OTT platform is one of the most emerging platforms in the current scenario. The COVID-19 situation which subsequently led to a lockdown and forcing people to stay indoors for their safety has no longer left any option for the entertainment of the people rather than watching their favorite series or shows on these platforms. Have you ever wondered how OTT platforms earn money?

There is almost no person who doesn’t know Netflix, Hotstar, or Amazon Prime Video. These platforms have taken a very sudden rise in the last few years because it provides such a big range of entertainment to its users. The younger generation has changed their taste from that high voltage drama TV shows to something which is entertaining as well as relatable and novel.

Netflix has been so popular among the youth that the phrase such as “Netflix and Chill” has been part of the youth lives now. Now, in this article, we are going to give you the answer to that question for which you have clicked on this article which is “How OTT Platforms Earn Money”.

How OTT came?

The OTT was meant to come since the IT revolution took place. The main reason OTT coming to rise is the rise of smartphones. When smartphones started getting affordable and accessible to every section of society, OTT web streaming was meant to come. However, the story in India came just four years ago since the JIO revolution came out, and now the data was available at much cheaper rates than before which contributed more towards the success of OTT platforms such as Netflix.

What is OTT?

OTT stands for Over The Top Media which allows you to watch interesting and entertaining content on your PC/smartphones while you are connected to the internet. You get a variety of choices to choose from and then watch it. There are many popular OTT platforms such as Hotstar, Netflix, Sonyliv, Amazon Prime Video and they very well know how to attract audiences to their platform in spite of such tough competition.

In fact, there is a reason why OTT platforms are known as over-the-top media because at first, you had the facility to watch the content on your TV sets, but now you can get rid of the cable and watch more entertaining content on your smartphones/laptops.

How does Netflix and Amazon Prime make money?

We have done the right research to know the OTT audience and crack the idea of the way that how OTT platforms earn money. Hotstar, which is owned by the Star TV group, has already control over Star Sports which was a big reason why all the sports lovers were left with no choice rather than buying a subscription to watch matches and the big IPL.

Netflix was already very popular among the millennials before it came to be known to the local audience. It provides so much variety to the contents that it offers and in various different categories that it is one of the most popular platforms among its rivals and is always giving tough competition to all others in spite of being more expensive on the other side.

Amazon prime has also gained popularity in the Indian audience through its first very original Indian show “Mirzapur” which has broken all other records of any other Indian web series. It came under the tag of Amazon originals just like the Netflix originals out there and it did provide tough competition to it at least in India.

Not only these but there are many such platforms that have attracted viewers on their platforms through trying out different things. Some of the OTT platforms are  Voot, Zee5, Disney Plus, Eros Now, Viu, TVF, etc. and they are also in the race for the viewer’s time.

How OTT media produces movie/series?

There is two way in which they produce a movie on their platform one of them is either they buy the rights of the movie from the filmmaker and then release it on their platform or they make a movie, decide on a crew and every other thing and pay them from their own pockets.

Both the cases work pretty well and it depends totally on the decision-makers to go for any option from both available.

How OTT platforms earn money or gain profit?

Before going for the answer to how OTT platforms earn money there is something you should already know about it. There are some terms with which you need to be familiar before knowing the final answer to the question in your mind about how OTT platforms earn money? If you are well familiar with them you will eventually get to know how the whole process works. What is the revenue model of OTT platforms?

The first term is SVOD which stands for subscription video on demand, now these platforms earn money through the subscription plans for which they take direct payment from the viewer/audience. These platforms ask you to select a subscription plan out of the choices they give to you and then you pay them to watch content on their platforms. For example, Netflix asks you for a subscription of INR 199 which can be shared by five people through five different IDs on the same account. Now, this is a direct payment you made to Netflix and they get an earning out of it. On the plus side, you don’t have to watch advertisements.

Thinking of advertisement leaves us to our second approach that is AVOD which stands for Advertising Video On Demand. From the name itself, it is very clear that in this approach we use advertising to give us an answer to our prime question of how OTT platforms earn money. Now, these platforms allow users to watch all that content for free you don’t have to make any kind of payment to watch shows on these platforms. But, then how they earn money.

Well, actually they earn money through banner advertising which you cannot skip. It is all the advertising which will come while you are watching your favorite series/shows to help you watch all that content for free. MX Player and Voot both use this kind of approach to make money.

And the last one which sums up both is the hybrid model or approach. Like the one used in Disney+Hotstar, here they use or provides options for the user to choose from, either they can pay the subscription fees and go for an ad-free version or they don’t have to pay that fees and continue to watch their favorite shows with an advertisement, the choice is theirs. So, these three approaches are the answer to our question of how to earn money through OTT platforms?

Conclusion – How OTT Platforms Earn Money

The rise of smartphones, cheaper data, and limitless entertainment, is the biggest reason why the OTT platform will continue to grow and shine in the coming times. Though there may be a lot of competition now these platforms will continue to make money in the future. The more people download, subscribe, and watch these contents, the more profit they will earn. We are already dependent upon it for our share of entertainment. So, in the future, these platforms will continue to be popular and successful. In the end, I think you might have got the answer to how OTT platforms earn money.

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