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6 Steps to Create a Profitable Streaming Video Service in 2020

Every three decades or so, the media and entertainment industry undergoes a major metamorphosis. Since the first motion picture in the late 19th century, technical innovation and advances have transformed the industry from silent films to ‘talkies’ in the 1920s and from black-and-white to vivid color in the 1930s. Just two decades later, almost every family owned a television, and by the 1980s, a home video player was a must.

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And now, the entertainment industry is experiencing arguably its biggest transformation yet—the era of streaming.

In this guide, we’ll get you up to speed on the rapid shift to over-the-top streaming and show you how to start a streaming service like Netflix, Hulu, or Disney+.

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Industry growth insights: How popular is streaming video?

Streaming video will continue to explode in 2020, and the commercial potential is immense—no matter what industry you’re in: entertainment, media, education, healthcare, e-commerce, and others.

In 2019, the top streaming players (Netflix, AT&T, Disney, and Viacom) together made more than $83 billion. And with media behemoths like NBCUniversal (Peacock), WarnerMedia (HBO Max), and Quibi set to release their highly anticipated streaming services in 2020, the industry is predicted to reach $184 billion by 2027.

These impressive profits are not surprising when you consider the fact that streaming services, such as Netflix and Amazon Video, now have more subscribers worldwide (613 million users) than those with a cable connection (some 556 million users).

For video content publishers big and small, it’s not a matter of if you should create a streaming service, it’s when. However, the logistics behind creating a streaming service that rivals the content libraries, user experience, and ease of use of a platform like Netflix are difficult; you can’t just push out any app and expect viewers to engage with your brand.

Here are some considerations of how to create a streaming service if the concept is new to you.

How to create a streaming service?

So, how do you create a streaming service like Netflix? Here are some of the main considerations for building a streaming service:

1. Find your niche
2. Plan your content
3. Consider your revenue model
4. Choose a video hosting solution
5. Determine supported devices and platforms
6. Focus your app on UX

To clarify, Netflix is a subscription-based video-on-demand (SVOD) service that allows members to watch a wide variety of content on any internet-connected device, including smart TVs, set-top boxes, game consoles, streaming media players, smartphones, and tablets.

Users simply download the Netflix app for their operating system (either Android or iOS) or use the web-based version for streaming directly on their laptop or computer.

Building an attractive OTT app like this is understandably daunting, but once you break it down, it’s easier than you might think.

Step 1: Find your Niche

The first step is to choose a specialized audience to build your content around. Homing in on a particular niche creates a sense of “exclusivity” that permits a higher perceived value. It also sets the overall tone and direction of your OTT app—helping to guide your content selection, bring clarity to your branding, and refine your marketing strategy.

For example, Disney+ is a “family-friendly” service, offering childhood classics, new releases, and exclusive originals from Disney, Marvel, Pixar, Star Wars, and more. While you might associate Disney with childhood cartoons, their target audience isn’t just children and adults who are young at heart.

Instead, it’s 18-to-24-year-olds interested in Marvel series and Star Wars movies. It’s parents who are conscious of protecting their children from inappropriate content. It’s also older consumers with grandchildren who are keen to explore our world through National Geographic.

With an in-depth understanding of its niche, Disney has been able to frame its content around audience segments within its target market. This is the level of specificity your OTT app needs. Knowing your niche is a game-changer that eliminates the guesswork and leads to a more engaged audience.

Step 2: Plan your Content

Content is the foundation of any OTT streaming service and the reason people will be watching and coming back. Therefore, you need to make sure that your service delivers content that engages your audience—whether it’s for entertainment or educational purposes.
There are a few key considerations at this step.

  • Content Acquisition: Do you have the capacity to create your own content? Or, do you plan to invest in the commercial rights for content directly from a distributor?
  • Content Partners: Will you partner with industry experts to create original content?
  • Content Structure: Will you offer one-off videos, or will you provide episodes as part of a series? What categories will you provide?
  • Content Refreshing: How often will you deliver new content (daily, weekly, or monthly)? Are your videos available to all subscribers, or will there be gated content?

