How Do Video Streaming Services Make Money: Guide
Video streaming services like Netflix or Hulu are popular among businesses from various industries. They are admired for their monetization potential. It is the reason many companies launch their video streaming services and share their videos.
The monetization capabilities of an OTT platform depend on the development company. You can find a solution with wide monetization potential like Setplex’s one or supporting one or two models.
Let’s observe how you can generate revenue with the help of a video streaming platform.
How do video streaming platforms make money?
For businesses, an OTT platform is a video monetization platform in the first place. So, they probably want a solution to have rich money-generating capabilities. What can it be?
Advertising is popular among users because they usually don’t pay anything for viewing videos. They watch ads instead.
These advertisements are made by third-party companies. They pay an OTT service provider for running these ads on the platform. This is how a provider generates revenue.
Advertising on video streaming platforms can be more profitable due to accurate targeting capabilities. The viewers, who are interested in a specific product or service, will be shown a corresponding ad. Maybe, fewer people will see that ad, but they will likely be the target audience. This is how OTT advertising works.
Subscription-based IPTV/OTT platforms charge a fee from users once in a period – a month, a quarter, or a year. So, a user purchases a subscription and gets unlimited access to video content.
They can go binge-watching and not watch videos at all. Content is available anytime they want until the new payment period starts.
People love subscriptions – they pay once and access content whenever they want. Also, a subscription is easy to cancel, which simplifies people’s lives a lot.
However, recently, subscription fatigue has been observed among viewers. They are getting tired of all the subscriptions they have. They start switching to advertising-based services that offer free content.
Pay-per-view-based services offer users to pay for every piece of content they want to consume. A viewer purchases a video they wish to watch right now, and the rest of the content remains inaccessible.
They can leave the platform forever or return, especially for content you have.
What else can influence your revenue?
IPTV/OTT platforms don’t only offer monetization capabilities. They offer you opportunities to reach more people. For example:
- IPTV/OTT applications will help you cover more devices and potentially more people. Also, you can create a package that allows people to use more devices from one account, but the price will be higher.
- A Content Delivery Network (CDN) will help you cover more locations, including other countries and continents. It will allow users to watch videos without latencies.
All these capabilities combined can bring you a fortune. But, of course, you should check other parts of your business if something doesn’t work. For example, marketing campaigns or customer service work. It can be that you attract people via the channels your target audience doesn’t use. Or maybe, your customer support service team consists of rude people who don’t know how to communicate with viewers properly.
Monetization models and other functionality can be properly configured, but users can face inconveniences in other parts of their route to becoming your customers. Check them to optimize later.
As you see, IPTV/OTT platforms are created so that you can generate as much revenue as you can. But you should not rely only on them as there is other work to do like arranging marketing campaigns or helping people with payment.