How OTT Platforms Earn Money: OTT Revenue Models

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OTT or Smart platforms are a medium to watch movies, web series, and other videos by using an internet connection. With Top 12 OTT platform is the ease of customization and controls. You do not require a fixed cable operator and enables you to watch the content of your choice.

How Do OTT Platforms Work?

OTT offers media directly to the end-user, simply by transferring IP packets to ISP and uses a technology known as Content Delivery Network CDN. Right from Smartphones to Smart Tv screens the content can be watched without buffers and advertisements smoothly at their convenience.

Did you know? There are over 300 OTT platforms available on the internet, but only 10-15 OTT platforms are well known and frequently used.

How Do OTT Platforms Acquire Content?

OTT platforms acquire content in two ways:

  1. Self-production – OTT platforms produce movies and web series by gathering a crew and funding their ideas to create original content for streaming on their application.
  2. Purchasing broadcasting rights – Here, the OTT platform buys the streaming rights from the filmmakers to showcase that particular movie or series on their application. This is mostly done to increase their content library so that more and more people subscribe to their platform.

How Do OTT Platforms Make Money?

Now the question arises, how OTT platforms make money? To explain in layman's language, these OTT platforms earn profits and popularity with the help of their subscribers. This funding is either done by themselves or they collaborate with the investors in return for profit share for that particular video content.

OTT Business Revenue Models

OTT platforms follow one of the four revenue models to make profits. Users will have to watch unskippable advertisements in the middle of their content, which might hinder the movie experience.

The popular OTT revenue models are:

  1. SVOD – SVOD means Subscription Video on Demand. In this model, the OTT applications earn through the subscription money that is paid by the users to view the content. The subscription value changes from platform to platform. This model is adopted by online streaming giants like Netflix, Amazon Prime, and Sony Liv.
  2. AVOD – AVOD means Advertising Video on Demand. This model allows the subscribers or users to view the content for free. These platforms earn through the Ad revenue model, where they charge brands and companies for posting ads on their platform. This model is adopted by Voot & MX Player.
  3. Hybrid – This OTT business model is a combination of both SVOD and AVOD. In this model, the OTT platform offers both free and paid subscriptions to its users and generates revenue through both models. This pattern is followed by Hotstar plus, and Zee5.
  4. TVOD – TVOD means Transaction Video on demand. This model comprises two steaming options that can be chosen by the subscriber as per their needs. This kind of revenue model is followed by Sky Box Office, Apple’s iTunes, and Amazon Video Store.

The Electronic sell-through model (EST) allows the user to get permanent access to the content and the Download to rent (DTR) model where the viewer can rent the content on a temporary basis by paying a minimal amount.

OTT Revenue Models Of Top Platforms In India

The increasing demand and reliability for entertainment have gained huge popularity for OTT Platforms. Every OTT platform offers its content with different subscription plans, revenue models, and services.

How do streaming services make money? OTT platforms offer premium versions that are ad-free, however, the user will have to buy the premium subscription at the pre-decided rate set by the particular platform.

Let us discuss how the Top OTT platforms in India earn money and offer to watch millions of content to their users.

About Amazon Prime Video

Amazon offers prime videos, prime music, and free amazon delivery with single subscription fees. The maximum number of people take subscriptions not just for video streaming but other benefits offered like free delivery and special discounts.

Amazon Prime Video shares its revenue with its parent company “Amazon” and is one of the leading video streaming platforms in India. They work on the foundation of “investment for future plans”.

How Amazon Earns Money?

Let's see how Amazon Prime Video makes money. Amazon prime video business models to earn revenue include SVOD, TVOD, and the Hybrid model. A report stated that, by the end of 2019, Amazon Prime Video held a market hold of 96.5 million subscribers leading to a revenue of $119 every year.

  • Supported Devices
  • Android
  • iOS
  • Smart TVs
  • Chrome
  • Web
  • Fire Tv
  • Playstation

About Netflix

Netflix is an online streaming platform that offers both original contents as well as various movies and web series. In the year 2020, Netflix earned annual revenue of $25 billion, which saw a 24% rise as compared to other financial quarters.

How Netflix Earns Money?

Netflix makes its revenue purely through its subscribers. The Netflix revenue model followed is the (Subscription Video on Demand) (SVOD) model. The subscribers pay the subscription fee to get access to the various content on Netflix. Netflix does not rely on Ads to support or earn; it is a complete ad-free application once you have subscribed.

