How Does an OTT Platform Work?

Streaming is quickly overtaking traditional cable as the number one choice for consumers. In fact, by 2024, more than 46 million households are expected to “cut the cord” – dropping cable in favor of streaming and over-the-top (OTT) platforms.  In addition, viewing on mobile devices such as smartphones accounts for a big part of that market; 30% of premium content was viewed on phones in 2020 – up from 23% in 2019.

These trends aren’t slowing down, so now is the time to get into the OTT market. But just how does an OTT platform work? We’ll go over the basics here, so you can decide whether you should build your own OTT platform.

What is OTT?

Over-the-top platforms skip traditional cable or broadcast infrastructure, instead serving streaming or on-demand video via the internet. Think of Netflix or Disney+ as examples. Using an OTT service, content providers can provide content more efficiently and at a lower cost than traditional broadcasters.

In turn, users can consume content on multiple devices such as tablets, TVs, phones, and streaming devices like Chromecast or Roku. Users can stream content on-demand or tune into live streaming broadcasts.

Creation and Setup

Creating an OTT platform can be as simple as working with a partner who specializes in make-your-own OTT platforms like MAZ. Without a partner, there’s some work to do, but it’s still not as resource intensive as creating a broadcast network. Your development team will need to write an app using an SDK like Android Studio or xCode, hook up player and video APIs, and choose a hosting platform. This could be an in-house server system, or a cloud-based solution.

The quickest and more robust approach is to work with a make-your-own-service provider like MAZ.

Once you’ve got the structure in place, all you’ve got to do is upload content into your library, tell your audience, and decide how you’ll monetize.

Monetizing OTT

How OTT platforms earn money depends greatly on the business serving them up. The flexibility of the medium allows for creativity and lets you decide how best to serve your audience and profit. That said, there are a few common monetization methods for OTT :

  • Ad-based video on demand (AVOD) – Great for customers who want free content. Platform owners make money by selling highly targeted ad time in-line or as banners.
  • Subscription-based video on demand (SVOD) – The most common method because it generates the most money per customer. Users could get unlimited access for one price, or you can set up different price points and offer varying levels of service – even including ads in the lower tiers.
  • Transactional video on demand (TVOD) – AKA pay-per-view. Using TVOD, platforms charge customers once to rent or buy content.

Of course, you’re not limited to one way of monetizing your OTT platform. Many OTT providers offer a free tier for users to get free content and get acquainted with the platform. Later they may buy into a subscription to remove ads or get access to premium content not available in the free version.

Pay-per-view style events can be promoted periodically to supplement revenue from subscriptions and/or ads, and since you have control over ads served, you can even use that functionality to sell products or promote other platforms.

Step into OTT

If you’ve been considering an OTT platform, there’s never been a better time. Streaming and video on demand are on the rise, and profitability isn’t hard to come by. Not to mention, it’s never been easier to build your own OTT platform.

If you’re ready to learn more, contact MAZ now and we’ll walk you through the process.