The world of digital piracy is often portrayed as a shadowy realm, rife with illegal activities and ethical quandaries. While it’s true that piracy is primarily associated with copyright infringement, the financial landscape of pirates is more complex than one might expect. Contrary to the popular notion that pirates make most of their money through advertising, the primary revenue streams of digital pirates are rooted in the distribution and monetization of pirated content, such as movies, music, software, and other copyrighted materials. Advertising, while still a factor, is not their main source of income. In this comprehensive exploration, we will delve into the multifaceted world of digital piracy and uncover the various ways pirates generate revenue.
Direct Sales
One of the most straightforward and traditional methods through which pirates make money is through direct sales of pirated content. This includes the distribution of physical copies, such as counterfeit DVDs or Blu-rays. Pirates often produce high-quality copies of popular movies and sell them at a fraction of the price of legitimate copies. These illicit DVDs can be found in some brick-and-mortar stores, street markets, or online marketplaces. They attract consumers looking for a budget-friendly alternative to official releases.
In addition to physical copies, pirates may offer USB drives or hard drives containing extensive collections of copyrighted content. These drives are particularly popular among those seeking a vast library of movies, music, or software without the hassle of downloading individual files. Customers purchase these drives, and pirates make a profit based on the sale of these unauthorized copies.
While direct sales are a significant source of income for some pirates, it’s important to note that this method is illegal and can lead to severe legal consequences. Law enforcement agencies and copyright holders actively combat the distribution of counterfeit physical media.
Subscription Services
The digital age has given rise to subscription-based models for content consumption, both in legitimate and pirate spheres. Some piracy platforms operate on a subscription model, where users pay a recurring fee to access a vast library of pirated content. These platforms mimic the user experience of legitimate streaming services like Netflix or Spotify but offer copyrighted content without the necessary licensing agreements.
The revenue generated from these subscriptions serves as a primary source of income for these pirate platforms. While subscription-based piracy services may generate substantial revenue, it’s essential to recognize that this income is also rooted in copyright infringement and is subject to legal action.
Donations and Crowdfunding
Some piracy websites and groups rely on the support of their users to sustain their operations. These users appreciate the services provided by the pirates and, in turn, make voluntary donations. These donations can take various forms, such as one-time contributions or recurring payments. Pirates may also engage in crowdfunding campaigns to fund their infrastructure and expand their reach.
Crowdfunding platforms offer an avenue for pirates to seek financial support from a global audience. Some users may be willing to contribute to the cause for reasons ranging from a desire to access pirated content to a belief in the principles of open access. The funds collected from these campaigns help pirates maintain their websites, servers, and other essential components of their operations.
File Hosting Services
File hosting services provide another dimension to the revenue generation strategies of pirates. These services allow users to upload and share files, including copyrighted content. Pirates exploit this opportunity by offering premium accounts on these hosting platforms. Premium users enjoy benefits such as faster download speeds, larger storage space, and an ad-free experience.
Pirates receive income from the sale of these premium accounts. As users flock to their services for convenient access to copyrighted material, they are willing to pay for enhanced features. In essence, pirates act as intermediaries between the hosting service and the users, capturing a share of the revenue generated from premium subscriptions.
Affiliate Marketing
In addition to the aforementioned methods, pirates may engage in affiliate marketing programs as a secondary source of income. Affiliate marketing involves promoting products or services related to the pirated content and earning commissions for each successful referral. Pirates leverage their large user bases to drive traffic to e-commerce platforms, digital services, or products that align with the interests of their audience.
For example, a piracy website focused on movies might use affiliate links to direct users to streaming services, online marketplaces selling movie-related merchandise, or VPN services for anonymous browsing. Pirates earn commissions for each sale or action resulting from these referrals.
It’s crucial to emphasize that while affiliate marketing can generate income for pirates, it operates in a legal gray area. Many legitimate advertising networks and affiliate programs have strict policies against partnering with piracy websites. Additionally, the use of affiliate marketing on such platforms raises ethical concerns about profiting from illegal activities.
Malware and Scams
Regrettably, some pirates resort to more nefarious means to generate revenue. This includes the distribution of malware, fake software, and various scams. These illicit practices can pose significant risks to users and their devices.
