Key takeaways

• There are four main monetisation models common to OTT platforms: SVOD (subscriptions), AVOD (advertising), TVOD (pay-per-view purchases), and HVOD (a mix of two or more models). Each model supports different audience types and revenue goals.
• The best OTT monetisation model to choose may depend on audience behaviour, content type, business goals or streaming service format.
• OTT services can improve monetisation by using viewer data, combining the right models, choosing the right pricing strategy, and investing in reliable streaming technology.
• Choosing scalable OTT technology partners like Simplestream can go a long way. They help manage monetisation, live streaming, content delivery, and audience growth better.

After you've successfully launched your OTT platform, it is only natural to want to make the most money out of it. But choosing the best OTT monetisation solution can be a struggle.

This is because several monetisation models are available for different goals and strategies. You may even need to combine two or more models to maximise revenue.

Now, the most common ones are SVOD, AVOD, TVOD, and HVOD. And each offers different benefits. In this guide, we'll discuss how they work. You'll also learn how to choose the right one(s) and optimise your revenue over time.

What is OTT monetisation?

Put simply, OTT monetisation is how streaming platforms make money from their content. And it boils down to three models:

1. Subscriptions (SVOD): Users pay a monthly or yearly fee for unlimited access to content.
2. Ads (AVOD): Platforms offer free content while making money from ad views and clicks.
3. Pay-per-view (TVOD): Users pay to watch one video at a time rather than access an entire library.

But you can combine two or three models. This way, they reach more viewers and earn more money.

What are the best OTT monetisation models?

There are several OTT monetisation models you can choose from. And the right choice depends on your goals and strategy. Here's a quick breakdown of each model:

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Subscription Video on Demand (SVOD)

SVOD is one of the most common OTT monetisation models. Here, users pay a recurring monthly or yearly fee to access content. And there are no extra hidden fees.

An example of a video monetisation platform that made SVOD popular is Netflix. The model helps them offer their users simple pricing and predictable access.

In general, this model works well for platforms that have lots of content, offer more than one video service (a.k.a. SVOD service bundling) and people who always come back to watch.

The biggest advantage of SVOD is that you can predict your recurring revenue. It also helps build long-term customer relationships. However, you need to update your content regularly and improve your strategy to retain viewers.

Advertising Video on Demand (AVOD)

AVOD allows viewers to watch content for free while the platform earns money through ads. A perfect example of a platform that uses this model is YouTube. Users don't need to pay a subscription fee to watch videos, but there will be ads before, during, or after videos.

Also, the model helps to focus on growing large audiences in a short period. This is because it lowers the barrier for viewers, since they do not need to pay to access content. As a result, platforms can increase reach and viewer growth.

But there is a thin line between offering free services and annoying viewers with too many ads. Hence, you need effective ad targeting and a smooth viewing experience so you don't push people away.

Transactional Video on Demand (TVOD)

Unlike SVOD and AVOD, people who view your content only have to pay for the ones they want to watch. They can make one-time payments to rent or buy specific videos or special releases. Apple TV and pay-per-view sports services often use this model.

TVOD is best suited for premium content such as live sports, concerts, movie premieres, and virtual events.

With TVOD, viewers enjoy flexibility while platforms can earn high revenue from content. And they don't even have to ask for long-term subscriptions. But the content must be unique and timely for people to want to pay for it.

Hybrid Video on Demand (HVOD)

Depending on your needs, you may want to combine these models, and that's where HVOD comes in. It combines multiple OTT monetisation models into one platform.

So, for instance, if you intend to serve a large audience with diverse preferences and budgets, HVOD is the best option for you.

With the model, you can offer free content with ads and still provide subscription and pay-per-view options. And as a result, you will create many revenue streams. This means you can earn at the same time from subscriptions, ads, and one-time purchases. It also helps attract both free and paying users.

However, you need to pay attention to how you structure your platform. It should be clear and well organised. Otherwise, managing pricing, ads, sales and user experience may become more complex.

Read more: SVOD, AVOD, TVOD, HVOD, BVOD, and OTT: the ultimate guide

How to choose the right OTT monetisation model?

Several factors are crucial to choosing the right OTT monetisation model for you. We discussed the four vital ones.

Know your audience

Find out how people prefer to watch your content and what they are willing to pay for. For example, AVOD will work best for audiences that want free content. And for loyal audiences who watch regularly and subscribe, SVOD is the best option.

You should also consider factors like viewer age, where they watch from, spending habits, and the content they prefer. That way, you'd know when to go for subscriptions, AVOD streaming, pay-per-view, or all of them.

In all, understanding what your audience likes and how they behave will help you choose a balanced monetisation model. That way, you can make money without giving them a bad viewing experience.

Evaluate your content type

SVOD is best for platforms with consistent content releases. This is because users have a reason to keep subscribing over time. Meanwhile, exclusive or time-sensitive content may work better with TVOD. Since viewers are willing to pay for access.

