The Over-the-Top (OTT) market is experiencing notable growth, driven by a surge in cord-cutting and audience demand for high-quality, on-demand content.
However, with a saturated market and fierce competition, OTT services must strategically optimize their revenue streams to ensure long-term profitability.
This guide will reveal some key strategies for maximizing OTT video monetization.
1. Monetization Beyond Subscriptions
While subscriptions remain the main revenue stream of most OTT business models, relying only on this approach can be risky. With the OTT market becoming increasingly saturated, content fatigue can set in, where viewers become overwhelmed by the volume of available options.
Moreover, subscription revenue can depend highly on new content releases and ongoing interest in popular seasons or shows. If content fails to attract or retain subscribers or a platform cannot consistently deliver fresh and engaging content, subscriber churn can increase.
To stabilize your income consider incorporating:
- Transaction-based Video on Demand (TVOD): Offer premium content for purchase or rental for viewers who may not desire a full subscription but are interested in specific shows or movies. Additionally, you can offer early access to new releases or exclusive behind-the-scenes content as TVOD options.
- Advertising-based Video on Demand (AVOD): Implement a tiered subscription model with a free, ad-supported option. This will expand your reach while generating revenue from targeted advertising. Still, remember that the ad load shouldn’t disrupt the viewing experience and alienate users.
Learn more about JWP Connatix’s video monetization solutions
2. Data-Driven Personalization
Targeted recommendations based on viewing history, watch time, and genre preferences increase user retention while boosting overall watch time and subscription value.
Consumers prefer personalized experiences and are more likely to engage with content that aligns with their interests. By gathering user preferences during the login and registration processes and combining this with viewing data, OTT services can optimize content suggestions to serve the most relevant content for each individual.
Furthermore, personalized marketing messages based on viewing habits can incentivize free-tier users to upgrade to premium subscriptions. Offer targeted promotions or discounts for specific content categories users have shown interest in.
3. Strategic Content Acquisition and Production
To optimize your content strategy, invest in compelling, original content that sets apart your platform and attracts new subscribers. Analyze popular genres and formats across different regions to identify content gaps and cater to underserved niches.
Another good practice is to strategically acquire content that aligns with viewer demographics and preferences, maximizing its revenue potential. Look for content with established fan bases or high critical acclaim that can draw viewers to your platform.
Lastly, use user data to inform content acquisition and production decisions to make content resonate with your target audience. Metrics like watch time completion rates, and social media engagement will help you gauge audience reception to different types of content.
4. Freemium Model Optimization
If you choose a freemium model, the free tier should have enough value to retain users without diminishing the appeal of premium features. You can do this by offering a smaller selection of content on the free tier, with a focus on older library titles or less popular shows. Therefore, you’ll incentivize users to upgrade for full access to the latest releases and original content.
Alternatively, allow free-tier users to watch only a limited portion of a series (e.g., the first episode or season). This works best when applied to content with multiple episodes or seasons, or even sports seasons, as it builds anticipation for the full experience and encourages users to subscribe for complete access.
For a different approach, offer limited-time free trials for premium content, giving users a taste of the full experience and motivating them to convert to paid subscriptions.
5. Partnering and Strategic Alliances
Forming strategic partnerships with CTV platforms and digital services can result in valuable revenue streams and expand your OTT service’s reach. Start by collaborating with CTV and digital platforms to distribute your content and get exposure to new audiences and additional distribution channels.
Similarly, working with content providers and producers to create content partnerships, whether through revenue-sharing agreements or licensing deals, can strengthen your content offering while reducing operational costs.
Seek reciprocal marketing opportunities by partnering with other OTT platforms to exchange content. By featuring each other’s content, both platforms can expand their reach and increase visibility.
Related: Check out our webinar on elevating OTT & CTV ads with server-side solutions
6. Innovation and Technology Adoption
Staying ahead of the curve requires continuous innovation and embracing new technologies.
Dynamic pricing models are a good strategy to adjust subscription fees based on user preferences, viewing habits, and content consumption. Budget-conscious viewers will appreciate the flexible pricing structure, resulting in more revenue for your business.
Moreover, emerging technologies like Artificial Intelligence (AI) and Machine Learning can further personalize the user experience and optimize content recommendations. AI can also be used for fraud detection and content security purposes.
To make your platform really stand out, invest in interactive content formats like choose-your-own-adventure narratives or gamified viewing experiences.
7. International Expansion Strategies
For OTT services with established domestic markets, international expansion can be a significant growth driver.
A good strategic approach can include adapting content libraries and user interfaces to cater to local tastes and languages. Partner with local production companies to create content that resonates with regional audiences.
Next, integrate diverse payment gateways to cater to preferred payment methods in different regions. Offering local currency billing options will improve user convenience.
Keep in mind that your platform needs to comply with data privacy regulations and content licensing requirements in each new market you enter. Legal experts can help you navigate the complexities of international expansion.
8. Building a Loyal Community
While subscriber numbers are important, building a loyal user community is essential for long-term success. Here are some tips:
- Social media engagement: Build a strong presence on social media platforms to connect with viewers, promote content, and foster community discussions. Encourage user-generated content and run interactive campaigns to boost engagement.
- Fan events and exclusive content: Organize exclusive events or screenings for loyal subscribers, creating a sense of community and exclusivity. Offer behind-the-scenes content, early access to new releases, or merchandise to reward loyal viewers.
- Reward programs: Create loyalty programs that reward users for their engagement. Some examples include awarding points for watching content, referring friends, or completing surveys redeemable for exclusive content and discounts.
Conclusion
The OTT landscape is constantly developing. By implementing these strategies and continuously adapting to changing market trends, OTT services can optimize their revenue streams, build a loyal user base, and achieve sustainable growth in the competitive world of on-demand entertainment.
Get in touch with us to learn more about how JWP Connatix can help you launch OTT apps.