Pirates may use advertising as a means to lure unsuspecting users into downloading malicious content or clicking on fraudulent links. For instance, a piracy website might display deceptive advertisements promising access to exclusive content or free software downloads. When users click on these ads, they unwittingly expose themselves to malware, identity theft, or financial fraud.
While this approach can be lucrative for the pirates involved, it not only damages the user experience but also further tarnishes the reputation of piracy in general.
Advertising in Piracy
Although advertising is not the primary source of income for pirates, it remains a noteworthy component of their revenue model. Piracy websites and platforms often display ads as a means to generate additional income. These ads may come in various forms, such as banner ads, pop-ups, or video ads. Advertisers pay pirates to display these advertisements to their large user bases, often targeting specific demographics or interests.
The revenue from advertising largely depends on factors like website traffic, user engagement, and the attractiveness of the audience to advertisers. Pirates use ad networks and exchanges to facilitate the placement of ads on their websites, similar to legitimate websites. These networks connect pirates with advertisers looking to promote their products or services.
The advertising income can be substantial for piracy websites with high volumes of traffic. However, there are several key considerations:
Quality of Ads: The types of advertisements displayed on piracy websites are often of lower quality and may include deceptive or harmful content. Users are frequently bombarded with pop-up ads, making for a frustrating browsing experience.
User Experience: Excessive advertising can diminish the user experience and erode trust in the quality of pirated content. Users might become frustrated with intrusive ads and turn to alternative sources for their digital piracy needs.
Advertiser Concerns: Some legitimate advertisers are hesitant to associate their brands with piracy, as it can damage their reputation and expose them to legal risks. As a result, many advertising networks and brands refuse to work with piracy websites.
Legal Implications: Hosting or displaying advertisements on a piracy platform can draw the attention of copyright holders and law enforcement agencies. In some cases, they may target advertisers and ad networks involved in these partnerships.
It’s essential to understand that the advertising revenue generated by piracy websites does not legitimize or justify their activities. Piracy is illegal and unethical, as it infringes upon copyright laws and negatively impacts content creators and industries that rely on intellectual property rights.
Conclusion
While the notion of pirates making most of their money from advertising is a common misconception, the reality is far more nuanced. Digital pirates generate revenue primarily through the distribution and monetization of copyrighted content, with various income streams ranging
TV service providers are continually seeking ways to boost viewer engagement, as heightened engagement has a demonstrably positive impact on their earnings.
A fundamental principle underlies this effort: Viewers who are deeply immersed in the content are more inclined to watch additional programming, order more video content and subscriptions, and stream more live events. Moreover, this pursuit extends beyond the immediate moment; operators are focused on augmenting the Lifetime Customer Value (LCV) and devising strategies to retain subscribers for the long haul. In today’s fiercely competitive streaming landscape, especially amid the current cost-of-living challenges that have led to a reduction in the video offerings in countries like the United States, this is a genuine and pressing challenge.
There exist five established methods to elevate viewer engagement, which can yield enhanced profitability and increased revenues.
1. Provide an excellent viewer experience
What keeps people coming back for more? A pivotal factor is an exceptional user experience, which hinges on delivering top-notch video and audio quality across all devices. When was the last time you continued watching a video that was pixelated or kept buffering? Chances are, you can’t recall such an instance. Viewers today possess zero tolerance for static, interruptions, buffering, or subpar audio. This demand for quality extends to live content, which is increasingly vital to streaming business models, and viewers also strongly disapprove of any noticeable latency. With the growing adoption of 4K UHD by users, they have grown accustomed to high-quality content, thereby presenting a significant challenge to TV operators who must ensure a consistently first-rate experience on any device and at all resolutions.
At the very least, they anticipate a Quality of Experience equivalent to what they once enjoyed with traditional linear services. However, their expectations extend beyond that point. Streaming content viewers demand consistent performance across all devices and locations, synchronized with minimal latency. It’s essential to emphasize that they are indifferent to or uninterested in the technical intricacies involved in achieving this seamless experience.
2. Personalize the encounter
The more tailored recommendations viewers receive, the more likely they are to connect with the content. However, achieving this connection requires more than just timely, intelligent recommendations. OTT service providers need accurate data as the foundation for these suggestions and must analyze that data effectively to create a meaningful viewer experience, all while adhering to regulations like GDPR.
When successful, this process establishes a continuous feedback loop where viewing data informs smart, personalized recommendations, enhancing the viewer’s journey. When these messages are seen as credible and engaging, they can lead to higher satisfaction and engagement rates.
