How can a streaming platform earn money? Choosing the right monetization strategy is key. Should they charge a monthly fee, run ads, or use a mix of both? This article explores various ways streaming services can make money, highlighting the pros and cons of each approach.

When deciding how to monetize a streaming platform, start with clear goals. Do you want to attract more users or keep your current users engaged? To attract more users, you might offer free trials or low-cost subscriptions. To keep users engaged, you could provide exclusive content or interactive features. Knowing your goal will help you choose the best monetization strategy.

What other options are there?

Common Monetization Strategies

💸 Transactional Video on Demand (TVOD)

‍This is a pay-per-view model where users pay for each piece of content they want to watch. In this model, clients have two main options: purchasing and renting.

For purchasing, users pay a higher one-time fee to own the content permanently. This allows them to watch the content as many times as they want without any time restrictions.

For renting, users pay a fee to rent a film or show for a limited period, typically 24-48 hours. During this rental period, they can watch the content as many times as they want.

This approach is implemented in the app we made – Vodeo. Users buy tickets to watch movies, similar to going to the cinema. Each ticket costs $0.10, and all rentals are available for 24 hours.

💸 Subscriptions

‍This popular model involves clients buying a subscription that gives them access to a product or service. Subscriptions can vary, offering different features. 

This model is effective because it provides a steady stream of income for the platform and gives users the convenience of an all-you-can-watch experience. It’s a win-win: the platform gets reliable revenue, and users don’t have to worry about ads interrupting their binge-watching sessions. Plus, users often forget about their subscriptions and rarely cancel them.

We used this type of monetization in project we built – Tradecaster, a platform where traders can stream giving trading advice. Tradecaster offers a free trial, and after it expires, users can choose from various subscriptions with different levels of access to streaming.

💸 Freemium‍

Users get basic functions for free but have to pay for additional features. These features can include watching on multiple screens, downloading content to mobile devices and tablets, watching in HD or Ultra HD, and accessing new releases before they hit the market.

Which is better: subscription or freemium? It depends on your goals.

Freemium can be better if your goal is to attract a large user base quickly and you can support a free service initially. Subscriptions are more suitable if you’re looking for consistent revenue and want to offer a premium, ad-free experience from the start.

💸 Ads-based‍

This model gives users access to all content on the platform, but they have to watch ads. For the platform, this attracts a large user base because there's no financial barrier to entry. Advertisers are often willing to pay a premium to reach a targeted audience, especially if the platform provides detailed user data for ad targeting. 

However, ads can be annoying, and people may use ad-blockers. To avoid this, you should try to make non-intrusive ads. Ad-based monetization works best for platforms with high user engagement and traffic.

💸 Hybrid‍

Combining different strategies is a common approach to monetization. For example, some platforms offer free content with ads and provide ad-free content to subscribers or premium users. This hybrid approach helps balance customer satisfaction, low entry barriers, and reaching a wide audience.

Additional Monetization Strategies

There are two additional specific types of monetization that may not apply to every service.

💸 Brand Sponsorship 

If a streaming platform adopts characteristics similar to online cinema, it can attract brands for sponsorship. Partners are invited to distribute and monetize their content to the platform’s audience, sharing revenue with the platform through advertising within video content or a portion of paid subscriptions or content purchases. Monetization through sponsorship becomes a viable option when the app's user base is sufficiently large.

However, a drawback of this strategy is its reliance on the platform's capability to attract and sustain large-scale sponsorships. Managing partnerships and integrating sponsored content seamlessly may require significant effort.

💸 In-app Purchases‍

While more commonly used by games, streaming platforms can also adopt this strategy. For instance, Netflix sells merchandise related to popular TV shows on its website. If a platform specializes in educational content, it can sell courses (similar to platforms like Coursera or Skillbox). Fitness streaming platforms might offer meal plans, among other options.

One drawback is its lack of universality; this strategy may not be suitable for all types of streaming platforms. Additionally, implementing in-app purchases requires a well-developed e-commerce infrastructure and a robust marketing strategy.

To sum up

Ultimately, the best way for a streaming platform to generate revenue depends on its unique situation, including its audience, content offerings, and market position. Platforms must clearly define their objectives, whether it's rapid user base expansion, stable revenue generation, or enhancing user experience. This clarity will guide them in selecting the optimal monetization strategy.

Combining different monetization strategies can also be successful. This approach allows platforms to balance user satisfaction with multiple revenue streams. However, it requires careful management to ensure smooth and effective operation.

Interested in adding or enhancing your streaming service with a monetization component? Contact us or book a quick call for a free personal consultation. 

  • Services