What Are OTT Platforms And How Do OTT Platforms Make Money?

Over-the-Top, or OTT, is a popular form of media and entertainment that has grown in popularity in recent years. Because of its widespread adoption, many households no longer require a television or a dish-based subscription. The main purpose of OTT is to deliver original and streamed content to customers directly via the Internet. The next blog delves into the fundamentals of OTT and explains how they earn money.

What is an OTT Platform?

An OTT Platform sells media content as a service that may be watched over the Internet. OTT platforms, contrary to popular belief, include not only video content but also audio streaming, messaging, and even voice calling over the Internet.

OTT is distinct from traditional media in that it avoids the traditional paths of telecommunications, cable television, and network providers. The majority of the content is streamed over the Internet and is available to anyone with an Internet connection and an OTT platform subscription anywhere in the world.

Many OTT platforms charge a monthly fee to access their content. A number of them, however, provide free material in exchange for an in-app payment or advertising.

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What are the Benefits of An OTT Platform?

It’s difficult to find a teenager these days who hasn’t been exposed to some type of OTT media. According to data, more than half of North Americans have at least one Netflix subscription. The following are a few of the causes for the explosion of OTT content:

1. Valuable Content at an Affordable Cost 

OTT platform content is considered as more creative, original, new, and accessible than traditional media. Not only that, but consumers do not have to spend money to receive a subscription. In fact, a Netflix HD subscription costs as little as $12.99 per month and gives you access to thousands of movies, web series, and other popular content from across the world. Even if you just watch a small part of the programming, it’s still a bargain compared to non-OTT outlets like cable TV.

2. Originality in the Content 

As mentioned above, the content available on OTT is just exclusive to their platforms. From recent times, production houses and film studios have been specifically producing content to be launched on OTT platforms to keep up with the rising audience base there. Some platforms such as “Disney+” and “HBO Go” also stream content that was previously provided on television. 

3. Multiple Device Viewing 

OTT platform material may be seen on the go, unlike traditional television. While they can be viewed on televisions, OTT material can also be viewed on PCs, laptops, and mobile devices with Internet access. Certain gaming consoles, in reality, support OTT.

4. More Data and Transparency 

OTT is a way for content creators and streaming platform owners to acquire more accurate data about who is watching what material, their age group, hobbies, and so on. This allows them to tailor their material to their target audience, whether that audience is large or small. In the era of television and cable network content, such data access was not available.

Even adverts are tailored to the viewer, and many OTT platforms offer the option to bypass ads once a certain amount of time has passed. Despite yet, the average amount of advertising on an OTT platform is lower than what we see on traditional television channels. This keeps the user interested in the content the entire time.

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Mediums of OTT Content 

Because OTT is delivered via the Internet, it can be viewed on any device that has a good viewing interface to the Internet and is connected properly. Here are several popular ways to watch OTT platform content:

  • Mobile Devices: OTT content on mobile devices is easily one of the most popular formats, and it is also optimized to work in low-network locations (with lower video and audio quality). In reality, some OTT platforms provide specific mobile-only membership options that are significantly less expensive.
  • Most OTT platforms allow you to stream content from your computer. This usually results in a better experience due to larger screens and improved sound quality. The consumer can stream through a web browser or a desktop application, depending on the streaming platform used.
  • Smart TV is one of the newest yet most popular ways to watch OTT video. It connects the classic television experience with contemporary OTT content. The television must be capable of connecting to the Internet and have OTT streaming apps installed.
  • Digital Players: Other ways to stream OTT content include the most recent launches of gaming consoles and the Apple TV.

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How Do OTT Platforms Get Content?

Let’s look at how OTT platforms get content before we look at how they generate money. In most cases, there are two ways to bring content into an OTT platform.

  • Self-producing films, web series, and other online material The OTT platform funds its own script, assembles a crew, and produces unique content for its own app to stream. The OTT platform can either fund itself entirely or collaborate with investors in exchange for a profit revenue sharing.
  • By purchasing filmmakers’ and other content’s broadcast rights to stream exclusively on their site. This is typically done with material that is expected to generate demand, resulting in more individuals subscribing to the OTT platform to watch it. On the other side, this significantly expands the OTT platform’s portfolio.

Revenue Streams of OTT Platforms 

This is when it gets interesting. OTT platforms have more than one revenue stream. Here are some of the most common ways they make money:

1. Through User Subscriptions (Video on Demand) – SVOD

In most OTT platforms, users will have to pay a fee to subscribe to the platform and view all the content in it. The fees are further categorized depending on the video quality of the content (like Standard Definition, High Definition, etc), or the time duration (Monthly, Yearly, etc.). The number of subscriptions changes from one platform to the other. Common platforms like Amazon Prime, Netflix, etc. adopt this model. 

2. Through Advertisements (Advertising Video on Demand) – AVOD

Users will be allowed to watch material for free on such platforms, but there will be continual ad breaks and ads. The OTT platform, on the other hand, levies a fee for advertising to brands and other businesses. Certain OTT platforms, such as Voot, MX Players, and some Disney+ Hotstar, use this revenue model.

3. Through Hybrid (Subscription and Advertising) 

This is a combination of the first two revenue-generating methods. Users may choose between free and paid subscription plans, and the OTT platform may profit from both. This is usually followed by Disney+ Hotstar, Zee5, and so on.

4. Through Transaction Video on Demand – TVOD

Users can purchase music or video by paying for individual tracks or the entire album. This revenue model is used by OTT platforms like Apple iTunes and Sky Box Office.

OTT Platform Revenue Model Revenue Generated (2020)
Amazon Prime Video  SVOD, TVOD, Hybrid  $25 Billion 
Netflix  SVOD $25 Billion 
Disney+ HotStar Hybrid  $2.18 Billion 
YouTube Premium  AVOD $3 Billion 

Final Thoughts – OTT Platforms 

OTT is the entertainment of the future, and it is already gaining traction. Although Amazon Prime Video and Netflix may have the majority of market share, there are a slew of new OTT services launching in nations throughout the world, both for local audiences and for a worldwide audience.

Frequently Asked Questions

If I am a movie director, can I sell it to an OTT platform?

You certainly can. You must follow the typical approach for communicating with the OTT platform and provide the relevant script and documentation for this. They may elect to purchase your broadcasting rights if you are accepted. Netflix, for example, covers the entire production expense.

Which is better – theatre or OTT for the viewer?

The initial channel through which new films are released is still cinema theaters. Movie theaters are an alternative if you want to see a lot of new movies from traditional movie stars and production firms. Otherwise, OTT is preferable in terms of overall content library size and content quality.

What are the challenges of OTT platforms?

The first priority must be increased competition. This complicates the task of attracting new subscribers. Furthermore, the aggregate size of online OTT material is growing to the point where many good and useful content may go unnoticed and unwatched.

What are future opportunities for OTT platforms?

Increasing market penetration in emerging markets such as Asia and Africa. OTT content consumption is also on the rise, thanks to rising Internet penetration and lower Internet costs.

How many people are there on OTT platforms worldwide?

OTT platforms were used by roughly 2.13 billion individuals in 2020, according to research. In 2025, this number is estimated to be over 3 billion.

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