Personalization doesn’t stop at what content to offer; it also involves how it’s offered. Today’s viewers expect personalized experiences throughout their day, and this can include:
Continued Experiences: The ability to resume watching content they had previously paused, or quickly start the next episode of a TV series they’re following.
Wishlists: Allowing viewers to bookmark content they can’t watch immediately or revisit specific shows.
Personal Recommendations: Providing tailored content suggestions based on both explicit and implicit preferences.
Targeted TV Advertising: Offering ads that align with the viewer’s preferences, sensitivity to ads, and purchase potential.
Personalization fosters a one-to-one relationship between viewers and operators, promoting trust and engagement. To enable this personalized experience, user consent for collecting viewing data is essential, and it’s essential that this process complies with GDPR regulations.
When OTT TV services offer features like personalized profiles, wish lists, and seamless cross-device viewing, it leads to a more involved and engaged viewership. Depending on a user’s preferences, broadcasters can also customize the imagery associated with suggested content. For instance, a movie blending sports and drama elements might be recommended to sports enthusiasts with a sports-themed image, tailoring the viewing experience to individual interests.
3. Utilize social media sharing to improve engagement
In 2012, Mike Proulx, co-author of the influential book “Social TV,” pointed out that “Between 60-70% of people, when they’re watching TV, also have a second screen device, such as a laptop, an iPad, or a mobile device.” These statistics have only continued to rise over the years.
Leveraging this second screen is another effective way to boost engagement in streaming. For example, it can involve providing additional information about the actors, sharing blooper reels, and more. Early pioneers in this field, such as “American Idol” in the early 2000s, introduced large-scale competitions that allowed at-home audiences to directly influence the broadcast’s outcome through text messages. While social media platforms have now largely replaced text messages (though text messages still have monetization potential and are used), the fundamental goal remains the same: giving viewers a way to interact in real-time and receive instant feedback, thereby enhancing engagement.
Social media also serves as an excellent platform to share behind-the-scenes insights, including deleted scenes, upcoming events, and commentary from the cast and crew, beyond what is available in the main content. It’s important to note that social media is not a one-way communication channel; it’s a valuable avenue for collecting audience reactions and feedback. In some cases, cast members actively participate in the conversation by liking and retweeting fans’ posts, and broadcasters often encourage and facilitate this engagement (sometimes through a carefully coordinated and centralized process). Additionally, fans have a history of organizing virtual watch parties and sharing humorous memes and GIFs while watching a show, a trend that gained significant momentum during the pandemic and is now increasingly being supported through official apps.
4. Provide original content that lures subscribers
When discussing original streaming content, Netflix often takes center stage. While its success cannot be attributed to a single factor, original content plays a significant role. Notably, in its recommendations, the count of “Netflix originals” typically outweighs non-original content, even though its library had a 50/50 split as of August 2022.
In a 2021 survey, 39% of US viewers cited Netflix as offering the best original content, with Amazon at 12% and Disney+ surprisingly at 7%.
Netflix’s investment in content remains notably higher than that of its competitors. This is understandable given the unique nature of its business. Rival platforms have other revenue streams (Amazon), a diversified portfolio of media properties (Disney), or are manufacturers branching into TV (Apple). Nevertheless, all these platforms continue to produce a wide range of content, relying on data in a manner akin to how traditional TV networks relied on Nielsen ratings. One can observe Netflix’s increasingly data-driven decisions, particularly regarding cancellations in recent years.
It’s important to underscore that data is just one aspect of the considerations when greenlighting a show, and companies can still be taken by surprise. For instance, the immense popularity of “Squid Game” was unexpected. Netflix’s South Korean hit was dubbed in 34 languages and subtitled in 37 upon release, indicating the company recognized its potential. However, few would have predicted it becoming Netflix’s most-watched show ever, surpassing even “Stranger Things 4.”
The primary objective behind this content creation is to attract new subscribers and encourage existing ones to consume more of Netflix’s offerings. Each viewer choice provides the company with valuable data on their viewing habits, enabling it to refine its future programming. Reportedly, Netflix has identified nearly 2,000 microclusters, categorizing users based on their preferences.