Netflix subscriptions start from Rs. 199 per month and range up to Rs. 799 for a month. This includes access to 1 screen, 2 screens, or 4 screens at a time with HD and Ultra HD quality depending on the type of subscription chosen by its user.

  • Supported Devices
  • Android
  • iOS
  • Smart TVs
  • Chrome
  • Web
  • Fire Tv
  • Playstation

About Disney+ Hotstar

Disney+ Hotstar is one of the largest streaming platforms with a subscriber base of 300 Million. A 10-second advertising spot on Hotstar content is estimated at Rs. 150 to Rs 250 per thousand impressions.

How Does Hotstar Make Money?

Disney Plus Hotstar earns its revenues by following the hybrid model, i.e, it earns from both the subscriptions and advertisements. The content is accessible to the viewers for Rs. 199 monthly to Rs. 999 annually. But with the help of brands advertisements on different platforms, Hotstar plus earns their revenue along with gaining popularity.

  • Supported Devices
  • Android
  • iOS
  • Smart TVs
  • Chrome
  • Web
  • Fire Tv
 

About YouTube Premium

YouTube is a worldwide free OTT platform that can be accessed by anyone and anywhere; all you need is an internet connection. Globally, over 1 billion hours are spent watching videos on YouTube and every minute over 400 hours of content is uploaded on YouTube.

How Does Youtube Premium Earn?

Youtube Premium earns a huge amount of revenue through advertising brands, products, movies, and other platforms on its steaming videos. It also has side earning from promoting featured content and also affiliate marketing.

Apart from advertisements, it earns through monthly subscription via YouTube Premium where they create original YouTube content. It does not earn itself but also offers creators to earn from it too.

  • Supported Devices
  • Android
  • iOS
  • Smart TVs
  • Chrome
  • Playstation
  • Fire Tv

About ZEE5

Initially Zee5 was a freemium platform that was working through the successful Zee Tv shows. With the increasing demand and new releases of TV shows and Movies it has turned its business on a higher level.

How Does Zee5 Earn?

The main medium of revenue for Zee5 was advertisement-AVOD based model. However, recently the OTT platform has been focusing on acquiring more SVOD based users.

Recently it has turned its AVOD service to SVOD (Subscription Video on Demand). It provides an array of Bollywood, Hollywood, and original shows, movies, and other rare content in just Rs. 499 annually.

  • Supported Devices
  • Android
  • iOS
  • Smart TVs
  • Chrome
  • Web

About MX Player

MX Player is a YouTube channel that started in 2011. The platform mostly covers content from the Entertainment Industry and currently has 1.57 million subscribers.

How MX Player Makes Money?

MX player earns its revenue mostly from Advertisements. This OTT platform is a subscription model ad-based platform. The MX Player revenue model followed is AVOD. It shows static ads in between the content when the shows are paused by the audience. MX player allows various brands to advertise their products and services on-screen after paying an advertising fee.

  • Supported Devices
  • Android
  • iOS
  • Smart TVs
  • Chrome
  • Web

How TV Channels Earn Money?

While we are talking about OTT Platforms, many of you would be wondering how TV channels earn money. TV channels earn money mainly through two sources:

  1. TRPs - Television Rating Point

    The higher the TRP, the higher the earnings.

  2. DTH cable operators- TV viewers subscribe to the cable operators and view the content through the satellite transmission received in their Set-top boxes.

Did you know?OTT platforms like Netflix and Amazon allow more parental controls with the feature of creating a separate childproof user account. All the content on this account is automatically filtered and is kids-friendly.

With the rise of digitalization, OTT platforms are growing extensively in the Indian market. The main component behind this popularity is the low-cost data services and affordable subscription charges. The OTT platforms use algorithm methods to understand their audience preferences. This helps them to acquire and produce content that will attract more subscribers and advertisers to their application and lead to an increase in profits.

Frequently Asked Questions

Do you know how films earn from ott platforms?

The entire process is a cycle. The OTT platforms pay the movie producers to obtain rights to broadcast a particular movie. If there are dubbed versions of the same movie in different languages, the OTT Service provider has to pay for those separately.

What is the Amazon Prime business model?

Amazon prime business models to earn revenue include SVOD, TVOD, and the Hybrid model

How do streaming services make money?

Most streaming services earn from their subscriptions. Some rely on advertisements. Please refer the above article for further explanation with regards to each OTT platform.

All our tips to manage your OTT plans!

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