Monetize, But Don’t Drive Users Away

Balancing revenue generation and keeping viewers happy has always been a challenging quest for OTT businesses, but the current economic pressures have intensified the stakes. As consumers tighten their belts, they’re becoming more discerning about where their money goes, opting for fewer subscriptions and showing less tolerance for rising costs. This financial strain is also pushing companies to reconsider their monetization strategies, seeking more efficient ways to run their platforms and generate revenue without alienating their audiences.

What are new avenues OTT platforms can explore? Are ad-supported models, FAST, or in-video shopping the answer? To shed light on this, we sat down with Luke Gaydon, Accedo’s Head of Offering Management, to discuss how video streaming companies can safely adapt and transform their monetization strategies amidst this turbulent landscape.

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With the increasing number of OTT services out there and the growing concern about subscription overload, especially with the current economic pressures, do you think ad-supported models like AVOD (Advertising Video on Demand) or FAST (Free Ad-Supported Streaming TV) could be a real solution, or are they just another headache for users?

It’s definitely a hot topic right now. Ad-supported models like AVOD and FAST have clear benefits, especially in making content more affordable or even free for users, which is appealing given the saturation of subscription services. However, the downsides include potential ad fatigue, which can lead to a poor user experience if ads are intrusive or too frequent. Content interruptions are another issue, particularly for immersive viewing experiences. Plus, some users simply dislike ads and might prefer to pay more to avoid them entirely.

When thinking about these models, the first thing you really need to consider is your audience. Do you have a good understanding of who they are, what they want, and whether they’d be open to an ad-supported experience? Factors like income level and geographic location can play a huge role in this. For some users, the idea of accessing content for free or at a lower cost—even if it means sitting through a few ads—can be very appealing, especially in markets where every penny counts.

But you also have to look at your broader business goals. Are you trying to expand into new regions, grow your user base, or are you focused more on driving profitability? What’s the competitive landscape like? And don’t forget the legal side of things! Each business model comes with its own set of regulatory requirements, depending on where you’re operating. Some of these can be pretty complex and might require a fair bit of work to get right. Have you factored all of this into your planning?

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Are there alternative monetization strategies that, while being more appealing to users, can still help video businesses stay profitable?

Hybrid models and freemium tiers are increasingly popular. For instance, you can combine SVOD (Subscription Video on Demand) with AVOD to give users more flexibility. Maybe you offer a basic ad-supported tier for free or at a lower cost, and then have a premium ad-free tier at a higher price point. It gives users options, which is always a good thing.

Freemium tiers are another approach where you offer a mix of free content with ads and premium content behind a paywall. It’s a great way to attract a broader audience while still generating revenue.

Then there’s TVOD (Transactional Video on Demand) and PPV (Pay-Per-View). These models let users pay for individual pieces of content, which works well for high-value or exclusive content like new movie releases or special events. And we’re also seeing some innovation with in-video shopping, though it’s still early days. This could be an exciting area, especially as more viewers are using second screens while they watch TV.

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Introducing new monetization models can be a bit of a gamble. What strategies would you recommend for rolling out these new models in a way that users will accept, without causing too much backlash?

That’s right—there’s always some risk involved, but there are strategies to minimize backlash. First, doing your homework is essential. This means conducting thorough market research and gathering user feedback before making any big changes. I think we all know understanding your users’ preferences and pain points is crucial.

When you’re ready to introduce something new, consider starting with a gradual rollout. For example, you could begin with a limited release of a basic ad-supported tier, or even launch in specific countries first to test the waters. This way, you can gauge user reactions and make adjustments as needed before a full-scale launch. A/B testing with different user cohorts is also great to consider. It allows you to experiment with various approaches, see what resonates best, and fine-tune your strategy based on real data.

In any case, It’s important to give users choices so they feel in control, and being open with them is really the key to keeping their trust. Make sure your users understand the benefits of the new model and how it’s going to work. The more upfront you are, the more likely they are to accept it.

Big plug for our new Social Listening software which aggregates and analyses end-user feedback on 3rd-part platforms, such as app stores and social networks. This data gives service providers additional insight into how changes to their service are impacting customer satisfaction.

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In-video shopping is another interesting area, especially as it’s still pretty new for OTT platforms. How do you think it can be adapted to fit the different content consumption style on these platforms, and do you see it as a viable monetization strategy?

Actually, we are already seeing signs that in-video shopping is set to become more popular as a monetization strategy for OTT platforms, especially with the growing push for shoppable ads. These ads, available in various formats like interactive overlays and dedicated landing pages, are designed to seamlessly integrate with the viewer’s experience, ensuring that engagement with content is not disrupted. 

A recent study by LG Ad Solutions indicates that CTV viewers want a quick option to buy advertised products, with 81% of the viewers saying TV ads influence their shopping decisions, and nearly half have actually bought something after seeing an ad. With platforms like Amazon reporting up to 20 times more engagement with interactive video ads, it’s clear OTT viewers are ready for a more instant shoppable experience.

For brands, the benefits are obvious: increased brand awareness, easier product discovery, and direct access to valuable data like conversion rates and average order values. As the tech evolves, in-video shopping is going to be a win-win, driving revenue while making things super easy and fun for viewers.

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Were there any new trends in OTT monetization that you observed in the IBC show this year? 

As efficiency has been everywhere at IBC, this was also driving the monetization talks - how to get the best-optimized technology stack to ensure the best impact of their monetization strategy. Churn is still an important challenge our customers are fighting against, and while they all invested in software, it feels this cannot be addressed any longer by each team separately but more as a transversal process. We can also see AI coming into play with customer journey optimization and personalized customer care, which will comfort the user that the service cares about them and wants to deliver the experience they pay with time or money.

Understanding these industry-wide developments, at the show this year, we also introduced Accedo’s new Monetization offering, which leverages Looper Insight’s award-winning analytics software. It’s designed to help businesses optimize app and content placement, ensuring their monetization strategies are as efficient and impactful as possible. With it, we hope to put our customers ahead of the game by focusing on the key priorities of today’s OTT landscape: delivering personalized, impactful user experiences while driving revenue in a more strategic, data-driven way.

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What about outsourcing? Is it something OTT businesses should consider when looking to continuously optimize their monetization strategies?

Outsourcing can be a smart option for OTT businesses. It allows companies to access specialized expertise without the overhead costs of maintaining a large in-house team. Especially with monetization strategies, where industry knowledge and the latest best practices are crucial to staying competitive, it can be particularly beneficial. Partnering with external experts will offer flexibility, enabling businesses to scale up or down based on demand, whether for a new launch or periodic updates.

Another benefit is efficiency—outsourcing certain functions can free up internal teams to focus on core areas like content creation and user experience, which directly impact customer satisfaction and retention.

But of course, there are also challenges to consider with such a critical business decision. Outsourcing may limit control over certain processes, and complications may appear with communication or alignment when working with external partners. Businesses need to ensure that any third-party vendor fully understands their brand and goals, and there’s always a risk of delays or mismatched priorities.

That said, when outsourcing is approached thoughtfully, it can be a highly effective tool for optimizing monetization strategies. By carefully evaluating their long-term goals and finding partners who align with their vision and brand objectives, video businesses can maximize efficiency and stay competitive without sacrificing control over critical functions.