Understanding the Revenue Model of OTT Platforms

Pune, 24th May 2024 – As the popularity of OTT platforms continues to rise in the country, users eagerly anticipate the release of movies and web series on these platforms. This surge in demand has significantly benefited OTT companies, even those offering free content. Today, we delve into how these platforms generate revenue, shedding light on their business model.

OTT, short for ‘Over The Top,’ provides an avenue for users to access web series, movies, or serials via internet-based applications. Subscriptions are necessary for users to access OTT platforms, although some offer free content alongside paid subscriptions.

How do OTT Platforms Make Money?
OTT platforms primarily earn revenue through subscription fees paid by users. Additionally, they generate income from advertising displayed on their platforms. These advertisements are strategically placed, with OTT companies determining their duration and scheduling.

Advertising partnerships are formed between OTT and companies seeking to promote their products or services. Revenue is generated when users interact with these ads, with some platforms prohibiting ad skipping to maximize earnings.

In addition to subscriptions and advertising, OTT platforms engage in affiliate marketing and sponsorship for additional revenue streams. Furthermore, revenue is generated from the content aired on the platform, with OTT companies receiving payment from content providers for featuring their shows.

OTT Business Model
The OTT business model encompasses various revenue streams:

1. Transactional Video On Demand (TVOD): Users pay rental fees for specific movies or web series, even after subscribing to the platform. This includes highly anticipated content.

2. Subscription Video On Demand (SVOD): Users subscribe for a set period, typically one week or one month, to access their favorite content. Subscription fees directly contribute to the OTT company’s revenue.

3. Advertisement Video On Demand (AVOD): Users can access free content, supported by advertisements. Ad revenue constitutes a significant portion of OTT companies’ earnings, often with non-skippable ads.

4. Multi-Screen Model: Many users opt for subscription plans allowing access across multiple devices, including smartphones, smart TVs, and laptops, contributing to additional revenue for OTT companies.

As the OTT industry continues to evolve, understanding its revenue model provides insights into its sustainability and growth prospects.