As the TV and video landscape fragments across screens and platforms, media companies of all sizes are looking for new ways to increase their share of audiences and revenue.
This can be a challenge when relying on the current content monetisation models which present a choice between advertising, subscription, and transactional revenue. Traditional commercial broadcasters are seeing ad spend and audiences spread ever-more thinly over an increasing range of channels. At the same time subscription services are dependent on the sustained growth of their user base to finance their continued investment in premium content.
For media companies to create optimal incremental value they need to adopt more flexible, holistic monetisation models where content can shift seamlessly between advertising, subscription and transactional funding. This will help to break down the silos of television and digital video, allowing AVOD, SVOD, and TVOD to merge and become the hybrid monetisation mix of tomorrow – XVOD.
So, what could this holistic monetisation approach look like in practice?
For streaming services that have so far relied solely on subscription or transactional revenue, holistic monetisation brings the opportunity to introduce free or lower cost ad-supported tiers for viewers who don’t want to pay to view content or be tied to a regular monthly fee. The idea of pulling a particularly popular series from behind the paywall and making it free to view may seem counter intuitive to these services, but if the series attracts large audiences it will also attract high CPMs, more than making up for any loss in subscription revenue.
Equally, commercial broadcasters traditionally funded by advertising could introduce subscription options that provide particular services to subscribers such as a pre-broadcast digital window for super-fans, or ad-free catch-up. Broadcasters could also consider implementing transactional opportunities for viewers who, for instance, are usually happy to watch advertising but would prefer to pay a one-off fee to view a movie or series without commercial breaks.
Embracing hybrid monetisation models requires a shift in mindset for media companies. It means rethinking the way they look at the value generated by their content and considering concepts such as content lifetime value and average revenue per user. The overall ROI on content will become more important than how that return is generated.
This shift doesn’t necessarily mean taking a major risk or leap of faith, because data forms a bridge between the two worlds. Data allows media owners to accurately measure and forecast the value and lifetime of content, enabling effective decision-making around monetisation strategy. With the right technology and experience, broadcasters and publishers can reliably predict advertising inventory and CPM rates versus potential subscription fees and subscriber gains, drawing on both empirical evidence and A/B testing.
Before making subscription content free on an ad-supported service, for instance, publishers can calculate the total revenue impact, taking account of projected ad yield and potential lost subscriptions to ensure they are making the right move. By adopting unified technology platforms that include accurate monitoring tools and forecasting engines to ease decision making and support all types of monetisation, media companies can continually fine-tune their advertising, subscription and transaction mix on a window-by-window basis.
Hybrid monetisation models are key to success in a world where the convergence of TV and digital video is unstoppable, and the fragmentation of video viewing is enduring. This holistic approach benefits all, with consumers able to view a wider variety of video content on their own terms, advertisers able to access more premium inventory across a range of platforms, and media companies empowered to realise the true value of their content via the optimum monetisation mix.