How to Start an OTT Business for Entertainment Content?

Do you create shows, documentaries, or films to entertain viewers? I think OTT is not just for big players like Netflix, Prime Video, Hulu, HBO, and others. Even these platforms (especially Netflix) had some humble beginnings, and now they are ruling the sphere. Hence, it’s possible to build and launch a successful OTT streaming business for you as well.

Nobody can argue that OTT streaming is a proven business model. Whether you create your content in-house like Disney, source from distributors like Hulu, or do both like Netflix, the OTT streaming market is massive enough to accommodate a ton of other players with unique selling points (USPs).

According to Statista, the global revenue in the OTT video streaming business is expected to surpass the US$171,772 million mark by 2021. It will continue to grow with a CAGR of whooping 10% between 2021 and 2025 to reach US$251,879 million by 2025; this would be a user penetration rate of around 35%.

The market is still into its growing phase, especially in the developing countries, which are currently experiencing a revolution in internet penetration, you have a great opportunity to tap into a highly profitable industry.

Do want to know how to start OTT business of your own to tap into this market? Here is a simple, step-by-step guide that shows how to start your own OTT streaming service and turn it into a profitable business to generating some roaring revenue.

Step #1: Source your OTT streaming content

Ideally, any guide on how to set up an OTT streaming business suggests you choose your OTT business model first, but I beg to differ a little. I suggest you sort out everything about content-sourcing before taking any further steps. The reason being the level of competition in the current market.

3 or 4 years ago, it would have been possible to generate profits by simply picking any business model and streaming some decent OTT content, which you may have produced or sourced from a third-party. Today, you can’t just pick any business model for any type of content. The business model for your OTT streaming platform must align with how you source your content. Hence, it’s better to sort your content-sourcing first before you can map a perfect business model to it. (we will learn this in the next step)

There are two major ways to obtain licensing for content you want to stream on your OTT streaming platform:

Produce your own content: You can upload your own content. You can either create your content in-house or sponsor other production houses that would create content for your platform. Yet another way is purchasing the exclusive rights to good, latest content produced already by a content creator or production house. Disney produces its own content under the banner of different production houses it owns. Whereas, Netflix either sponsors third-party creators or purchase exclusive rights to stream content from third-party producers.

Source from distributors: There are dedicated content distributors who purchase streaming rights of content from different producers and creators. These distributors then offer content licensing under different models to the OTT streaming services. You can rent or purchase content licenses from these distributors. There are various OTT content providers whom you can connect online.

Step #2: Identify a suitable business model

OTT services across the planet rely on three different business models to generate revenue:

• AVOD (Ad-based Video on Demand): Embedding Ads on your platform to generate revenue from advertisers, while you can offer the streaming service free of cost to the viewers. For example- YouTube, cwtv.com, etc.

• SVOD (Subscription-based Video on Demand): Asking users to pay a recurring subscription fee to access all content on your OTT platform. You will be generating direct revenue from your viewers. For example, Netflix, Disney+, etc.

• TVOD (Transactional Video on Demand): Let your viewers purchase access to only the individual content they want to watch. For example, Amazon Prime pay-per-view movies.

Which OTT business model is right for you?

It depends on your content sourcing model and type of content.

• If you have exclusive rights to any in-house or third-party content that users can’t find anywhere else, SVOD can do wonders, just like it did for Netflix. You can experiment with different levels of subscription plans to attract all kinds of prospects.

• If you have exclusive rights to new releases, combining TVOD with SVOD will be a good idea. You can put some exclusive content under pay-per-view (PPV) while users can still access other content they have subscribed to.

• If you don’t have a progressive library to come up with new titles every now and then, users would subscribe to your platform for nothing. Here, you can pick the TVOD model alone to let users pay for only the titles they want to watch when they arrive.

• If you have some popular titles but don’t have any exclusive rights to them, users would not mind watching ads (AVOD) in between as long as they can stream free of cost.

