand (PVOD)
Premium Video on Demand or PVOD is more like a special case of TVOD where users can pay to access content faster than other SVOD or TVOD customers! For example, a paid movie is first published on PVOD and then subscribers access it through SVOD or TVOD.
- Subscription Video on Demand (SVOD)
Subscription Video on Demand (SVOD) is one of the most popular ways to profit from the VOD platform. The SVOD model works by getting users to pay recurring fees to access your content. As long as you have content that people are willing to pay for, SVOD is often one of the most profitable ways to generate a steady stream of revenue from your platform. With SVOD, you can create different access levels at different price points, making your VOD content available to a broader audience.
- Transactional-based content (TVOD)
Transactional Video on Demand or TVOD is the most straightforward OTT revenue model. It is suitable for one-time give and take systems, such as purchasing or renting items from a nearby store. Customers buy or rent one video at a time based on their needs. This OTT model is sometimes referred to as pay-per-view (PPV) or pay-per-download (PPD).
Top OTT platforms for enterprises
Over the past few years, OTT platforms have seen rapid growth in viewership and show no signs of stopping.The global OTT industry is worth $121.61 billion in 2019 and is expected to reach $1.039 trillion by 2027.
For businesses, this is the hot spot to secure consumer interest.
Check out our breakdown of the best OTT platforms for your advertising business to determine which platform is most beneficial for your campaigns and marketing strategy.
As we see a huge structural shift in global consumer habits, it presents opportunities for every OTT provider, regardless of budget, size, and industry. SVOD, AVOD, and TVOD monetization models are likely to continue to change and intertwine, so we can expect more new approaches in the rapidly evolving OTT and CTV markets.