Furthermore, it’s worth noting that valuable archival content can also play a pivotal role. Netflix’s acquisition of global rights to all nine series of “Seinfeld,” at a cost of over $500 million starting in 2021, emphasizes the power of exclusivity in driving subscriptions.
5. Utilize powerful, accurate business analytics
Measuring the impact of recommendations is of paramount importance as it allows for a deep understanding of what’s working and what isn’t across consumption, conversions, and Average Revenue Per User (ARPU). This analysis goes beyond simply evaluating content; it extends to assessing its influence on subscription packages, promotional efforts, and advertising strategies. The key is to extract sharp, actionable insights that can be leveraged to fine-tune offerings, identify upselling opportunities, and optimize promotional activities.
One recommendation is rarely sufficient; multiple data points are needed. Solutions like Sigma’s data-driven TV Business Analytics exemplify how a single recommendation can trigger multiple engagement actions, driven by the cumulative impact of personalized suggestions. These analytics are also adept at uncovering unconventional viewing patterns within the audience. By analyzing these patterns, it becomes possible to identify viewers at risk of churning, enabling proactive measures to re-engage them. Contextual recommendations can further enhance the viewing experience by considering external factors such as national events or weather conditions. For instance, on the first day of summer holidays, suggesting a vacation film or an action flick can be more appealing. During stormy weather, a horror film might be an apt recommendation.
To truly personalize the viewing experience, OTT cloud and TV Service Providers should aim to foster strong relationships with their users. Obtaining feedback on usage and understanding the problems viewers want to solve is invaluable. Analyzing user search queries, as well as their responses to customer support issues, can inform decision-making. Combining this additional information with data analytics yields a comprehensive view that genuinely personalizes the viewer experience, enhancing engagement and satisfaction.
A renaissance is currently unfolding in the realm of targeted advertising. Historically, in the context of video advertising, targeting was confined to a viewer’s geographical location, largely due to the distribution of ads through multicast, which sent the same video stream to numerous viewers. However, with the advent of unicast delivery (i.e., one-to-one video stream delivery) and recent advancements in AI, it is now possible to deliver individually tailored ads to a broad audience. These rapid technological developments in targeted advertising are empowering video service providers to redefine viewer engagement and enhance their revenue. Let’s delve deeper into this transformative landscape.
Enhancing Revenue and Viewer Engagement through Targeted Advertising
Targeted advertising presents a substantial opportunity for video service providers to elevate viewer engagement and unlock fresh revenue streams. As ads become more finely tuned, the advertising inventory gains substantial value. Traditional CPM rates for legacy TV inventory have historically hovered around $15. However, with individually addressable TV ads, even low-value inventory can command a CPM of $20, while high-value content, such as live sports, can fetch rates of up to $50.
The predictive capabilities of AI technology play a pivotal role in allowing advertisers to deliver precisely tailored messages to specific demographics. The more relevant an ad is to its audience, the more impactful it becomes, resulting in higher engagement rates and improved return on investment (ROI).
AI-driven targeted advertising also equips video service providers with granular tracking, providing insights into who is actually viewing the ads, how long they are engaged, whether they are muting the TV, and more. This data is immensely valuable to advertisers, instilling confidence that investing in individually addressable ads is a wise decision.
Crucial Components of a Targeted Advertising Solution
Several key features are essential for a targeted advertising solution sought by video service providers. The deployment of server-side ad insertion (SSAI) technology enables advertisers to seamlessly inject personalized ads into the video stream. With SSAI, video content and ads are seamlessly integrated into one stream, making ad blocking impossible. This entire process ensures a consistent viewing experience. Dynamic ad insertion (DAI) is also imperative, allowing ads to be tailored to each viewer using AI technologies, thereby optimizing ROI. Offering customized content to each viewer is pivotal in providing a unique service and attracting subscribers.
Furthermore, the targeted advertising solution must be scalable to ensure an uninterrupted viewing experience for millions of concurrent viewers, a critical consideration during premiere sports events.
Next-Generation Advancements in Targeted Advertising
Recent technological enhancements are rapidly advancing the field of targeted advertising. One of the latest innovations is dynamic brand insertion, which leverages AI algorithms to seamlessly integrate branded content into video. For instance, this could involve placing a popular soft drink’s logo on an in-scene beverage cooler. With dynamic brand insertion, advertising becomes seamlessly embedded in the video scene, creating a non-intrusive and engaging advertising experience and eliminating the need for commercial breaks. The ad blends harmoniously with the video content itself.
