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The Not-so-distant Future of OTT Monetization

Alex Wilkinson

Head of Sales & Marketing - EMEA & LatAm

August 2, 2023


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OTT providers need to find new ways to monetize, and they know it. Churn is a serious problem for many SVOD services so naturally, they’re searching for ways to unlock additional revenue streams to supplement income generated from subscriptions. In the State of Streaming Spring 2023 Report, participant organizations were asked to rank their 2023 goals in order of importance. The majority of contributors chose “monetizing services in new ways” as one of their four top-ranked objectives for the year. And while this comes as no surprise, the focus ought to be on future proofing services by identifying innovative and enduring monetization routes, rather than concentrating solely on ad-supported or mixed subscription models. 

For business continuity and success, monetization strategies must evolve in-line with changing consumer habits and preferences. With this in mind, what will OTT monetization look like in years to come? Are we headed in a direction where new technologies allow video providers to vary their monetization strategy at an individual level?


How can OTT providers diversify their offerings?

When done well, a diversification strategy can increase revenue by creating new monetization strands, while at the same time reducing business risk by multiplying and spreading revenue sources. Successful diversification requires deep industry and business knowledge and an ability to identify potential synergies. With the right creative input, OTT providers will be able diversify into new areas to create monetization opportunities that may not have existed before. As more and more aspects of users’ daily life move to the digital space, this could mean satisfying more of their media needs than video streaming alone. But is it really profitable to diversify and provide multiple media offerings? 

It certainly seems to work for many of the big media providers. Just look at the likes of Amazon, Google, and Apple, who have all found success by branching out into new service areas including SVOD services, podcasts, music, sports, and more besides. Netflix is another provider that seems to be adding to its standard video streaming offering. In addition to bringing users the inside scoop on films, shows and content with its podcast series, it has also broadened its offering by expanding into the fitness vertical following a partnership with Nike, and is currently making moves on the game industry with Netflix Games.

As video owners look to diversify their offerings, will we start to see providers having a presence across multiple areas of viewers' digital lives, from streaming entertainment to shopping, social experiences, health and fitness, gaming, and sports? I’d say, quite possibly.


Leveraging partnerships to boost OTT providers’ competitiveness

That being said, video providers won’t need to go it alone - unless they want to, of course. As the saying goes, there is strength in numbers, and mutually beneficial partnerships between media service providers will act as a means to deliver a more diverse offering to customers. By teaming up with other entertainment or technology companies to provide attractive packages, streaming services will be able to offer a combination of music, gaming, or e-commerce services alongside their video content, with each vertical complimenting each other.

Partnering will also have a particularly important role to play at a regional level as local providers continue to team up to be greater than the sum of their individual parts. This is currently playing out all over Europe as local joint ventures emerge, which is creating a counterweight to US dominance. From a monetization standpoint, this is of course an interesting path to explore because it can help to reach new audiences while unlocking new revenue streams among existing users.


Is the future of the OTT industry local?

The growing importance of local content cannot be overstated, especially in markets with strong regional preferences. And of course, monetization strategies for global and local services will differ because revenue models need to cater to regional tastes and market tendencies. For a global service, this can be difficult to get right at a local level.

Despite this, it's clear that global services enjoy greater scale than their regional counterparts. They can span the globe and target a potential audience of billions of people. However, being successful on this scale requires a massive content library which means huge initial and ongoing investment. It is also true that for these kinds of global models, timelines for return on investment can be lengthy due to the high costs often incurred during content production. Arguably, regional BVOD (broadcaster video on-demand) services which are growing in popularity, are at an advantage because they have a huge content library from day one and are generally ad-funded. This means that they start off in profit or at least by having a much shorter time to getting there than the global streamers.


Building OTT viewer loyalty and creating a sense of exclusivity

Rewarding viewers for their loyalty with virtual points or incentives could be a significant driver for engagement and retention. Similar to loyalty programs in other industries, streaming services could offer exclusive content or benefits to subscribers who regularly watch content on their platform. Exclusive merchandise is another area that could be promising. In much the same way that the SVOD model allows providers to create a sense of exclusivity that people want to be part of, merchandise could be marketed but made available exclusively to subscribers.

This same approach could work well with sports fans. By offering exclusive products and content, such as season passes, behind-the-scenes access, and merchandise, service providers could attract a devoted audience willing to pay a premium. Streaming services could collaborate with sports leagues and teams to create unique content experiences, enhancing viewer engagement and unlocking new routes to monetization.

How can OTT providers merge e-commerce with video?

Integrating OTT services with e-commerce will also create multiple new monetization opportunities for video providers. By enabling in-video shopping, viewers will be able to purchase products directly from the shows they are watching, all without having to leave the video service. This will improve engagement, streamline the buying process, and create a seamless and interactive shopping experience. To boost consumer confidence and improve conversion rates, video services could also incorporate virtual try-on and AR features to allow users to visualize products before purchasing.

Another idea could be to offer exclusive deals and discounts to viewers, encouraging them to make purchases through the integrated e-commerce platform. OTT providers could further boost revenue by leveraging affiliate marketing, and earning commissions from referrals to e-commerce partners. The integration of e-commerce into streaming platforms will make all these transactions seamless, which will be critically important for shopping experiences in the video space to truly take off.

Introducing smarter billing for OTT services

Future OTT platforms will need to experiment with innovative payment models, such as offering the first half of a series for free and charging for the second part of it. Service providers could also facilitate auto-bundling by forming partnerships with banks, so that users receive automatic discounts based on the number of subscriptions that they hold.

Technological advancements may enable services to identify individual viewers in a room, allowing for personalized billing and individual subscriptions. This could theoretically be done by capturing live video feeds from cameras, either built into the viewing device or by connecting external cameras, and using facial recognition technology to match the detected faces with templates in the database. When users want to access OTT content, the system could use this technology to detect and identify the individuals present in the room, then link to their individual billing account.

Experimentation will be key to evolve OTT monetization 

One thing is for certain and that is that video services will need to trial different monetization approaches and experiment with combining multiple strategies. If a particular method isn’t paying off, then providers need to ensure they can pivot and switch tactics. 

As technology and AI capabilities improve to enable hyper-personalization on a level not yet seen, services could ultimately apply different monetization strategies to individual subscribers or viewers. This would ensure that the route that is the most effective with a particular person at a given moment is always employed. An exciting future lies ahead.

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