Revealed! Why Startups Are Choosing Streaming Business Model

Illustration by Herdetya Priambodo ✱ via Dribbble

Mobile apps and quick internet usage have increased the use of streaming platforms. Internet influencers are rewriting the rules of eCommerce and marketing. Likes, shares, and comments on social channels have become a new currency. However, grabbing customers’ attention is as valuable as gems.

Everything goes live when entrepreneurs, artists, and organizations compete for precious seconds from each viewer. This boosted the usage of streaming platforms and encouraged startups to choose a streaming business model.

The OTT market size was valued at 121.61 billion in 2019 and is predicted to reach around $1,039.03 billion by 2027, growing at a 29.4% CAGR between 2020 and 2027. Over-the-top service refers to TV shows and movies that are delivered directly to digital viewers without the need for a satellite television subscription or cable.

Over-The-Top Market
Image: (Source)

Streaming content can be viewed and downloaded on users’ demand. This type of content includes TV services and movies which are delivered over the internet to connected devices like tablets, consoles, PCs, and smartphones.

Over-the-top (OTT) services are at a relatively nascent stage and are accepted as a trending technology globally. However, the streaming market is projected to witness advanced transformation and innovation, enabling viewers to access everything they want in a single space.

OTT Business: Explore the Whole History Here!

Over the top means video streaming that takes place on the web. It is associated with top streaming services such as Hulu, Netflix, HBO Max, Disney+, and many more. But how did such businesses come to power? It all started in 1995 with the launch of the first streaming platform.

ESPN hosted a Major League Baseball game. Soon, top technology companies such as Apple, Microsoft, and many more joined the race and invested in the OTT platform script that caters to the growing demand of viewers efficiently.

By the late ’20s, this streaming technology started to go mainstream with services offered by Amazon instant video, Netflix, and many more.

These streaming services introduced a new way to access movies, series, TV shows, and other streaming content viewers love. They gave visitors an alternative to expensive and restrictive satellite or cable options.

Most of all, they expand collective imagination on how entertainment can make revenue and work. OTT grew popular over time, and different types of services flourished through the market.

The selection of video and TV services has been diverse in 2020 due to the pandemic. However, the way OTT revenue models operate is diverse. What captures viewers’ attention is taking place right now and never happens again. That is real-time content.

Video streaming services are a hot addition to mobile apps and social media. Platforms like Twitter, Vimeo, Facebook, Instagram, and others have joined this trend.

How Do Streaming Platforms Help Businesses to Grow?

The OTT video segment revenue is projected to reach around $281.70bn in 2022. It is anticipated to show annual growth of 11.01% between 2022 and 2026, resulting in an increase in a market volume of $427.80bn by 2026.

User penetration is expected to reach around 43.1% in 2022 and is predicted to hit 49.9% by the end of 2026.

OTT Video Revenue
Image: (Source)

Real-time streaming technology enables entrepreneurs and brands to stay connected with friends and followers, providing exclusive content rather than obnoxious ads.

Live video streams can help brands take their inbound marketing to a new level. As it is a cost-effective method, small businesses can also consider it. The streaming platform can be helpful for various businesses, including:

 icon-angle-right Leisure and Entertainment

Twitch is a popular gaming video streaming app; gaming fans can easily watch others playing games or stream content. At the same time, live dating video streaming enables matches to connect virtually before the meeting.

Momo, a Chinese dating app had 114 million monthly active users in 2021; the number has doubled in the past five years.

MOMO Monthly Active Users
Image: (Source)

 icon-angle-right Retail

Marketing in a retail industry depends on the visual appeal of goods. A live-streamed launch of your business product or services can prove to be a great start. Retailers can improve sales by allowing users to purchase while viewing live streams.

 icon-angle-right Real Estate

Real-time streaming can easily be used to display properties to buyers. Individuals can get information about the taxes, location, neighboring areas, and more within the company’s app without going anywhere.

 icon-angle-right Webinars

Video streams diversify business presentations and reduce the distance between buyer and seller. It can prove valuable for businesses that don’t engage with the public.

Most B2B and B2C companies need a streaming platform to offer Q&A, share materials and consultations and get fast responses from other customers.

 icon-angle-right Healthcare

Live streaming technology facilitates patient support, interviews, conferences with colleagues, presentations, education, and training of interns, etc.

 icon-angle-right Logistics

Brands can use live streaming services to manage the delivery process. An installed webcam in the truck luggage space can be used to stream video for customers, shipping agents, or any other stakeholders. IoT integration and geolocation will add value to the apps.

Live streaming or video streaming is a growing trend in marketing. The flow of engaging and new interactive video content can increase traffic and boost revenue and advertising opportunities.