Another recent advertising innovation in the video space is double-box displays, enabling viewers to simultaneously watch live shows or events while ads run on the screen. Apart from opening up new revenue avenues for video service providers, this type of advertising minimizes disruptions for viewers, enabling them to maintain their focus on the content and enhancing their overall satisfaction.
Transforming Streaming Experiences with Targeted Advertising
Propelled by technological advancements, including AI, targeted advertising is evolving at a remarkable pace. By embracing the latest innovations in targeted advertising, video service providers can drive viewer engagement and enhance profitability. However, they require a scalable, user-friendly targeted advertising solution that guarantees a seamless viewing experience. Solutions like Harmonic’s VOS360 Ad are revolutionizing targeted advertising by providing video service providers with a single platform for AI-powered targeted advertising, delivering a seamless viewing experience, and optimizing monetization.
SSAI Service Providers play a pivotal role in enhancing viewer experiences and maximizing ad revenue, making the choice of the right provider essential.
Server-Side Ad Insertion (SSAI) offers several significant advantages in the world of online video streaming. One of its primary benefits is the enhancement of viewer experiences by eliminating buffering delays and ensuring seamless ad insertion. SSAI also enables precise ad targeting, tailoring ads to individual viewer preferences, thus increasing engagement and ultimately boosting ad revenue. Today, we’ll delve deeper into the top 6 SSAI service providers and examine their respective strengths and weaknesses.
1. Brightcove:
Strengths:
High-Quality Video Delivery: Brightcove boasts a reputation for its high-quality video platform, ensuring that viewers enjoy uninterrupted streaming without buffering or lag.
Ad Revenue Optimization: Brightcove’s SSAI solutions are crafted to maximize ad revenue by seamlessly integrating ads into video streams.
Analytics and Reporting: The platform offers robust analytics and reporting tools, allowing content providers to gain valuable insights into ad performance and viewer behavior.
Weaknesses:
Pricing: While Brightcove delivers a powerful platform, its premium quality comes with a price tag that might be prohibitive for smaller businesses with limited budgets.
2. Conviva:
Strengths:
Advanced Video Optimization: Conviva excels in optimizing the online video experience, ensuring smooth streaming, minimal buffering, and an overall superior viewer experience.
Comprehensive SSAI Solutions: Conviva provides end-to-end SSAI solutions, assisting users in effectively managing and monetizing their video content.
Viewer Insights: The platform offers in-depth insights into viewer behavior, enabling content providers to make data-driven decisions to improve content delivery and advertising strategies.
Weaknesses:
Complexity: Some users might find Conviva’s offerings complex, especially those without prior technical expertise, which could pose challenges during setup and configuration.
3. Akamai:
Strengths:
Global CDN: Akamai is renowned for its extensive Content Delivery Network (CDN), ensuring fast and reliable content delivery on a global scale.
Reliability: Akamai’s SSAI solutions are robust and highly reliable, making it the preferred choice for large-scale streaming events where uptime is critical.
Security: Akamai offers advanced security features, safeguarding content against DDoS attacks and ensuring secure content delivery.
Weaknesses:
Cost: While Akamai’s services are exceptional, they can be relatively expensive, making them more suitable for enterprises or organizations with substantial budgets.
4. Kaltura:
Strengths:
Customizable Platform: Kaltura’s video platform is highly customizable, allowing users to tailor it to their specific needs and branding requirements.
SSAI Integration: The platform seamlessly integrates SSAI, enhancing the viewer experience while effectively optimizing ad revenue.
Scalability: Kaltura caters to a wide range of businesses, from small enterprises to large corporations, offering scalability that suits various needs.
Weaknesses:
Learning Curve: Setting up and customizing Kaltura’s platform may require a learning curve for some users, particularly those new to video technology.
5. THEOplayer:
Strengths:
Flexibility: THEOplayer stands out for its versatility as an HTML5 video player that can be seamlessly integrated into existing video applications.
SSAI Capabilities: THEOplayer offers SSAI integration, enabling users to efficiently manage and optimize their advertising strategies.
Viewer Experience: Designed with the viewer in mind, THEOplayer ensures a seamless and enjoyable viewing experience with features like adaptive streaming.
