OTT Industry: 76% Plan To Change Business Model To Capitalize On Streaming Demand

Applicaster, a technology provider for simplifying the creation, delivery and management of OTT video applications, in its latest industry report finds that 84% of media executives expect streaming to grow in 2021, with nearly half of those budgeting for more than 50% growth this quarter alone. In addition, three-quarters of respondents plan to change their monetization model this year, or are considering making a change.

The new report, The State of OTT Revenue 2021, features insights from nearly 100 streaming executive decision-makers in broadcasting, direct-to-consumer video brands, and multichannel aggregators.

“The study clearly shows top media executives are diversifying streaming and revenue models amidst this tsunami of digital content demand,” said Ido Hadari, CEO of Applicaster. “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.”

OTT Brands Moving From Single To Hybrid Revenue Models

Audiences are increasingly expecting customization, 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 monetization mix, according to the study.

However, in 2021, 54% of OTT brands plan to change their business models to appeal to a wider range of viewers, with an additional 22 % considering it. Two-thirds of OTT brands are now transitioning to a hybrid monetization approach, with only one-third employing a single model. In fact, the study showed 19 different combinations of revenue tools are currently utilized across platforms.

Flexibility Is Key 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% will launch app(s) on more platforms
• 57% plan to create more content for their apps
• 55% expect to launch more properties/apps on existing platforms
• 49% will license more content for their apps

“Media executives understand viewer behavior 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,” said Devra Prywes, CMO & CPO of Applicaster. “It’s clearly important for these businesses to create a matrix of options and experiment with offering low-priced, or free, options to be accessible to an even greater audience, especially price-conscious ones.”

The full report is available here.