The Monetization Dilemma in OTT

The Monetization Dilemma in OTT
08.03.2019 Zaif Khan

Today, with the growing competition, new entrants and even incumbents in the OTT industry face the dilemma and the burning question of monetization.

Monetization is the most crucial part of running a business. The absence of a sound monetization strategy has caused many technology behemoths to fall to the ground. In the OTT industry, a lot of publishers and content creators are betting high and are creating more premium content. After all, the industry is poised to more than double its revenue in 4 years and reach USD 129 Billion.

OTT providers are also following the footsteps and are licensing premium content to stand out from the crowd. However, choosing a monetization strategy has become much harder since the linear TV days, where the options were just limited to Free-to-Air (FTA) and Pay TV. The changing dynamics of the industry, evolving consumer demands, lack of monetization strategies and technology preparedness is causing many in the industry to lose on colossal market potential.

Methods of Monetization

In our experience, a sound business strategy paired with a capable digital backend can overcome the odds and help generate revenues. Let’s explore the many ways by which monetization can be achieved in OTT:

Revenue models – Choosing the right model is crucial in attaining monetization of any VoD platform as different content, regions, and audiences demand different business models. For instance, viewers in Europe and the US want access to the whole TV shows and movies upfront, so they can watch the content as they please. Hence, they find advertisement-free subscriptions (SVOD) or transactions (TVOD) based platforms more lucrative.

Ad-insertion – The most common monetization model in mass media is advertising, and OTT is no different. Advertising video on demand (AVOD), widely used in Asia and Latin America, is made even more effective with personalized ads using dynamic, server-side or client-side ad-insertions. Such personalized advertising not only increases the revenue generation but also engages the viewers with relevant content, creating an immersive experience.

Promotions – Everyone is aware that marketing is an elementary step towards sales. Even in OTT industry, effective and targeted marketing of a platform is very much needed to create buzz around the content and the platform. It helps in gaining the audience and the market share for monetization at later stages. For this technique, the most common methods are the use of trials, vouchers and coupon codes.

Bundling – One of the major monetization strategy, especially in the telecommunication industry is the bundling of services to offer more value to the customer. Bundling can be done with their own services or with external partners. In the OTT industry, this method has gained some traction in recent years with big OTT providers such as Netflix, Hulu, and Amazon bundling their services with an aggregator, phone or broadband service.

Convergence – The latest paradigms in technology have ushered a new era of cognitive computing, and it’s making its way into all segments of our lives slowly and steadily. Big data, machine learning along with rich metadata, analytics, and personalized ad-insertions are laying the foundation for the next big move in OTT, which is convergence. This can enable ancillary revenue generation through e-commerce, targeted advertising and much more.

Devising a sustainable monetization strategy in this fast-paced multi-device industry can be challenging. Any company foraying into the OTT arena, or looking to expand and capitalize on their content needs to consider this crucial step of monetization twice. As a monetization strategy ultimately leads to user experience, market share, and revenues.

Being an experienced digital solutions provider in the media industry, Axinom understands that each company is different, each content piece is unique, and every market needs individual monetization strategy. Our digital backend solutions allow you to choose between AVOD, SVOD or TVOD revenue models to target different markets and audiences, Dynamic Ad-insertion (DAI) or CSAI (Client-side Ad-Insertion) for personalized advertising. Our architecture also allows numerous integrations to facilitate customer systems, payment providers, bundling opportunities, marketing promotions through vouchers, promo codes and donations.