Weaknesses:
Limited Ecosystem: Compared to some larger industry players, THEOplayer may have a more limited ecosystem of services and features.
6. Sigma DAI
Sigma DAI is a cutting-edge Server-Side Ad Insertion (SSAI) service proudly offered by Thudo Multimedia, one of the greatest SSAI Service Providers, designed to revolutionize your video streaming and advertising capabilities.
Thudo Multimedia-Sigma DAI
Strengths:
Seamless Ad Insertion: The ability of Sigma DAI to seamlessly insert ads into video streams without causing buffering or disruptions is paramount. Thudo Multimedia ensures a smooth and uninterrupted viewer experience by effectively integrating ads into the content.
Ad Personalization and Targeting: Effective Sigma DAI should enable personalized ad targeting based on viewer data and preferences. Thudo Multimedia offer advanced audience segmentation and targeting capabilities to maximize ad relevance and engagement, ultimately boosting ad revenue.
Analytics and Reporting: Thudo Multimedia should provide a robust suite of analytics and reporting tools. This includes detailed insights into ad performance, viewer behavior, and engagement metrics. Access to actionable data allows content providers to fine-tune their ad strategies for better results.
Content Security: Thudo Multimedia provide a robust suite of analytics and reporting tools. This includes detailed insights into ad performance, viewer behavior, and engagement metrics.
Cross-Platform Compatibility: The SSAI solution from Thudo Multimedia work seamlessly across a wide range of devices and platforms, including smartphones, tablets, desktops, smart TVs, and more. Ensuring a consistent and reliable ad experience across devices is crucial for reaching a broad and diverse audience.
Weekness:
Learning Curve: Setting up and customizing Sigma DAI’s platform may require a learning curve for some users, particularly those new to video technology.
In conclusion, the choice of an SSAI service provider should align with your specific needs, budget, and technical expertise. Each provider presents its unique strengths and weaknesses, making it essential to evaluate them thoroughly to determine which one best suits your streaming and advertising requirements.
OTT platforms come with their share of disadvantages, and there are several challenges that OTT businesses may face. These are the six key OTT challenges you must address to ensure success in the ever-evolving landscape.
Launching an OTT service has never been easier. Despite the strong demand for content, accelerated by the pandemic, technology has advanced, embracing cloud solutions and incorporating live streams, including sports and other live events. With the advent of ultra-fast broadband and the expansion of 5G networks, it’s now possible to deliver the high-quality, low-latency streaming video that consumers crave.
However, it’s essential to recognize that, despite the success of giants like Netflix and Disney+, the OTT industry is not immune to failure. Even these global leaders have encountered challenges and growth slowdowns over the past year.
OTT platforms have their downsides, with various potential pitfalls, some more evident than others. This guide aims to help you start your OTT business and provides insights into avoiding the common stumbling blocks.
6 OTT Challenges
Some of the following may seem obvious, but the growing list of failed OTT companies suggests that not all these issues were carefully thought out.
1. Not understanding your audience
Understanding your audience and their content preferences is crucial when launching an OTT platform. This is especially important for niche channels, as they can make two common mistakes: either targeting an overly narrow niche or entering a crowded niche space.
Audience attention is becoming increasingly divided. Recent data from the US market shows that the average number of individual TV services used by consumers has risen to 11.6 video services per household. This figure encompasses traditional Pay-TV, all available streaming services, and over-the-air reception via antennas. Notably, this number is on the rise, with 8.9 video services per household in 2022.
This trend is primarily driven by younger viewers, with Millennials averaging 16.3 video sources, Generation Z at 12.7 sources, and Generation X at 12.2 sources.
With a limited pool of viewers and a finite amount of time for content consumption, the competition is fierce. In the past, certain OTT services have failed due to missteps in targeting their audience. For instance, Fandor and FilmStruck aimed at the already crowded cinephile market, and both struggled. Highly specialized services like Hortus TV, catering to gardeners, and XtraFrame, offering live access to bowling events, also failed to gain traction.
Recent notable casualties include Hooq in Asia, Quibi, and TVision in the US. Other closures involved Acorn TV in South Africa, live music specialists Mandolin and Sessions, GolfTV, and more.
The key lesson here is to thoroughly research and understand your target audience. Some ideas might be better suited as YouTube channels initially, as the monetization opportunities there can be more accessible, despite YouTube’s own set of challenges.