SVOD is the best way to monetize your platform in my opinion. Users hate ads, and recent studies have shown that viewers are gradually developing a taste for ad-free experiences. More and more consumers are willing to pay for OTT content. So, try to set up a progressive content library with new titles making it to the platform every now and then.

Moreover, you can always pick a balanced hybrid of all three models and monetize your library according to the exclusivity. Like YouTube; it uses all three models for different types of content on the platform.

Step#3: Create an OTT streaming platform

Once you have a source for content and have mapped a suitable business model to it, it’s time to create an OTT streaming platform for business.

The OTT streaming ecosystem is much larger than any other segment. For example, if you want to start an eCommerce website, you just need a website, an android mobile app, and an iOS mobile app to cover the entire populace of potential customers.

However, OTT streaming is more diverse in this regard. Apart from the website and mobile apps, you might feel the need to target other major platforms like Android TV, Samsung TV, Apple TV, Roku TV, Amazon Fire TV, etc. This is a good idea, but I would suggest you develop an MPV first. Wait and observe the response, then you can proceed to the next phase once you get a viable success with your MVP.

How to build an MVP for streaming service?

There are two major ways to build an MVP for your streaming service:

• You can develop an OTT platform from scratch
• You can purchase a turnkey OTT streaming Script

If you have a pretty unique platform and features in your mind, it’s better to invest in developing your solutions from scratch. You could hire a development team, or outsource the work to a software development firm. In either of the ways, it will take at least 6-7 months to design, develop, test, and deploy an MVP from scratch: Front-end, Back-end, Android App, and iOS App. Taking the US development cost as low as $80-$100 per hour, you can calculate the expense of such a project.

However, if you purchase a turnkey OTT streaming script, you can acquire the same set of solutions for as low as $1K-$2K, that too within a few days. Now, you may ask which type of turnkey script to choose? It depends on your business model.

If you want to build a subscription-based VOD streaming platform, you can go for a decent Netflix clone script. Such a script can be found on the internet with a one-time cost and 100% source-code access so that you can always customize your platform and not depend on the stock features. Similarly, if you want to use a hybrid of AVOD, SVOD, and TVOD models, you can pick a reliable YouTube clone script from the market.

Once you find a turnkey script, you can simply install it on your webserver, integrate your media server (for example AWS), upload your content, set up the monetization channels, and take your platform live on the go. Most of the turnkey script providers will help you with this entire process.

Step#4: Find your viewers

Once your platform is live, it’s time to promote it and let your target audience know about it using video marketing. Here are some tips to promote your platform and get your first viewers or subscribers:

• Pro-active social media marketing: use social media to the fullest. Create your brand’s social media pages (or handles) and start driving followers. Use Facebook, Instagram, and Twitter Ads to reach out to potential customers. Post teasers and trailers on social media to attract paying consumers.

• YouTube is a goldmine: The giant video-sharing platform is not only a great source of content for the viewers, but it also accommodates a majority of internet users. Even a VOD giant like Netflix uses YouTube Marketing to drive subscribers to its platform. From posting teasers and trailers to creating YouTube specific videos and collaborating with YouTube creators, and YouTube video and display Ads, there is no shortage of ways to use YouTube for video marketing.

Apart from these, you can rely on all sorts of traditional marketing channels such as Google search Ads, Bing Search Ads, Display Ads, content marketing, SEO, affiliate marketing, and referral marketing.

To Summarize

Remember, the video streaming market has not been taken over by the giants. You need not become Netflix, Amazon, Disney, HBO, or Hulu to succeed as an OTT service. There are plenty of OTT services apart from these big names, and they are all doing extremely well. In fact, most of these are small regional and niched players that do not even go eye-to-eye with the giants. Instead, they fill the gaps left by the big players.

It a massive market, and even small players can drive big profits. You just have to figure out the profitable ways to make the most out of the 4 steps discussed in this guide. I have discussed one such example as two different ways to develop your OTT platform: traditionally VS using a turnkey script.

So, think wisely and learn where to devote your time, money, and resources, and when to by-pass the redundant expenditures. Success will be yours.