Video streaming, whether it’s free, ad-supported, or subscriber-based, is a growing market. According to Digital TV Research, global media revenue from OTT is expected to reach $224 billion in 2027. While SVOD revenues will climb to a whopping $136 billion, AVOD revenues are set to reach $70 billion by 2027.
Table of Contents
- Choose the Right IPTV/OTT Solution
- Understand Your OTT Costs
- Monetize Your OTT Content
- Leverage the Power of Analytics and a Recommendation Engine
Today, video streaming can benefit nearly every industry, from entertainment to education, fitness, music, and religion. Platforms such as Disney+ and Paramount+ have taken the OTT market by storm and are perfect examples of how to do it right.
When developing your IPTV/OTT business plan, first consider how you will create, launch, monetize, and differentiate your platform. Choosing the right provider and content delivery network (CDN) is key to launching a successful platform, while monetization and analytics are crucial to growing your user base and revenue.
Choose the Right IPTV/OTT Solution
To deliver a seamless IPTV/OTT experience, there are many moving parts to consider including hardware, software, middleware, transcoding, CDN, security, apps, analytics, and UI/UX. While this can seem overwhelming, OTT providers such as Setplex can provide an all-in-one solution for operators who are looking to start or upgrade their platform and reach a wider audience.
As an end-to-end OTT solution, Setplex provides all the components needed to deliver a complete IPTV solution, including encoding/transcoding, content and user management, CDN, ad monetization, and analytics. Setplex’s NORA Middleware™, utilizing a microservices-oriented architecture, incorporates all the latest technologies to make Setplex’s platform fault-tolerant and highly scalable. NORA™ is ideal for Tier-one operators that need to support millions of subscribers as well as startups experiencing hyper-growth that require high availability [CS1] to support their OTT/IPTV business operations.
Understand Your Costs
It’s important to fully understand each of the company OTT operational costs, which typically include middleware fees, app fees, storage costs, DRM fees, and the largest variable cost – CDN fees.
Content delivery network fees are based on subscriber connection speed and average time watched per day. For example, if an average subscriber watches two hours of video per day at an average connection speed of 3 Mbps, the amount of bandwidth consumed is about 2.575 GB. Over 30 days, that is about 77.25 GB. or .08 TB. At a cost of .02/GB, you can estimate to pay about $1.55 per subscriber monthly in CDN fees.
Beware of OTT companies that offer low middleware or app costs but have CDN charges of .06 /GB, as you will end up paying a lot more at the pump, even if you are not being charged ‘per subscriber’ fees. In this scenario, CDN fees will eat up your profit as your platform becomes more popular.
In order to manage your expenses and revenue, it’s important to choose an IPTV/OTT company who will deliver your content to your audience’s geographic region with a standard rate commitment to minimize costs as your service scales. In general, the more you commit to in terms of TB per month, the lower the cost per TB.
Here at Setplex, we offer a “pay as you grow” model with tiered pricing on video delivery through a major CDN provider. Additionally, we give our customers the option to bring their own CDN.
Monetize Your Content
There are several monetization models to consider. Which is best for your OTT/IPTV business?
- AVOD monetization – This model usually works by providing free content along with paid advertisements. YouTube and Hulu’s ad-supported plan are two examples of AVOD monetization.
- SVOD monetization – SVOD allows users to access all of the content available on a platform, such as Netflix and Amazon Prime Video, through a monthly or yearly paid subscription.
- TVOD monetization – Also known as pay-per-view, users only pay for the content that they access. iTunes, Google Movies, and YouTube Movies use this model to offer music, sporting events, and movies.
- HVOD monetization – When two or more of the above business models are combined strategically to create a unique model, it’s termed as Hybrid Video on Demand monetization. YouTube is the perfect example for this category as it combines TVOD, SVOD, and AVOD monetization models on a single platform.
Leverage the Power of Analytics and a Recommendation Engine
As an OTT business, you must continuously offer new, engaging, and personalized content to your subscribers. Analytics can offer valuable insight into user preferences and allows you to tailor content accordingly to reduce churn.
Setplex has collaborated with NPAW, a powerful analytics suite for streaming services, to enable its customers to gauge their UI/UX, optimize marketing, identify streaming quality issues, build their audiences, and improve user retention.
Additionally, Setplex’s recommendation engine utilizes machine learning and artificial intelligence to optimize each subscriber’s viewing experience, suggesting content that is specific to the subscriber’s interests and preferences. The functionality incorporates algorithms that learn from subscriber-watching behavior, including content type and categories as well as other metrics such as length and time of views.
Interested in learning more? Contact Setplex.