For example, Daily Burn partners with certified trainers to stream new one-off workout videos on a weekly basis. Subscribers can tailor their workout to their personal goals and fitness level, and search for content using a range of sub-niche filters, such as yoga, dance, and cardio.

In another example, SkillShare offers subscribers access to content in a course format. Students looking to learn a new skill in business or design can select from a range of courses containing a series of step-by-step tutorials.

Both approaches are successful as they reflect the needs of their audience.

Step 3. Consider Revenue Models

The secret to a profitable on-demand or streaming app isn’t necessarily the revenue model. UX/UI is far more influential, however, choosing the right revenue model for your audience is important.

There are three key monetization options to choose from including subscriptions, advertising, and pay-per-view.

Subscriptions: Major streaming services, like Netflix and Amazon Prime, have used ad-free subscription models to dominate the global market. In fact, 44% of subscribers said an ad-free experience was the top reason they signed up for a streaming service. Subscribers are charged a monthly fee to receive access to a library of content. However, to justify monthly payments, you’ll need to continually update your platform with fresh content.

Continually generating new content, in addition to asking for up-front payment, can be challenging for start-ups and small businesses yet to prove themselves. But that’s where advertising can act as an alternative source of revenue.

Advertising: Selling advertising placements to other companies or agencies is a legitimate revenue source with a great deal of potential. Of course, a sizable audience is first required to entice advertisers. However, you can also increase the value of your ad placements by offering advanced marketing features such as consumer segmentation, targeting, and analytics to help marketers effectively measure and manage their video advertising campaigns.

Pay-per-view: Another monetization method to consider is pay-per-view (PPV), also known as transactional-based video on demand (TVOD). Users are given the option to make a once-off payment to access content for a given number of views or time period. This method is a great option for those who are new to video content distribution and want to introduce their content to audiences before pushing a subscription.

Of course, a hybrid blend of any of the above three can also be considered.

Step 4: Choose a Video Hosting Solution

Selecting a video hosting solution is a crucial step that can have ramifications on the overall functionality and appearance of your app. You can choose to host your content on your own server(s) but that requires a specialized level of expertise in and of itself.

Another option, and perhaps the best one for smaller brands who lack expertise in this space, is to partner with a company that specializes in streaming hosting technology.

An Online Video Platform (OVP) — essentially an all-in-one platform — allows you to share your content with your audience using a white-label website, mobile, or desktop application. Hosting your content on an OVP may seem like an easier (and cheaper option), however, out-of-the-box solutions have a limited set of parameters which won’t suit everyone.

Examples of Online Video Platforms include:

CDNs

If you’re planning to scale rapidly, then you should consider hosting your video on a Content Delivery Network (CDN) too. CDNs are geographically located servers, which work together to reduce load times and speed up the performance of your OTT app. They also reduce interruptions by utilizing caching to reduce hosting bandwidth. The majority of web traffic on major sites like Facebook, YouTube, and Netflix, use a CDN in addition to web-hosting.

Examples of Content Delivery Networks (CDN) include:

Video CMS

In addition to a CDN, you’ll also want to consider a video CMS, or content management system. This software will help you to organize your videos so that they are easy to manage. If you have a large library of content or if you have a small library but plan on scaling rapidly, you’d probably want a video CMS in place before things get too difficult to manage.

Overview of Video Hosting Options

Basically, there are two main options for video hosting that work for the vast majority of companies:

OVP: Essentially the all-in-one approach, an OVP will include ingestion/encoding, video CMS, a CDN, and more built-in functionality.

Modular approach: The modular approach could include, for example, pairing an ingestion/encoder with a CDN and a video CMS.

Step 5: Determine Supported Devices and Platforms

What devices and platforms do you want users to be able to access your content? For a minimal viable product, you may want to choose just one, such as Roku.

