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SURE! Blog

Promising OTT Monetization Strategies

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10

Sep, 2016

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As discussed in our previous blog “Bundling vs. À la carte – Best way to monetize content for OTT providers“, that in brief reflects on the exisitng and changing pricing strategies in OTT.

To talk more on that, here is our next blog where we talk on key OTT monetization strategies that helps OTT service providers to better capitalize on their services.

AVOD – Advertisement Video on Demand

This is the most practiced model by anyone who either is an established players or a new entrant in the OTT industry.

Considered as a safe bet, it strategically provides OTT services providers to win over their customers by luring them with right content at no cost. Providers play by providing access to content of interest without charging anything to poach on subscribers using tradition cable TV. Once they find their services better than their traditional TV viewing, they unsubscribe with them and replace it with OTT. Though advertisement are always annoying but still a large section of viewers prefer to watch these rather than paying money.

Here, providers earn the revenues through ad insertion. They sell advertisement slots to brands and charge based on the content type, reach, and publishes time (in case of dynamic content) and other factors. Key to success lies in getting more viewing hours per customer. This will leads to more ad viewing rate thus higher revenue per content.

SVOD – Subscription Video on demand

OTT providers offer a multitude of packages to their subscribers. Services can be availed by subscribing to a package of a choice against a monthly amount. Normally there is no lock-in period but providers may come up with such in later stages to hold on to a customer for a minimum period.

Most of the service providers are now opting for SVOD with an option for AVOD. Slowly SVOD is gaining a momentum over AVOD with more subscribers unsubscribing their DTH connections and opting for OTT. Even customers don’t want hindrance due to advertisements.

The key to growth over here is customer engagement. Higher the engagement lower is the churn. Providers are exploring a range of option to keep the engagement rate higher. Content is surely a winning factor but getting content recommendation plays a crucial role too. With that rolling out campaigns on all social media platforms helps in generating returning visitors.

TVOD – Transaction Video on demand

Some viewers neither want advertisements nor want to subscribe to a package. But, still they want to access the content of their liking. Even, OTT providers cannot overlook them. They made up a considerable number of the viewer base.

In order to address their needs, providers tag a price to each of the offered content. It allows the customers to choose what to watch and pay only for that with a free signup to access the content. Providers classify them under premium category.

This model acts as a strategy for providers to lure more consumers and get more from existing customers by offering discounts on some premium content and try to earn more as compared to SVOD by implementing a proper recommendation engine that force consumers to do impulse purchase.

On the technology side, product cataloging, packaging and pricing engine plays a key role. That should be flexible enough to let you make changes in real time.

Day/Daily Passes

OTT video market is still nowhere near to maturity around the globe, except USA where it will be in the next 3-5 year span. Various players are entering into this market. Now, in order to capture large user base they are also providing daily rentals/passes as a possible option.

Providers either offer complete access to content against a minimal price or a limited access to premium content.

It provides the consumers to get to know the scope of offerings once they signup. For providers they can build the customer database in order to further push their services.

Rentals

Providers allow the viewers to rent the movie for a particular time and charge a fixed amount against that. They cannot download it but can view it multiple times within that specific period of time.

Purchase – Download to own

Providers give a free hand to consumers to legally download the movie at a markup against the price. They otherwise would have to pay for other option. Over here the providers charges maximum amount or price which is equivalent to that of buying a DVD.

Viewers require a storage device and an internet connection to download it. But once they downloaded they can enjoy it whenever wherever they want without an internet connection.

Exclusive offers! And Loyalty programs

Providers can run several offers like refer a friend, discounts, promote the app, generate 5 sign ups against a benefit to enjoy premium content at no cost for a certain period of time.

Also, to reward their existing loyal user base, providers can run programs where they give them discounted upgrade to a superior package, discount/1 free month of access in case they renew their subscription or some goodies etc.

Usage Based charging

Providers can allocate a quota to their customers to use for a certain amount. Quota is majorly defined on amount of content they can watch. That may or may not include access to premium. Further providers can put a cap on time limit within which viewer should utilize it fully else it will become invalid.

Multiple devices

Harness the advantage delivered by all the available platforms (Web, App, TV etc.). Just don’t restrict your content reach to your customers by providing it on a single platform. Although it takes more investment but key here is to include multi platform reach within your service roll out plan.

Hybrid

As most of providers are still in concept validation phase, so it is a common practice that they test with no single strategy. Implementation of 2-3 strategies at a single time is visible as well. But right pricing model can be chosen once customer persona is understood well. Not all pricing strategies work for all geographies.

The list of pricing models doesn’t ends here. As the industry grows backed by good understanding of consumer usage behavior, it is expected that industry will experience quite a few more.

If you think there are some more strategies that we skipped, please comment. We would love to talk to you.

STOP! Having a sound strategy that makes you capture large subscribers is not good enough. There should be a scalable and highly efficient Subscription Management, Billing and CRM solution that allow you to efficiently and effectively capitalize on your revenue model.

By carefully analyzing the strategies chosen by other operators around the globe, we will cover more of OTT Billing and CRM software in the next blog.

If you like to get a first-hand on it please do subscribe.

By : Ramakrishna Mashetty

Ramakrishna Mashetty is The Chief Marketing officer of SURE! (a Magnaquest product).SURE! is an internationally acclaimed player in comprehensive end-to-end Subscription Business Solutions for PayTV, Broadband and Cloud Computing businesses – through deployment of Metered Billing, CRM, Service Fulfillment, Value-Added Services, and Managed Services.

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