2. Using the wrong technology
Today, there’s a clear distinction between the right and wrong approaches when it comes to technology, especially in the TV industry. The right way involves harnessing the capabilities of the cloud. Over seven years ago, Netflix’s CEO, Reed Hastings, demonstrated the immense power of the cloud when he expanded the streaming service to 130 new countries with the press of a button during a presentation at CES. Today, Netflix operates in 190 countries worldwide.
In essence, the cloud offers the ability to rapidly and efficiently scale operations without the massive upfront costs associated with on-premises equipment. This scalability and cost-effectiveness make the cloud the most rational and viable choice for any business plan, whether you’re running an OTT platform or any other service in today’s digital landscape.
3. Showing the wrong content
Two critical elements for the success of your content delivery are understanding your audience’s preferences and leveraging TV business analytics. Big Data, now commonly referred to as ‘analytics,’ provides invaluable insights into the performance of your content library. It helps identify what content is resonating with your audience and what is not. This data-driven approach is essential for optimizing your content library, removing content that isn’t performing, and retaining content that continues to attract viewers over time.
Content is often a significant expense, particularly in emerging markets like OTT sports. Therefore, every minute and every gigabyte of your content should serve a purpose and deliver value. Additionally, safeguarding your content is crucial. New forms of video piracy, illegal apps, IPTV, and streaming are on the rise. To protect your investment, a comprehensive anti-piracy strategy is essential.
4. Offering a poor user experience
When launching a new OTT service, operators often find themselves competing with established global SVOD (Subscription Video on Demand) giants like Netflix, Disney+, and Amazon Prime Video. These industry leaders have meticulously crafted user experiences that efficiently connect customers with content. They employ personal recommendations, outstanding user interface design, and provide seamless support across various platforms.
The good news is that you don’t need to invest the same level of research and development (R&D) budget to create a similar experience. Ready-made solutions are available off the shelf, such as the one we offer. However, the challenge is that your customers will expect a similar level of quality and convenience.
This customer-centric approach extends throughout your organization, including customer service. User experience is not limited to the interaction with a screen but encompasses all interactions with your company, whether it’s an email to technical support, an account inquiry, a request on social media, or any other form of contact.
Additionally, there are certain barriers to entry that must be addressed. Making it easy for people to sign up is crucial. Long contracts, hefty fees, and limited payment options can deter potential subscribers and hinder your ability to thrive in the market.
5. Catching a bad wave
Navigating the OTT (Over-The-Top) market is akin to surfing in the ocean—waves constantly ebb and flow, and not every wave carries you smoothly to your destination. The industry is in a state of perpetual change.
For instance, when this piece was originally written in May 2019, Transactional VOD (TVOD) was seen as the next significant trend in the industry. However, the subscription model consistently outperformed it. In 2021, the impact of the COVID-19 pandemic reshaped the landscape, with TVOD becoming a potent tool for Hollywood film studios trying to recover revenue during cinema closures.
Today, we can confidently discuss the rise of AVOD (Ad-Supported Video on Demand) and FAST (Free Ad-Supported Streaming TV) services. Many operators are now adopting a tiered approach, offering everything from ad-supported and free content to premium SVOD (Subscription Video on Demand) and multiple levels in between.
The dynamic nature of the industry is illustrated by the evolving trends. Services targeting the 3D and VR markets have faltered, while those exploring esports have experienced rapid growth. Predicting the future of the OTT market is akin to playing the stock market—potentially rewarding, but fraught with risks and uncertainties.
6. Managing expectations
This is an internal problem, but no less of an issue because of that. Because some companies have made successful investments in OTT operations, it doesn’t necessarily follow that all will. Nor, indeed, that a company will be as successful and show returns as quickly as its investors want. Netflix is just one company whose share price is still incredibly exposed to shifts in subscriber numbers growth, with any quarter that underperforms compared to analysts’ expectations seeing it punished in the market.
The long and the short of it is that companies can achieve success in subscriber numbers and even turn a profit but still be killed off because the internal expectation was set so much higher.
Solving the common OTT challenges
The potential offered by OTT solutions is immense, but it’s also an increasingly competitive marketplace where companies must establish the essential foundations before launching their services. Some solutions are technical in nature, such as leveraging the power of the cloud and utilizing data analytics. Others revolve around sound business practices that are relevant to any industry.
