Know the cost of owning an OTT
Have you ever wondered what is the cost of video content platforms such as Youtube or LaLigasportsTV? What business model do these platforms follow to have a positive balance ? What monetization model do they follow to offer a free service?
Nowadays marketing strategies are shifting towards content marketing. As a result, more and more companies and entrepreneurs are interested in creating their own OTT video-on-demand platform because of all the advantages it offers.
However, despite all the benefits of working independently of third-party platforms, many do not understand the costs associated with working in this type of model. That’s because it depends a lot on the platform’s features, users and usage flow, and it is very difficult to anticipate the results.
Translated with www.DeepL.com/Translator (free version)
Popular platforms such as YouTube or Twitch bear these costs, indirectly passing them on to consumers and content creators in an opaque way.
Having your own OTT can help you maximize your revenues by removing intermediaries in the value chain. But to do so, you must first understand the costs associated with them. Let’s try to explain what OTT platforms entail, and later we will show you how to maximize your revenue to make a profit. Generally there are 2 types of costs: fixed costs and variable costs.
Fixed costs
Development costs
These are the costs derived from the development of the OTT platform or from the licensing payment in the case of contracting a SaaS service. This concept includes not only the development costs, but also the maintenance and development of improvements to the platform.
Front end costs
This category includes the adaptation of the OTT platform and maintenance to different devices such as Android, iOS, Samsung TV, among others.
Variable costs
Storage costs
Content to be distributed on the OTT platform must first be stored. Nowadays, storage is usually outsourced and cloud storage is the most common storage option.
CDN costs
"Content Delivery Network" is the infrastructure responsible for distributing stored content to customers. Most often, companies that generate content, such as media or creative agencies, already have their own CDN and are interested in adapting it to their new OTT to reduce costs. However, these CDNs do not usually guarantee neither service nor performance, so it is advisable for an OTT with growth prospects to migrate to one of the leading providers in the market. Having a quality CDN provider is essential for the good performance of an OTT platform. The OTT backend and the CDN are responsible for ensuring service and low latency when serving content. The CDN concept is generally billed at a cost associated with each GB transmitted. The higher the amount of GBs transmitted, the more competitive the prices offered tend to be. It is not surprising that the CDN cost is generally the largest among the costs within an OTT. However, there is no need to panic about it. If your customers are consuming your content, it means that there is interest and therefore you can monetize, cover these costs and make a profit..
Payment processing costs
All e-commerce models have Internet payment infrastructures. These are responsible for accepting payments, sending transfers and managing commercial activities on the Internet. These platforms generally charge a fixed or variable percentage of the amount billed for each transaction.
In conclusion, all video on demand platforms contemplate these associated costs. Some of them directly pass the cost on to your profits. And in other cases, as with OTTs, all costs are broken down.
OTTs give you full control over the platform. This control brings with it more responsibility but also greater profit potential. That is why it is key to understand each cost linked to these platforms. It is important to emphasize that there are currently few OTT platform models that work like a SaaS. Virtually the entire market has been broken down by generating custom platforms, which involves a huge cost that must be borne entirely by the customer. From Tyris TV, we offer this service for high performance platforms but we have created an OTT as a Service (www.galgo.tv), for those content creators who can not afford, or who want to start with a customized platform.
On the other hand, in the case of platforms like Youtube or LaLiga Sport TV, they assume those costs in exchange for having full control over the monetization of the content, the information received. Remember, if you are not paying for a product, it is because you are the product.
Free platforms that assume these costs do so at the expense of being the ones that have full control over content, subscriptions, ads, promotions or sponsorships, acting as intermediaries and taking the biggest slice of the revenue pie.
In future articles we will tell you how to monetize your OTT Galgo platform to obtain immediate income without the intrusion of intermediaries.
Galgo
If you want more information on how to launch your own OTT platform, go to Galgo.tv or contact us to launch your platform in a simple and easy way.
