EXPLORE CHAPTERS
1.
Matching Monetization Models To Audience And Content
There is no one-size-fits-all monetization strategy for a streaming media business. The best revenue model—whether AVOD, SVOD, TVOD, or any combination of the three—depends on your audience and content library.
When is AVOD Suitable?
When is AVOD Suitable?
AVOD makes sense if your content draws millions of viewers every month. An ad-funded model has relatively low customer acquisition costs, scales easily, and appeals to audiences who are less likely to pay for content.
With inflation squeezing household budgets, streaming services are increasingly turning to AVOD. But it’s not without challenges. AVOD success demands an effective strategy for maximizing revenue across ad avails, while maintaining audience engagement.
When is SVOD Suitable?
When is SVOD Suitable?
SVOD is a lucrative option if you have an audience that’s passionate about your content. A profitable subscription-based business doesn’t require an audience of millions. But you do need niche or premier content that people will subscribe to access.
SVOD provides a predictable, recurring revenue stream and can deliver the highest lifetime value per viewer. Data-driven approaches to audience acquisition, engagement, and retention are critical to growing a subscription-based offering.
When is TVOD Suitable?
When is TVOD Suitable?
TVOD works best for highly anticipated, one-off events, like a championship match or movie premiere. However, the revenue stream is inconsistent and it’s difficult to build a long-term audience relationship. For these reasons, streaming businesses typically use TVOD to complement other monetization approaches.
Monetization Considerations
2.
Succeeding With A Hybrid Monetization Model
Many streaming services are moving beyond a single monetization strategy, combining two or more monetization approaches to increase and diversify revenue.
MIXING
MODEL =
MORE LEVERS
FOR GROWTH
A hybrid revenue model could prove to be your best option in a highly competitive streaming market, especially if you have a diverse viewership and a large video catalog. By mixing models, you have more levers to grow your audience and monetize content.
Here are just a few examples of how hybrid models can unlock more business.
Grow your audience with a hybrid model
- Appeal to consumers with different purchasing preferences by offering free ad-supported content for convenience-minded, budget-strapped viewers and a subscription plan for those with more discretionary entertainment dollars. (AVOD + SVOD)
- Appeal to consumers with different interest levels by providing a subscription service for your most passionate fans and pay-per-view content for casual viewers interested in a single game, performance, or class. (SVOD + TVOD)
Better monetize content with a hybrid model
- Make a few episodes of your most-watched content available in a free, ad-supported environment, then encourage viewers to subscribe to continue watching. (SVOD + AVOD)
- Collect a recurring subscription fee for access to some of your content library, but charge extra to watch a top-tier channel, newly released movie, or in-demand TV series. (SVOD + TVOD)
Media and Fan Brands Succeed with Hybrid Revenue Models
Media and Fan Brands Succeed with Hybrid Revenue Models
AMC Networks maximizes monetization with a combination of subscription-based and ad-supported services available across multiple devices.
SVOD + AVOD
The WNBA drives revenue through a mix of single-game passes, a season-long subscription, and ads in video clips on the league’s web site.
SVOD + AVOD + TVOD
Craftsy offers hobbyists the option of accessing videos on a purchase-to-own basis or as part of a subscription that also includes livestreamed events.
SVOD + TVOD
Expert Voices
I heard this loud and clear at IBC this year: A single monetization
strategy now is not really the optimal way to monetize content.
COLIN DIXON
FOUNDER AND CHIEF ANALYST, NSCREENMEDIA
3.
Future-Proofing Your Streaming Revenue
Selecting a monetization strategy isn’t a set-it-and-forget-it exercise. Technology advances, new channels emerge, and consumers’ willingness to pay for content rises and falls with the economy.
76%
As a result, the monetization strategy that works for you today might not be the best revenue-driver tomorrow. In fact, a recent survey found that more than 76% of media execs planned to revise their business model within the next year.
Having the flexibility to add new monetization approaches helps you protect and grow revenue as your business matures and the streaming market continues to evolve.
Consider the value of being able to monetize content in different ways in these common scenarios:
| SCENARIO | WITH A VERSATILE MONETIZATION STRATEGY, YOU CAN... |
|---|---|
 You’re an SVOD service, but subscriber growth is starting to stall |
Win a wider audience with free ad-supported content, then upsell your subscription plan |
 You’re an SVOD business that’s losing subscribers to FAST services |
Pilot a free or low cost ad-supported tier to retain customers who are cutting their streaming budgets |
| You’re an AVOD service that’s built a sizable audience of repeat viewers |
Introduce a subscription offering to capture an additional revenue stream from loyal fans |
 You want to expand beyond your home market |
Set up payment models that appeal to local consumers in different regions to encourage service uptake |
 You have the opportunity to license some newly available tentpole content |
Offer the content on a pay-per-view basis or as part of a premium subscription to attract new viewers |
Expert Voices
Things are clearly shifting now. even the strongest subscription services are going to need hybrid monetization.
WILL RICHMOND
EDITOR AND PUBLISHER, VIDEONUZE
Hybrid Services See Higher Retention Rates
Hybrid Services See Higher Retention Rates
Offering a free or low-cost AVOD tier is a proven customer acquisition strategy for SVOD services. But that’s its only benefit. Data now shows that a hybrid AVOD + SVOD approach can also increase customer retention. At a time when cost-conscious consumers have countless streaming choices, media companies with the ability to combine and iterate revenue models can minimize user switching and optimize profitability.
4.
Getting a Handle on Revenue Implications
Understanding how changes in monetization impact overall business performance is critical to success. Any number of approaches may be possible, but are they profitable?
Imagine you’re an SVOD service that wants to increase streaming revenue. You decide to pull some content off your subscription offering and make it available in a free ad-supported tier.
To determine whether the strategy is paying off, you’ll need to answer questions like:
- Did we see a measurable change in service engagement?
- What's the impact on subscriber lifetime value and churn rates?
- How will that affect subscription revenue a year from now?
- Will ad revenue offset any projected slowdowns in the SVOD business?
Optimizing your monetization strategy requires actionable insights from a meaningful and comprehensive set of audience, engagement, and advertising metrics. This will allow you to make the best, data-driven decisions to grow your business.
5.
Keeping Your Monetization Options Open
Creating a sustainable and profitable streaming media business requires the flexibility to:
- Choose the right monetization model for your audience and content
- Combine monetization models in a hybrid strategy
- Optimize and evolve monetization models over time
Without the right enabling technology, your business will be cut off from potentially lucrative revenue streams. And you’ll have a tough time responding to new business objectives or changes in viewing and spending behaviors.
That’s why your best bet is a streaming platform that supports all monetization models, including AVOD, SVOD, TVOD, or any combination of the three. Another must-have: Rich analytics to measure and fine tune business model changes.
With an adaptable streaming solution and the willingness to test different revenue approaches, you can achieve the optimal monetization strategy for your media business now and into the future.