OTT Business Models: What You Need to Know

OTT content delivery allows you to: send and receive messages, listen to music, watch videos, arrange video calls. Learn about OTT business models.
ott business models

OTT content delivery is in demand as it is used for different purposes and OTT business models can help you make more money for your business. It allows you to:

  • Send and receive messages 
  • Listen to music
  • Watch videos
  • Arrange video calls

These activities refer to OTT because the content (music, videos, and messages) is delivered “over-the-top” – with the help of the Internet. In this article, we are going to focus on the business models of platforms that deliver videos and allow users to watch them anytime they want. These platforms are called VOD, or Video-On-Demand.

Their business models depend on the monetization model the owners choose. 

OTT Business Models – What to Know About Them

AVOD

AVOD stands for Advertisement-based Video-On-Demand. AVOD platforms offer videos for watching without a fee. Instead, viewers are shown advertisements. Ads are the way a platform owner earns revenue and covers expenses on maintaining a platform and creating video content. 

Advertisements can run anytime during the video, and usually, users cannot skip them – the process is similar to TV ads. However, you can personalize advertisement videos and show a user those ads that might interest him or her.  

AVOD monetization model is popular among businesses. It is forecasted that AVOD platforms will reach revenue of approximately $260 billion by 2025. 

Consumers also like watching videos with ads without a fee. According to a study, 50,6% of consumers from the USA prefer AVOD platforms. 

SVOD

SVOD is a Subscription-based Video-On-Demand. Customers access the platform’s library of videos after paying for a monthly or yearly subscription. 

Some SVOD services introduce tiered pricing. For example, the price can be higher if a user consumes videos on several devices. For example, a smartphone and a Smart TV. Or if the whole family uses the same profile to access videos. 

Netflix is a popular example of an SVOD monetization platform. 

TVOD

Unlike SVOD when a user receives access to the whole library of videos, TVOD (Transactional Video-On-Demand) allows users to purchase one movie or one season they want to watch now. 

There are two types of TVOD: DTR and EST. 

  • DTR is a Download to Rent service. It allows users to rent a video for a limited amount of time.
  • DTO is a Download to Own service. Unlike DTR, DTO offers videos for unlimited times of viewing. 

FVOD

FVOD stands for Free Video-On-Demand. The content on these services is free of charge, and users also don’t need to watch advertisements during the video. 

FVOD services tend to offer old movies as content. They can also focus on linear TV allowing users to watch a TV program on schedule when it runs on the channel. Some FVOD platforms offer live TV programming. 

But these platforms also maintain the catch-up feature so that users can watch the program later. 

Final Thoughts

Whatever business model you select, remember that people choose a platform not because of its business model. But due to the accompanying conditions: price, available content, the payment channels, and the possibility to watch videos on different devices.

When choosing the appropriate business model that will bring you more revenue, don’t forget to consider what your target audience will appreciate. You will lose them if they find your service inconvenient.

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