How personalization in monetization strategies can play a key role in OTT?

We all are attracted to things that feel more customized to us individually. Businesses are picking up the cue and introducing unique and personalized user experiences. In the entertainment industry, the aspect of personalization is even more pronounced. Moreover, with the growing OTT market competition, it has become a necessity.  

When viewers switch on their favorite OTT channel (all the time wondering what next, we should watch), personalized recommendations based on the watch history add to their experience as an audience.

Along with the personalized application user experience if users also get customized subscription plans, then it can play a major role in getting them onboarded and retaining them as they will feel more connected to paying for what they are watching. Customized subscription plans can be based on various aspects like device usage, content being watched, providing different content and features based on the plan chosen etc., which will be explained further in detail below.

Choosing the right monetization strategy suited to the app is very important for the businesses. The key to generating revenue is to understand the different video monetization models to identify the right one, considering the market and the user base.

Different OTT Monetization Models

Subscription Video-On-Demand (SVOD)

SVOD is currently the most lucrative monetization model and represents the largest segment in the OTT market. Online streaming platforms like Netflix, Amazon Prime, Sony Live, Hulu, YouTube Premium, HBO, Disney+, etc.  have adopted this model.

In Android applications, the Google Play billing library is implemented to provide the subscription feature, and a user is required to subscribe using their Google Play Store account. Google Play’s billing system is a service that enables you to sell digital products and services in your app. The user is charged monthly or yearly, depending upon the subscription plan.  

In iOS applications, configuration is required in App Store Connect, and StoreKit APIs is used in the app to offer subscriptions. Different subscriptions can be created based on prices, access levels, and duration. These subscriptions can be given different names along with the details of that subscription. In the App Store, these are listed under the In App Purchases section of your application’s product page.

Transactional Video-On- Demand (TVOD)

TVOD allows consumers to purchase content on a pay-per-view basis. This model is followed by Apple’s iTunes, Amazon Prime Video, and Sky Box Office. In mobile applications, a payment gateway is implemented, which helps in online transactions. 

Advertising Video-On-Demand (AVOD)

These platforms earn through ad revenue, where the platform charges ad companies for posting ads on their platform. YouTube, Hulu, The Roku Channel, Voot, & MX player use this model.

Hybrid Model

This model is a combination of different revenue models. For example- Amazon Prime audiences pay a subscription to access a library of content but also have the option to purchase new releases or specific sporting events at an additional fee ( a combination of SVOD and TVOD). On the other hand, YouTube offers audiences free, ad-supported content with an option to pay a subscription to access premium videos. Using a combination of AVOD and SVOD enables users to access content before converting into paying subscribers.  

Diversified Distribution Models

With growing competition, the SVOD market has started slowing down, so the OTTs following SVOD have started to adopt customized monetization strategies. The OTT streaming space has started to grow in distribution models like FAST, Premium VOD, Multi-tier Model, and Multi-screen Model.

Free Ad supported Streaming TV (FAST)

Free Ad supported Streaming TV services provide free live TV services. It offers the traditional linear TV channel services free of cost to internet-connected devices and is not VOD.

Multi-tier Model

This model targets providing flexible multi-tiered pricing options that a user can choose from. It gives users the power to choose on how they want to pay and how much. This allows the provider to engage viewers and optimize the revenue by leveraging more points along the demand curve. 

Multi-screen Model  

This model provides flexibility to users to seamlessly switch between devices. This is an important feature as users tend to switch between mobile, TV, and other devices with the increase in binge-watching; the switching needs to be without any interruption in their viewing experience. With this model, the user can continue watching the same content on another device and resume from where they left off on the last device. The 5G technology allows such flexibility in content availability for different screens and devices. So, getting an app published for Mobile, TV, and Web has become necessary. All these platforms are different and require different code architecture on the front-end. On the back end also, it can be handled differently as per the business requirement.

Stats on how top OTT platforms earn money through strategizing their subscriptions:  

How can Personalization in OTT give an additional advantage to the OTT players?

Personalization is the platform experience provided to a user based on the data the platform has collected about the individual. The personalized experience includes filtering, classifying, prioritizing, and adjusting the content.

Data acquisition, for the recommendation engine depends on user profile data (like user preferences, region, language, and device used), user interaction data, and video/streaming content.

Collecting User Interaction Data

The OTT platforms implement various analytics libraries and SDKs like Adobe Analytics, Think Analytics, Firebase, Google Analytics, Flurry, etc. to collect user interaction data such as platform browsing patterns, downloads, type of content watched, pattern of watching, multi-device login, data sharing, reviews, etc. And present it in a graphical and more detailed form, which is further used to understand the app usage.

Data Processing

The collected user data is first organized, cleaned, and verified.  A profile is created for each user. And using the analytics tool, personalized content, user journey, targeted marketing campaigns, and ads are published.  Using customized subscriptions, depending on the above individual user’s data collected, can further be a game changer. Some of the options to create personalized subscription plans are:

Choosing the best technology partner who can provide cutting-edge technology infrastructure is another crucial point when developing OTT apps. Check our blog on the Best practices for outsourcing OTT app development. While developing an app, many factors play a key role, like technology at the front-end and back-end, UI experience, business model used, business goals, etc.  Nagarro can work with you to access your digital maturity, we can together enable you with best technology to suit your monetization strategy and leverage our Genome based AI offering to personalize the experience for your audience.