The streaming industry is experiencing unprecedented growth, giving users access to an infinite variety of audiovisual content.
However, monetizing these services is a major challenge for providers in this industry. To meet these monetization challenges, streaming video suppliers are increasingly turning to three models: advertising, paid models and a hybrid approach.
The challenges of advertising in streaming
Today, advertising is a major source of revenue for many free streaming services. This model (AVOD) can be a gateway to the subscription model. In fact, some customers who are satisfied with the content on offer decide to switch to a paid package to avoid advertising. According to a study by the Baromètre OTT NPA Conseil / Harris Interactive, the new Netflix package has enabled it to acquire 1.4 million subscribers, 60% of whom are new customers.
Nevertheless, frequent interruptions or irrelevant advertising can irritate users. Streaming providers therefore need to strike the right balance between advertising monetization and user experience. To achieve this, they need to offer targeted, non-intrusive advertising to ensure a pleasant user experience while generating revenue.
The challenges of paid models in streaming
Subscriptions (SVOD) have become a popular monetization model in the streaming industry. With the proliferation of OTT platforms, providers need to offer exclusive content to stand out from the competition and acquire new subscribers. Subscription price is a crucial element in user retention. A balance must therefore be struck between attractive pricing and sufficient revenue generation.
Moreover, competition in this market is fierce. Faced with a wide choice of services, users are sometimes reluctant to take out multiple subscriptions. Differentiation through unique features, personalized recommendations and customer loyalty is essential. Subscriber loyalty ensures the stability and growth of a streaming service.
We also have pay-per-view (TVOD), which appeals thanks to its payment flexibility and lack of commitment. Consumers choose to pay only for the content that interests them and are not bound by a long-term contract.
However, this model can be more expensive than a monthly subscription if the consumer wishes to follow several pieces of content. This is because the price of a subscription (SVOD) is a fixed cost that does not vary according to the number of videos watched.
The hybrid model
The hybrid model in streaming is a combination of advertising and subscription revenues. Consumers can access both a free offer incorporating advertisements and a paid offer without advertisements on the same platform. This model attracts a wider audience: those who prefer free access and those who are willing to pay for a better user experience.
Additionally, the hybrid streaming model requires creativity and adaptability. You need to regularly evaluate user feedback, refine your content offering and advertising strategies to build subscriber loyalty and attract new consumers. In this constantly evolving market, the hybrid model has a bright future.
Piracy and account sharing are also challenges facing streaming providers.
Streaming platforms are targeted by individuals trying to bypass security systems and illegally distribute content. The rise of these platforms and the increase in their rates have partly contributed to the resurgence of piracy. Read our article on piracy.
And finally, account sharing is now a widespread practice in the streaming industry. Consumers share their login details with friends and family. This has consequences for the platform's revenue generation. This practice can significantly reduce revenue generation since there is only one user is paying.
To conclude, monetization in the streaming industry is a complex challenge that requires providers to find creative solutions to generate revenue while delivering a quality user experience. Whether advertising, pay models or hybrid models, each approach has its own challenges and requires balanced management. Streaming providers therefore need to be attuned to users' needs and expectations to ensure viable and sustainable monetization.
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