Maximizing revenue: Innovative strategies for streaming monetisation

New Delhi: The growth of streaming viewership over the past decade has been significant, driven by technological advancements, changing consumer habits, the rise of Connected TVs and the availability of diverse content. Traditional linear television is giving way to the flexibility and convenience offered by streaming platforms. Smart TVs and streaming devices have made improved access to streaming and on-demand content, and diversity of content across movies, TV shows and live events has boosted OTT Video viewership globally. 

While streaming platforms have predominantly monetised their content via subscriptions, there’s been a big surge in monetising via ads over the last decade. Streaming platforms have started expanding to ads to offset increasing content costs. Netflix - widely regarded as the gold standard of streaming - built their business on subscriptions, but have now decided to pivot and expand to ads to expand their user base and revenues. Prime Video has also launched ads and made the ad tier their default option. This allows them to access more budget conscious users who do not want to pay a recurring subscription fee. 

Apart from offering subscriptions and ads, streaming platforms can also offer freemium content and FAST content. Let’s begin with the freemium model. Take for example, a tried and tested commodity in the streaming world - a Shondaland production. For unsubscribed viewers, what if only the first 2 episodes of a newly dropped show were free, and the rest of the episodes were behind a paywall? For Shondaland fans, they probably wouldn’t think twice about paying to get access to her complete works. But for those who haven’t spent several weekends binge watching Grey's Anatomy or Bridgerton, they might still decide to indulge in the hype and (will likely) end up getting glued to the show after the first 2 episodes. By offering this content for a one-time fee less than the monthly subscription amount, the streaming platform may be able to grow their paying customers and build out a diversified revenue stream. Let’s face it - apart from a high fixed recurring fee for a subscription, users also choose not to subscribe if they’re inclined to watch only a single show across the entire library. Additionally, streaming platforms can choose to personalise the experience of such viewers and heighten awareness of other Shondaland shows on their homepage. This would increase consideration of such viewers to watch other shows, potentially boosting watch time, ad revenue and maybe even subscriptions!

Streaming platforms can also decide to open up FAST inventory to expand their viewership and open up another monetisation channel. Free Ad-Supported Television or FAST offers linear TV programming and movies without a paid subscription, and is monetised solely by advertising. It is great for budget conscious viewers as well as an older demographic that is used to traditional television. As Smart TV penetration increases in developing markets all over the world, one can expect a corresponding uptick in FAST viewership, which would lead to more opportunities for advertisers. Especially for lower end smart TVs, streaming platforms should negotiate to have their FAST content app in the first fold of the homepage to enhance visibility. They can also do offline promotions at TV retail stores to boost awareness of FAST content and market themselves as a cost-effective alternative to cable TV. 

From an advertising perspective, streaming platforms have a significant opportunity to maximize their revenues. Traditional linear television is dominated by brand ads and CPM buying with no targeting, which limits the opportunities to optimise yield. For streaming publishers on the other hand, the ability to maximise yield (or revenue per ad opportunity) is a lot higher with advancements in the space like audience targeting, measurement & attribution and innovative ad formats. Streaming platforms must invest in building data enriched audiences or cohorts in a privacy first way, which would offer advertisers the ability to profile and target groups of users by demographic, location, interests and even purchase history. This would dramatically increase the relevance of an ad, so that a user sitting in Chennai is not seeing an ad of a restaurant based in Delhi. This will also help the restaurant not waste precious advertising budget by showing their ad to an irrelevant user. Let’s take another example. For a show of mass appeal like Suits, a streaming platform can curate an ad package for advertisers in the high-end clothing, furniture and lifestyle categories (thereby providing content targeting), and offer them exclusive access to engaged users with the help of non-intrusive shoppable ads. By showing these ads to relevant users, these advertisers can increase their brand awareness and recall, as well as grow purchases of their products. This could go a step further in the world of AI - what if a user opens their phone camera and points at a blazer worn in the show and an ad for Hugo Boss blazers opens up on their phone? If the user decides to purchase after clicking on this ad, the streaming publisher should be able to claim credit, by showing the advertiser that the purchase was driven by product exposure on their platform. This would require the publisher to invest in sharp measurement and attribution capabilities across devices. With the rise of multi-surface viewing (mobile and CTV), streaming platforms can get creative with their ad offerings and allow advertisers to target users across devices and at different stages of the marketing funnel. This level of customisation would be invaluable for marketers and would enable streaming platforms to boost their pricing power, thereby maximising their ad revenue. 

As streaming platforms invest in creating and curating their content libraries, they must parallelly invest in building diversified monetisation strategies to become / remain profitable in the highly competitive streaming marketplace.