However, if you want to maximize your audience, it’s imperative that your service is available across multiple screens, devices, and platforms. In an ideal world, this would be easy, but unfortunately, each platform has its own unique program language and necessary software development kits, often requiring highly specialized knowledge. Multi-platform capabilities also require larger budgets.

There are several platforms worth considering:

  • Roku: Roku-powered set-top boxes, streaming sticks, and Roku TVs
  • iOS: iPhone, iPad, Apple TV
  • Android: Android mobiles, Android TV, Amazon Fire TV
  • Smart TVs: Samsung, LG, Vewd, Amazon Fire TV, etc
  • Universal Windows Platform: Xbox One, Windows Mobile

It’s also important to consider what model of each device you would like your app to be compatible with. Generally, each model has a different operating system, processing power, and resolution.

As Roku development partners, this is the platform that we suggest if you are going to start with one app. Roku streaming accounts for 40% of the market, making it the most ideal platform for reach and monetization.

Fortunately, there is a shortcut to developing a streaming service across multiple platforms. At Zemoga, our experience working on leading platforms like Roku, Apple and Android led us to design and develop a custom framework accelerator we call zTV.

zTV is ideal for content creators who want to deploy across many platforms quickly and efficiently. This proprietary set of modules expedites the time to market for your channels regardless of the platform. zTV has a common set of features in the framework that can be leveraged by our staff to increase development velocity when delivering common requirements like Content Navigation, Discovery and Video Players.

If you are considering cross platform experience (and you should be) an option like zTV will ensure consistency so that users have the same enjoyable experience whether they are streaming through Roku, their Smart TV, or their Android phone.

Step 6: Build an OTT App with a Focus on UX

The final—and most important—step is to start building an OTT app for each of your chosen platforms/devices. Your chances of launching a successful app and establishing an enduring audience hinges on this design and development phase.

As competition within streaming apps continues to intensify, the onus is on content providers to deliver an exceptional user experience (UX) from day one. In fact, a recent US survey found that in addition to a rich and varied content offering, over 50% of users place a large emphasis on ease-of-use, specifically the ability to quickly access desired content. Now that consumers are confronted with more content than ever, they won’t tolerate clunky interfaces with old-school scrolling libraries and imperfect search tools. They’ll simply move onto the next platform.

Look at Netflix. There’s a reason they’re the market leader in UX/UI. The company uses machine learning and advanced algorithms to deliver a more personalized viewing experience and minimize content discovery times—no doubt a major driver in their enviable engagement and retention scores.

Netflix adapts and recommends different content based on the interests and watching habits of each profile, making it easy for users to sift through thousands of programs and find exactly what they want. And with over 167 million global subscribers, it’s a strategy that’s clearly working.

However, it’s no easy feat to build an app that delivers a seamless and personalized user experience. In addition to collecting everyday data on user viewing behavior, Netflix invests heavily in A/B split testing to drive innovation in UX/UI. In fact, they run over 250 A/B tests per year. These tests present users with two slightly different experiences to examine how they react and respond to variations, which range from slight alterations in the interface aesthetics to major changes to search mechanisms.

So how do smaller, independent brands keep up with the likes of Netflix? And how will the big players stay on top? Moving forward, content providers will need to invest in creative and technical teams that can collaborate to find a harmonious balance between mechanics and interface.

A professional team of UX/UI designers serve as mediators between the end-user and the technical developers. Investing in UX will be your secret weapon to consolidating a firm position in the crowded OTT market.

Summary

The ultimate goal is to build a video service that delights users and delivers sustainable revenue. At Zemoga, our team of OTT experts develop rich media experiences that push the envelope of capability and engage viewers across all Connected TV and mobile platforms.

We can help you build your streaming application from scratch or deploy specialists to work alongside your team. Don’t just take our word for it though; we’ve worked with some of the worlds biggest media companies including Hulu, Sony, and HBO.

Contact us today to Build Better.

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