OTT is not a guaranteed path to instant riches. While there is money to be made and audiences to be reached, success requires more than just introducing a product and expecting profits and viewers to pour in. A solid plan is essential, involving the delivery of compelling content at the right price, and then giving the product time to grow and scale. Even after an initial burst of success, the period leading to sustained, long-term growth can be a nervous one for all involved, and ongoing diligence is required.
In recent years, the surge in popularity and profitability of streaming video services has been remarkable. The digital media landscape has witnessed the emergence of diverse monetization models, including Free Ad-Supported Television (FAST), Advertising Video on Demand (AVOD), and Subscription Video on Demand (SVOD) models.
However, this evolution has also created new avenues for pirates to illicitly access premium digital content, making the industry vulnerable to piracy and unauthorized distribution. To combat these threats, it is imperative to establish a robust, multifaceted, and scalable content security framework that can accommodate various content distribution and ad-generation models, ultimately envisioning a piracy-free content consumption environment. In this context, let’s explore the different OTT content distribution models and underscore the vital role that content security plays in enhancing the user experience.
AVOD vs SVOD vs FAST : How are FAST, AVOD and SVOD different?
What is Free Ad-Supported Television (FAST)?
Free Ad-Supported Television (FAST) is a model in which streaming services offer free video content supported by advertising. This model has experienced a surge in popularity in recent years, with platforms like Pluto TV, Roku Channel, and XUMO gaining substantial traction. FAST is an attractive choice for viewers who prefer not to pay for premium content but are willing to tolerate advertisements.
FAST operates on the principle of scale to generate revenue from advertisers. As more viewers consume content, the ad inventory expands, thereby attracting more advertisers to the platform. Since the advertising revenue is shared with the content providers, FAST presents a mutually beneficial solution for all parties involved.
What is AVOD?
Advertising Video on Demand (AVOD), in contrast, permits viewers to access premium video content at no cost, with the condition that they watch advertisements. This model represents a step up from FAST, featuring higher-quality content and a more sophisticated advertising approach that tailors ads to the viewer’s preferences and demographics. A prime example of an AVOD streaming platform is YouTube.
AVOD can prove to be a lucrative model for both the service provider and content creators, as advertising revenue can be shared between them. However, the success of AVOD hinges on the platform’s ability to attract and retain a substantial audience, a task made challenging by the competitive nature of the market.
What is SVOD?
Subscription Video on Demand (SVOD) is a model in which viewers subscribe and pay a fee to access premium video content without encountering advertisements. This model has gained widespread popularity through services like Netflix, Amazon Prime Video, and Disney+. The appeal of SVOD lies in its provision of exclusive content, tailored recommendations, and an uninterrupted, ad-free viewing experience.
The revenue generation of SVOD hinges on nurturing a dedicated subscriber base. To achieve this, these services make substantial investments in creating original content to maintain subscriber engagement. The drawback of SVOD is that the subscription fees can be relatively high, potentially limiting the size of the potential audience.
Why FAST and AVOD need Multi-DRM and Forensic watermarking
While the primary revenue model for FAST and AVOD platforms is advertising, they still have an interest in protecting the value of their content and maintaining positive relationships with content owners. Therefore, they employ multi-DRM systems, either in-house or through third-party providers, to strike a balance between content protection and accessibility for their audience.
Implementing multi-DRM solutions allows these platforms to apply encryption and access controls to their content, limiting unauthorized viewing or copying. It helps prevent piracy and protects the rights of content owners. Additionally, multi-DRM solutions enable content providers to enforce usage policies, such as limiting the number of devices that can access the content simultaneously or setting expiration dates for downloaded content.
Forensic Watermarking, is other techniques can be employed to track and identify illicit distribution of content.
Sigma multi-DRM supports FAST, AVOD and SVOD models that allows your content business to maximize scalability and revenue potential through the OTT video route, all along ensuring a top-notch user experience. The security framework is flexible enough to enforce concurrent streaming experience across devices while providing premium user experience.
In conclusion, the choice of monetization model depends on the goals of the content provider. FAST and AVOD are great options for content providers who want to reach a large audience, while SVOD is ideal for those who want to generate revenue from a loyal subscriber base. Ultimately, the success of any model relies on the quality of the content and the ability of the platform to attract and retain viewers.
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