Streaming is not one-size-fits-all, but it can be a great growth engine if appropriately utilized.

Streaming Business Models: Check Every to Choose the Best One!

Video streaming is no longer the media of the future. Cable and satellite TV use have dropped in the US since 2015; the percentage of Americans who view streaming content has increased from 24% to 44% between 2015 and 2021, a drastic jump during the period.

Many streaming companies have emerged, and many more are on the way. They follow different business models that offer a chance for success. Streaming business models have risen above the others; let’s explore the most popular streaming models right here.

AVOD (Ad-Based Video on Demand)

The ad-based video-on-demand business model helps you generate revenue with ads. AVOD enables viewers to watch videos for free; businesses pay a charge to advertise and place commercial ad breaks in the content. Ads can take the form of video ads, sponsored content, screens, and more.

 icon-angle-right Pros of an AVOD Business Model

This business model is helpful in finding new viewers. With no barrier, viewers can get hooked on the content without hitting any hurdles. This enables you to create channels and grow faster. If you serve an interest group or niche demographic, you can charge a higher rate from advertisers.

 icon-angle-right Cons of an AVOD Business Model

Businesses can make less money per viewer compared to other models. You need to gain a substantial audience; however, ads can be annoying to viewers. You are required to serve ads to make revenue without driving away viewers.

 icon-angle-right Examples of AVOD Businesses

SVOD (Subscription Video on Demand)

In this model, companies charge a recurring cost for access to the video platforms. Members get complete access and can stream video as they like. Subscription video on demand came about with services such as Netflix and dominated popular OTT businesses.

 icon-angle-right Pros of an SVOD Business Model

It is a customer favorite. More than 50% of US households pay for an SVOD subscription. It is an efficient model that builds steady income from other consumers. However, you can provide pricing incentives to entice viewers.

 icon-angle-right Cons of an SVOD Business Model

Subscription video-on-demand is tending to viewers leaving. Changes in price, economy, or content can cause people to end subscriptions; a barrier to entry can make it challenging to find customers. Hence, it becomes crucial for you to provide improved content if someone is going to pay for it.

 icon-angle-right Examples of SVOD Businesses

TVOD (Transactional Video on Demand)

It is one of the straightforward business models out of the bunch. Customers can easily buy or rent video content in a TVOD model. It is also known as pay-per-download (PPD) or pay-per-view (PPV).

 icon-angle-right Pros of a TVOD Business Model

Transactional Video on Demand is a simple and straightforward model. This method is effective and great if you want to sell a video or do not have enough to launch a feature-rich streaming platform. It is a perfect time for one-time sporting events, film debuts, instructional videos, and more.

 icon-angle-right Cons of a TVOD Business Model

Businesses fail to get revenue as AVODs and SVODs in this model. Most viewers are comfortable using services consistently. However, paying for additional programs can be frustrating. However, it’s harder to access transactional video-on-demand channels on OTT boxes and Smart TVs.

 icon-angle-right Examples of TVOD Businesses

Hybrid Business Models

Many businesses have found many creative ways to structure their content. A hybrid business model combines all three OTT business models; they enhance the user experience and help generate more revenue.

Top players like Disney+ are blending TVOD with SVOD. The streaming platform charges around $7month but soon offers TVOD access to new films like Mulan.

Another prominent example is Hulu which has blended SVOD and AVOD. It charges low-level subscribers to pay and watch their programs with ad interruptions.

At the same time, they need to pay high to watch streaming content with 0 ads. Many businesses have put their unique spin on the streaming industry. We can’t wait to see what combinations are up next.

Netflix is the leading OTT platform with more than 208 million subscribers, while Hulu and Disney+ are not so far behind, with 103.6 million subscribers and 37.9 million subscribers, respectively. There are many players serving customers’ requirements while many are going to enter the industry in the future.

Parting Words

The rise of streaming platforms is challenging the supremacy of traditional TV, with the emergence and growing popularity of digital platforms liberating the most prominent population globally.

Many people are aiming to get rid of ads while viewing content. However, ads on streaming platforms like YouTube, Hulu, and others deter users. HBO Max has around 39% of ad-free subscribers considering switching to ad-supported streaming.

Looking at the growing popularity of OTT platforms, many businesses are choosing to shift to a streaming business model.

No matter whichever you prefer, you can get success if you want to make innovative and strategic decisions. You can take the support of an app development company to build apps to support different streaming models.

About the Author!

Gaurav Kanabar founder of Alphanso Tech a music streaming app development company provides an amazing white-label music streaming platform. Besides this, Gaurav also loves to deliver excellent content helping readers to have deep insight into the topics like music, video streaming, live streaming etc.
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