There's also the case of new vs old content. So, you need to consider whether your content is evergreen or short-term, because:

• Older on-demand content can continue generating ad revenue through AVOD.
• Premium new releases may be best for direct purchases or subscription upgrades.

In the end, strong exclusive content will give you more pricing flexibility and monetisation control.

Match the model to your business goals

Your growth strategy or goal can influence the monetisation model you choose. For example:

• AVOD is best if your goal is to grow your audience quickly because viewers can access content for free.
• But SVOD is a better long-term option for stable recurring revenue.

So, if your aim is for customer retention, you would prioritise brand awareness first. And if it's all about making profit, focus on maximising subscriber revenue immediately.

In many cases, the best OTT platforms combine models over time. But what's most important is choosing a model that supports both current and future business goals.

Consider your streaming service format

People will subscribe to watch on-demand video on platforms that offer continuous access. And they will pay to watch premium live events and broadcasts, such as sports. Also, HVOD will best serve platforms with mixed content libraries since they can access all models in one place.

This means the type of streaming service will determine how you generate revenue using these models. Or any other goals, as the case may be.

Finally, you should track how people interact with your platform to know which model structure delivers the best results.

How can OTT services make the most of monetisation?

Choosing the right OTT monetisation models is a good start. But you still need to optimise your preferred choice to get the most out of it. Here are a few practices you can adopt:

Use viewer data to improve personalisation

Platforms like Netflix and YouTube often do this. They use what their viewers watch to recommend other similar videos to them. Since the viewer is already interested in these kinds of videos, it is easy for them to engage or keep coming back.

But how does this work?

Start by analysing users' behaviour to better understand what they watch, when they watch and how they interact with content. Doing this will help OTT services recommend more relevant videos to them. That means more engagement and money for your platform.

For example:

• Better recommendations can encourage users to keep paying for subscriptions on SVOD platforms.
• And for AVOD services, viewer data helps show more relevant ads. This can improve ad revenue and reduce unrelated ads that may annoy viewers.

Platforms will also be able to understand which content performs best and when users are most active. You'd also increase watch time and monetisation opportunities over time.

Combine monetisation models carefully

Many OTT services now combine two or more monetisation models instead of relying on a single model. This helps them reach more viewers and create diverse revenue streams.

For example, a platform may offer free content with ads to attract users. Then, keep premium or exclusive content behind a subscription. They can also use the TVOD model to sell or rent out special releases and live events.

But you must be careful to adopt this strategy. Do not make the mistake of using unclear pricing or putting too many ads in people's faces. This may frustrate them and hurt the user experience. In fact, you should clearly separate free and paid content so users understand what they are getting.

To manage all these, you can use platforms like Simplestream. You'll be able to manage subscriptions, advertising, and pay-per-view, and  balance it all with a fitting viewing experience.

Match premium content with the right monetisation method

Different types of content need different ways to monetise them. For example, live sports, concerts, and new movie releases often work well with TVOD. Since people are willing to pay to watch exclusive or time-sensitive content. Subscription plans also work well for premium content that viewers watch often.

Also, the AVOD is best for older videos, documentaries, tutorials, and archived shows. OTT service providers can even continue to earn from older content over time.

To better leverage this strategy, always track which videos bring the most views, subscriptions, and purchases. This will help decide which content should stay free and which should be for paying users only. In short, a clear content strategy will increase revenue without slowing audience growth.

Choose scalable OTT technology and partners

The technology behind an OTT platform can affect how much money the service makes. Even good content can struggle if there are payment issues or too many technical issues. Imagine something going wrong during a live event when many people are watching at the same time. That will upset viewers.

Hence, OTT services should choose strong technology platforms that support the following:

• Different monetisation models
• Secure payments
• Audience tracking
• Ad insertion
• Reliable streaming

Working with experienced OTT partners can also make platform management easier. For example, Simplestream helps here. It supports live streaming, content management, monetisation flexibility, and multi-platform distribution for broadcasters and streaming services.

Read more: Five ways to acquire new customers in OTT

Monetise your content your way with Simplestream

Even after choosing the right OTT monetisation model, you need strategies to achieve long-term success. And no matter the kind of streaming service you are building, your platform should support:

• Flexible monetisation
• Reliable streaming
• Audience growth
• Scalable infrastructure

Simplestream will help you achieve the four easily. It manages live streaming, content distribution, monetisation, and multi-platform delivery from a single OTT solution.

Book a demo to see how it work!

FAQs

Which OTT monetisation model is the most profitable?

Hybrid models are most profitable. Mixing subscriptions, ads, and pay-per-view lets you reach different viewers and earn more money.

What are SSAI and CSAI?

SSAI (Server-Side Ad Insertion) puts ads into videos on the server. CSAI (Client-Side Ad Insertion) loads ads on the viewer's device. SSAI feels smoother; CSAI allows more personalisation.

What technology do I need to launch an OTT platform with monetisation?

You need video hosting, a content delivery network (CDN), a payment system, and ad insertion tools. Many providers offer all-in-one solutions to make setup easier.

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