VIDEO MONETIZATION 101: WHY ALL THE BIG INDUSTRY PLAYERS ARE DOING IT

It’s called Netflix & Chill, not Cable & Chill.

Admit it. Television ain’t what it used to be.

Ask any 18-34 year old where they go to watch content, and chances are they’ll fire off a list of streaming platforms ranging from Netflix to Sling TV.

These days, it’s hard to pass up the flexibility and control that over-the-top (OTT) channels promise their users. And as viewers rapidly migrate to digital platforms from cable, content owners are following suit.

The Bandwagon You’ll Actually Want to Ride

In the past year alone, key industry players such as Disney, AT&T, and Viacom announced launch dates for their own content platforms, thus joining the ranks of the original OTT gang: Netflix, Hulu, and Amazon Prime Video.

Sure, they might be a bit tardy to the party, but if anything, their delayed embracement of digital platforms only illustrates the truth about the evolving landscape for content owners:

If you want to stay in the race, you have to hop on the OTT bandwagon with the big boys.

Making Money in Your Sleep

Picture this:

You have content. You have a platform. And most importantly, you have an audience. When it comes to assembling a well-oiled OTT machine, you’re 75% of the way there.

So what accounts for that last 25%? It’s simple- revenue.

In order to ensure long term profitability for your content and your platform, you need to develop agile and effective monetization strategies. Once implemented, these strategies will bring in the big bucks with minimal effort.

This is why behemoth companies such as Disney, AT&T, Viacom, and more are trying to elbow their way into the OTT industry: at Netflix alone, the streaming giant was able to earn an impressive 11.69 billion. Furthermore, total revenues for U.S. OTT companies as a whole are projected to increase 66% to $27.6 billion by 2020.

A Tale of Two Strategies

Monetizing your video essentially comes down to two different models: AVOD and SVOD. AVOD refers to advertising based video-on-demand and is free for consumers, whereas SVOD requires consumers to pay for a subscription in exchange for content access. You can also use a hybrid model, which effectively combines the two options.

Now, how do you pick?

Generally speaking, the best strategy usually depends on the following factors:

MODEL TYPE OF CONTENT LOCATION OF AUDIENCE AUDIENCE DEVICE PREFERENCES MARKETING BUDGET
AVOD Less targeted and short form content Nations prones to content piracy Devices with high processing power to call ads Smaller budget
SVOD More niche and long form content Nations with underdeveloped ad network Works well with all kinds of devices Larger budget

But let’s get a bit more specific…

AVOD: Your good ol’ corn-fed model

Ads are familiar: people recognize that they are part of the natural order of content consumption. That being said, taking a page from the linear playbook and adopting this tried-and-true model for OTT platforms is almost a no-brainer. In fact, Google recently found that 75% of content owners saw greater ROI from their digital ads than their linear ones.

However, implementing an AVOD model will bring on its own set of issues in the digital world.

Three AVOD obstacles and how to overcome them

Ad Blocking

Problem: There are over 236 million ad blocker installs in the US alone.

Solution: Combat blockers by explaining why they are necessary: ads= free content, no ads= content will no longer be free.

 

Buffering & Delays

Problem: Delays from multiple ad calls can slow down content and cause frustration with viewers. This is usually a side effect of client-side ad insertion.

Solution: Use server-side ad insertion rather than client-side. That way, devices with less processing power won’t be affected.

 

Ad Frequency

Problem: 27% of respondents to an IBM survey claimed they stopped watching content with too many ads.

Solution: Make sure you have a proper proportion of ads to content. Perhaps offer lighter loads to new viewers to hook them, then serve heavier loads later on.

SVOD: The new(ish) girl in town

In recent years, OTT companies such as Netflix and Hulu have launched SVOD into the content sphere as a stable and lucrative model for monetization. In a study performed by Digital TV Research, SVOD revenues will reportedly fly past $25.71 billion by 2021, with subscriptions accounting for around 40% of total revenue for OTT.

Despite being a more predictable flow of income for OTT, SVOD certainly comes with a few challenges of its own.

Three SVOD obstacles and how to overcome them

Customer Turnover

Problem: People will cancel subscriptions after trial periods, or will start one only to binge a certain show and then cancel.

Solution: Produce and/or acquire high quality content that viewers can’t refuse. Good content will keep them returning for more.

 

Login Sharing

Problem: According to a Reuters poll, more than 20% of young adults use friend’s or relative’s login.

Solution: Strategize on how to gain new customers. Provide them with incentives to sign up for your platform, and engage them with new features and content.

 

Technical Hurdles

Problem: It’s difficult managing entitlement and payment across multiple apps and devices, along with handling varying payment obstacles.

Solution: Seek advice from experts in the industry. Monetization is tricky, and consulting with someone who knows the ropes will help.

Monetizing never sounded so sweet

There you have it:  two separate monetization models that will help your content roll in the dough. Although each model contains its own unique set of challenges, you can overcome them with the right strategy.

However, assembling this strategy is no small feat. In many cases, it’s hard to allot the necessary time and resources that successful monetization requires, but teaming up with an experienced and knowledgeable partner can make all the difference.

At Ownzones Entertainment Technology, we possess the technology and industry acumen to help you fully capitalize on your content. With our cost effective monetization solutions, we will set you up for success while you reap the benefits of a steady stream of ROI.

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