Media and TV App Development SaaS Platform Applicaster has released a report entitled The State of OTT Revenue in 2021, which features insights from nearly 100 streaming executive decision-makers in broadcasting, direct-to-consumer video brands, and multichannel aggregators. The report revealed that 84 per cent of media executives expect streaming to grow in 2021, with nearly half of that budgeting for more than 50 per cent growth this quarter alone.
For this study, Applicaster surveyed 95 digital media executives and decision-makers at broadcasters, D2C media companies, and multi-channel aggregators for this study, to explore ten key OTT subjects that define the industry in 2021.
“COVID-19 changed how we consume media, and brands are getting increasingly creative in mixing and matching different revenue models to be able to serve the expanding number of cord-cutters, cord-nevers, and cord-shavers,” said Ido Hadari, CEO of Applicaster.
Moving from single to hybrid revenue models
Audiences are increasingly expecting customisation in both viewing experience and pricing options. This has led to increasing experimentation with different revenue models.
Advertising is the most prevalent revenue model, currently used by two-thirds of respondents, and usually in a monetisation mix.
However, in 2021, 54 per cent of OTT brands plan to change their business models to appeal to a wider range of viewers, with an additional 22 per cent considering it. Two-thirds of OTT brands are now transitioning to a hybrid monetisation approach. In fact, the study showed 19 different revenue combinations currently utilised across platforms.
Current revenue models at play
67% of the respondents use AVOD (advertisement-based video on demand)
- 81% of AVOD users combine ads with other strategies
- 19% of AVOD users rely only on advertising
58% of the respondents use SVOD (subscription video on demand)
- 78% of SVOD users mix subscriptions with other strategies
- 22% of SVOD users rely only on subscription
40% of the respondents use TVE (TV everywhere)
- 87% of TVE users mix subscriptions with other strategies
- 13% of TVE users only rely on TVE
39% of the respondents use PP (product placement)
- 91% of PP universe use it mixed with other strategies
- 9% of the product placement universe use PP-only
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Applicaster’s study highlighted three key trends:
- The vast majority of apps include advertising in their monetisation mix, with in-house sales teams driving most of that value.
- Local advertising is currently outpacing national advertising.
- Product placement and sponsorships are widely used to drive additional revenue opportunities.
Flexibility is vital as brands plan for Growth
Brands also plan to grow by expanding the number of platforms in their streaming strategies — leveraging the proliferation of Smart TV viewing and its interplay with mobile.
Expansion plans vary:
- 66 per cent will launch app(s) on more platforms
- 57 per cent plan to create more content for apps
- 55 per cent expect to launch more properties/apps on existing platforms
- 49 per cent will license more content for their apps
Multi-platform streaming strategy is critical
A mobile-only strategy for OTT just won’t cut it anymore. Viewers use multiple platforms and devices, and brands that want to monetise this tide of growth must be everywhere their viewers are. This is why mobile, CTVs and connected devices all made the top of the study’s “most important platforms” list. Expanding to new platforms is the easiest way to add new viewers in bulk, which will increase ad revenue and subscriptions.
“Media executives understand viewer behaviour will continue to evolve, long after apps launch. It’s not enough to keep pace by making changes in their app offerings, they need to continuously adapt their business models as well and appeal to a variety of audiences,” said Devra Prywes, CMO & CPO of Applicaster.