As the popularity of streaming services surged in the past two years, many major streaming platforms have also had a similar revenue rise. If having a subscription to a streaming service was considered a luxury earlier, having access to at least two such services has become the norm today.
So, how much revenue do streaming services such as Netflix make each year?
According to research on Statista, Disney+ and HBO Max stand as one of the highest revenue grossing platforms worldwide, with 316 and 156 million dollars earned in 2021, respectively. Netflix and Hulu also made highly, raking in 89 and 79 million dollars respectively last year. Disney+ and Netflix earn from a global diaspora of the four platforms, while HBO and Hulu are popular with mostly US audiences.
These platforms work with a variety of monetization models. Depending on your audience and the kind of content, one or a combination of models can work for you.
Some streaming revenue models are given below:
Subscription
This is the most popular streaming Monetization method. In the subscription-based model or SVoD (subscription video on demand), the user pays a certain amount of money monthly or annually to access content on the platform.
Earlier subscription models were pretty straightforward and gave access to all the content in return for a paid subscription. Nowadays, due to competition and a diverse customer base, there are different subscriptions types to which a user can avail.
For example, Netflix works on a subscription-only business model and they divide their subscriptions based on the quality of video and the number of simultaneous users allowed. The most affordable plan comes with Standard Definition video playback and one concurrent user, while the top-end plan has 4K video streaming with four simultaneous streams.
In countries like India, Netflix has additional subscription plans that work only on their mobile app. This is because a large majority of Indians consume video on their mobile
Advertisements
Another way to monetize your streaming platform is by accepting advertisements. Ads can be placed inside the website as banners and during video playback as skippable or nonskippable videos.
Advertisements are an excellent way to expand your revenue stream, but they can also reduce the streaming experience for your users. For new platforms, it is important to place minimal and personalized ads so as to reduce the use bounce rate and increase retention.
You can host two types of Ads on your platform:
3rd party advertisements
Here, you place a code from 3rd party ad services such as AdSense or Bing. These platforms have a substantial existing advertiser network and you don’t have to go out of your way to get ad slots filled. They usually integrate seamlessly with the website and are a viable option starting out.
3rd party Ad services usually charge high commissions to fill your Ad slots
Direct advertisements
Accepting direct advertisements is a good way to go if you have a solid user base and want to get around the Ad commission.
To attract advertisers directly to your website, you should be transparent about your traffic and policies. The process of getting an ad slot should be as seamless as possible for the advertiser.
Selling products
Another way by which you can make money out of your streaming platform is by selling products that are closely related to the video content you have. For example, suppose you have a niche streaming service related to football. In that case, you can sell football-related products by featuring them inside the video or on areas surrounding the playback area.
This is an effective monetization strategy for niche websites because you will be showing relevant products to highly targeted audiences. A person who watches football videos will most definitely be interested in playing football and buying related products such as boots and knee pads. At the least, he will be a fan of a football team whose merchandise can be easily sold via the football streaming platform.
Pay per view / TVOD
In the Transaction Video on Demand (TVOD) model, users can choose to pay for just the content they wish to see instead of subscribing to the entire list of content. TVOD can be electronic sell-through (EST)- where a single payment gets users permanent access to content and download to rent (DTR)- where content is rented out for a specific period.
This model has been tested effectively by many informational platforms related to education and documentaries recently. For example, if you have a programming tutorial website, you can have users buy or rent tutorials that they wish to learn- like Python or Java, instead of giving access to the entire website.
Some examples of TVOD models are Google Play & Apple’s iTunes
Hybrid Model
Most modern streaming platforms work with a combination of the models mentioned above- called the Hybrid Model. You risk not making enough money to sustain yourself if you follow just one model, especially while the app grows. Furthermore, to stick to one monetization channel, you might need to charge a premium from the users- which is not ideal.
This doesn’t mean a single monetization model doesn’t work. Netflix, for example, has stayed true to its subscription-based model for many years now. While Netflix subscription is costly, people are more than willing to buy due to the availability of premium content.
Other streaming platforms have wholly embraced the Hybrid model. Disney+ has a low-cost subscription plan that shows in-video Ads while streaming. They also accept direct advertising for slots in live streams. Amazon Prime also juggles with Subscription-based, direct advertising and even Pay-per-view methods. Youtube is primarily an advertisement-based platform that provides subscription-based premium plans and even allows creators to sell products and merchandise.
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