The online entertainment industry
has seen tremendous growth over
the past few years, particularly in the
over-the-top (OT T) streaming video
segment. The remarkable success of
online video subscription services
such as Netflix, Hulu, and Amazon
Prime have helped push the OTT
market to new heights. Businesses are
increasingly positioning themselves to
capitalize on the growing population of
“cord cutters,” “cord shavers,” and “cord
nevers” who want their favorite movies,
videos, and TV shows any where,
anytime, and on any device.
Whether you’re a broadcaster, content
owner, media publisher, or content
aggregator, you’re undoubtedly looking
at OT T market strategies to leverage
your investments in content, reach new
customers, and grow recurring revenue.
While your organization may be new to
OT T monetization models that rely on
direct end-user relationships (see “Popular
OT T Monetization Models,” below), you
are probably discovering that successful
video content monetization is much more
than just offering premium content while
making the traditional choice between
ad-funded vs. subscription-based delivery.
Trying to navigate the complex maze
of OT T monetization strategies and
business models can be a real challenge.
However, making the right monetization
decisions will be critical in determining
whether your company’s OT T efforts
will be successful or will fail.
Let’s begin with a little industry
SWITCHING FROM TRADITIONAL
CABLE: CUTTING THE CORD
Let’s face it, consumers today are
increasingly questioning their traditional
cable or satellite subscriptions. The
average cable service costs $99 per
month, and that price is increasing.
What’s more, research shows that typical
consumers watch only 17 of the 200
channels provided. They are frustrated
because they are paying for a lot of
content that they never watch.
According to the NPD Group’s latest
“Connected Home Entertainment
Report,” more than half of U. S. homes
with internet access today have devices
that stream video directly to their
televisions. In fact, most households don’t
stop at just one—the average family has
about three video streaming devices.
Instead of paying high prices for
cable, consumers are flocking to OT T
content services. They’re choosier about
the programming they watch and would
rather spend less money for specific
titles. Viewers can now create their own
mini-bundles by picking and choosing
the shows, events, and services they
prefer, rather than be subject to the
bundles, schedules, and programs of
their cable or satellite provider.
WATCHING MORE TV
ON MULTIPLE DEVICES
NPD’s research breaks down the
connected devices into four categories:
Blu-ray players, smart TVs, video game
consoles, and streaming devices such
as Apple TV and Roku. While game
consoles are still the most widely used,
streaming players are growing at a faster
rate. Amazon, Google, and Roku have
all released new boxes and adapters for
Another study by Strategy Analytics
found that the most popular devices are
the Apple TV and Google Chromecast.
Chromecast ended last year stronger
than Apple TV, despite having lower
sales overall. The Google product made
up 35% of the 42 million streaming
units shipped in 2015. Apple TV came
in second place, followed by Roku and
Amazon Fire. Ultimately, Apple leads
the pack with 37 million devices shipped
since 2007. Chromecast sold 27 million
during the same time period, and it is
quickly catching up.
“Everyone keeps talking about how TV
viewership numbers are going down, but
these new connections and relationships
and technologies are allowing people
to watch more,” said Amy Young of CBS
Networks in a recent Boston University
interview. “Average viewership jumps 88
percent when you look at the full 35-day
multiplatform window versus live and
POPULAR OTT MONETIZATION MODELS
• Subscription Video on Demand (SVOD). Subscription-based offerings, typically
providing unlimited access to a library of streamed film and TV content.
• Transactional. One-off payments for content, either in the form of digital ownership
(DTO/EST) or rental with an expiration date (DTR).
• TV Everywhere. Services providing access to pay-TV content across multiple screens
and devices, made available exclusively for pay-TV subscribers.
• Ad-Funded Video on Demand (AVOD). Free access to content, funded by advertising
that usually appears prior to the video content.
• Hybrid. OT T business models that combine various features from the models above.