Traditional broadcasters and hybrid monetization to drive growth

There will be nearly two billion active global on-demand video service subscriptions by 2025—a 65% increase over the end of 2020—according to a report released this January by Juniper Research, an analyst house specializing in digital technology market research. 

Driving this growth are traditional broadcasters who foray into streaming services to extend their reach and compete with online video players such as Amazon Prime Video.

Increased competition is also driving innovation of over-the-top (OTT) monetization models. An OTT is a streaming media service offered directly to viewers via the Internet. Traditional monetization models include TVoD/PPV (Transactional Video on Demand/Pay-Per-View) or SVoD (Subscription Video on Demand). Viewers either paid a one-time fee to watch, download, or rent content in Apple iTunes, Amazon Video, and Google Play, or monthly subscriptions with streaming service providers like Netflix.

In the Philippines, revenue in the Video-on-Demand segment is projected to reach $158 million this year, according to Statista, a provider of market and consumer data. SVoD is the largest segment of the market, with a projected market volume of $101 million for the same period. 

HYBRID MONETIZATION
Titled OTT TV & Video Streaming: Evolving Trends, Future Strategies & Market Forecasts 2020–2025 Research, the Juniper Research paper reported that traditional broadcasters are turning to hybrid services, or a combination of subscription- and advertising-supported monetization. It forecasts 273 million users of hybrid OTT TV subscription services by 2025, up from 115 million last year. It also anticipates these services to account for $1.4 billion in advertising spend in 2025.

“Thanks to this high level of market saturation, streaming providers need to keep their offerings competitive to retain subscribers,” said research co-author Nicholas Hunt in a press release. “Hybrid monetization is one way that Video on Demand (VOD) providers can keep their offerings low-cost, and therefore less likely to be dropped.”

An example of a hybrid service is the bundling monetization model, which Disney+ uses. It bundles its content together with ESPN, National Geographic, and other content producers. 

Mobile network operators such as T-Mobile, meanwhile, have been bundling Netflix for free for its family plan subscribers since 2017. 

Local providers offer similar bundled packages: Globe Telecom’s GoWATCH bundle includes video apps and sites such as YouTube, Netflix, Viu, and NBA League Pass. Smart, for its part, offers video streaming via its Video Every Day promo that includes YouTube, iflix, iWant, NBA League Pass, and Cignal Play. 

Streaming service providers are also expected to integrate hybrid monetization models further into their business plans. Providers will look beyond the subscription-only, ad-free model to hybrid monetization that offers a range of options to the consumer and a variety of revenue streams. 

NBCUniversal’s streaming service Peacock, for one, utilizes a hybrid monetization approach with its three tiers of service. The Free tier has a section of the content of the upper two tiers with targeted user advertising. The middle tier, Peacock Premium, has advertising but with the full library of content. The upper tier, Peacock Premium Plus, has the full library without ads. 

As Peacock’s chairman, Matthew Strauss, said in the report, “There was this belief in the industry that people did not want advertising or did not like advertising. That just is not true. Free, ad-supported content plays to our strength, and that has been where we focused.” — Patricia B. Mirasol 

RELATED ARTICLESMORE FROM AUTHOR