OTT platforms have transformed the way users consume media content, becoming an integral part of daily life of millions of people around the world. In order to attract new users and expand their subscription base, these platforms also actively engage in user acquisition campaigns.
In this article, we will analyze how OTT platforms leverage several strategies to grow their user base, including the most common monetization models, metrics, and the evolving trends within the streaming industry.
What are OTT Platforms
The term OTT, short for “over-the-top”, refers to technology that enables content to be streamed on Internet-connected devices. These OTT platforms allow users to enjoy content through streaming apps and websites on smartphones, tablets, and connected TVs like Smart TVs, Fire Sticks, and gaming consoles.
Popular OTT platforms are Netflix, YouTube, Disney+, Pluto TV, Peacock, Paramount+, and many others that are dominating video streaming. On the other hand, in the audio streaming industry, Spotify is one of the leading examples as it offers music and podcasts to users.
This model has transformed the traditional TV-watching experience by giving users the flexibility to choose what to watch and when, without being tied to the fixed schedules of conventional TV providers.
In addition to providing users with greater choice and flexibility, OTT platforms actively invest in user acquisition strategies in order to expand their subscriber base and stay competitive in the rapidly expanding streaming market.
Monetization Models of OTT Platforms
OTT platforms rely on several monetization models to generate revenue and attract users. Here are the most common models used:
- Subscription Video on Demand (SVOD): platforms like Netflix or Spotify attract users with subscription plans, granting them access to a wide range of content for a fixed monthly price.
- Advertising-based Video on Demand (AVOD): allows users to access content for free in exchange for watching ads which generate revenue for the publisher. YouTube, DailyMotion, Pluto TV, Spotify are OTT platforms that employ it.
- Broadcast Video on Demand (BVOD): refers to on-demand video services provided by traditional broadcasters. These services are made available online, allowing users to access content after it has aired on TV.
- Transactional Video on Demand (TVOD): is based on a pay-per-view model where users pay for the specific content. This model is particularly effective for exclusive content, sporting events, or new film releases.
- Free Ad-Supported Television (FAST) offers free linear programming powered by ads. These OTT platforms imitate the traditional TV experience, where viewers cannot choose the next program but can enjoy content without a subscription fee, making these platforms an effective tool for user acquisition campaigns.
- Premium Video on Demand (PVOD), a premium fee is charged for early or exclusive access to video content. Users can pay extra to watch new titles before they are released on other platforms or on traditional TV channels.
By combining different monetization models, OTT platforms can attract even more users, offering customized options that meet different audience needs and maximizing user acquisition opportunities.
OTT metrics
The effectiveness of user acquisition strategies for OTT platforms is measured through the key performance indicators (KPIs):
- Return on Ad Spend (ROAS): measures the profitability of your OTT user acquisition campaigns by dividing the revenue earned by the total spend.
- Lifetime Value (LTV): represent the total estimated amount a customer will spend with your brand throughout their entire relationship with it.
- Cost per Action (CPA): calculates the cost incurred for each specific action taken by a user, in the case of OTT platforms subscription.
- Click-through rate (CTR): tracks the average of viewers who clicked on your ad compared to the total number of impressions it received.
- Average Revenue per User (ARPU): indicates the average income generated from each customer by dividing the total revenue by the number of users from your OTT campaign.
User Acquisition on OTT Platforms
User acquisition on OTT platforms has become a critical strategy for app marketers, especially with the rise of connected TV (CTV) as a powerful device for reaching potential users. As one of the most effective channels for user acquisition, connected TV enables advertisers to connect with a broad and engaged audience through highly targeted and interactive ads.
Moreover, since OTT platforms are mainly subscription-based, their revenue relies on subscriptions, with advertising playing a secondary role. As a result, user acquisition efforts are centered around attracting high-quality users, often through Cost per Action (CPA) campaigns designed specifically to obtain subscriptions.
These campaigns are particularly effective when paired with video traffic, as video naturally showcases the app’s content and enhances its appeal. Ads that feature new releases, special offers, or exclusive content are particularly effective at capturing user interest.
New Trends of Streaming
Recently, short video apps have been gaining more and more popularity, offering users dynamic platforms for creating, sharing, and discovering engaging content.
One example is ReelShort, a new Chinese app making its way into the streaming and TV series world. A distinctive feature of this app is that users do not need a subscription to access it. Instead, they can freely watch movies or TV series, paying only a few cents for selected episodes. However, the most innovative aspect of ReelShort is the format of its content: episodes last around one minute, creating an experience similar to scrolling through TikTok or Instagram Reels.
This new trend is emerging as an innovative alternative to OTT platforms, offering a new form of entertainment that combines TV series and movies with the immediacy of social media.
Conclusion:
- OTT platforms stream content directly to Internet-connected devices, offering flexibility and targeted advertising opportunities.
- OTT platforms use several monetization models, including subscriptions, ads, and pay-per-view, to generate revenue and attract users.
- Key performance metrics like ROAS, CPA, and LTV help measure the success of OTT platforms’ user acquisition efforts.
- User acquisition campaigns on streaming apps focus on attracting high-quality subscribers, often using CPA strategies.
- New trends, such as short video apps, provide innovative ways to engage and drive user growth.
