Monetizing Video Content in Today’s Market
Today’s content tends to fall into three realms: hobby, promotional and professional. The last two can overlap, but the distinction is that a solely professional video has an end goal to be self-sustaining and ultimately a profitable or at least breakeven endeavor. While not always easy to achieve with audience sizes outside of thousands, it can be done and here is how: Pay Per View.
The prospect of a paywall (content being placed behind a subscription or Pay Per View system in order to access it) has come a long way since it was originally coined as a way to extend the life of the newspaper industry into the digital realm. Today, this type of technology can be easily embed and integrated into someone’s website with minimal effort through OVPs (Online Video Providers), making this an easy approach to adopt once decided on.
Admittedly, the dream model to monetizing content has always been advertising. Being able to insert a video ad and turn a profit is an ideal scenario, as it’s the most accepted method. However, not many can use this approach successfully. I speak from experience from our own company’s history, where we introduced and had to ultimately pull advertising as a built-in option. The reason for this is the CPM (cost per thousand) many advertisers are will to commit doesn’t come close to covering expenditures. Pay Per View, in contrast, can support a much more modest viewership, and our Pay Per View users in a good month would eclipse the total revenue earned over all the years we supported ads.
Let’s give an example, though, of how Pay Per View might work for your application. To be fair, we will use the bottom of the average video ad CPM for top sites, which according to a report from MoneyNews in 2013 was $15.
- Average Video Ad CPM: $15
Let’s assume 1000 people watch each month. That’s a total of 12,000 over the year and a total earning of $180. Not bad.
- 1,000 viewers*12 months/1,000*$15 CPM = $180 annual
Now let’s do the same with Paywalls. Finding an example average price is hard, so let’s assume something like $5 per day of access.
- Pay Per View 1 day price: $5
Given that this is monetized content, we will predict we only get 10 paying viewers per month for a whole year. Plus, to make this fair, we will subtract the commission charged by most paywalls of around 11%.
- $5*10 viewers*12 months *-11% = $534
So for 1% of the viewers we got with our ad approach, our gross revenue is already 297% higher. Now imagine if we got 15 viewers, or charged $6. With Pay Per View it’s far easier to turn a profit with our video project.
Many types of video content fit well into the Pay Per View approach as well. For example, instructional videos can often mandate a price or live entertainment such as concerts or sporting events. Securing the content is often easier than expected, although since this is paid content there does have to be a sense of added value to ensure repeat customers. This added value can come from a variety of places, from professional level production values, such as those offered through Vidaao, or a local hook, such as content involving a community or school where viewers have a more vested interest in the event.