Monetizing Interactive Live Video: How To Get It Right

Whether selling goods and services or experiences, business success for any brand hinges on monetization. For websites or apps that leverage many-to-many live video streaming, there are different approaches to monetization and the option that makes the most sense depends on the use case and current goals.

The live streaming lineup

A simplified view of many-to-many live streaming ecosystems includes creators, platforms, and consumers. Creators produce the content, platforms manage the live stream video delivery and the viewer experience, and consumers watch the content. Platforms can also double as creators and creators can build their own platforms, but in both cases, they are looking to attract and engage consumers, which are needed for monetization.

Top ways to monetize live video

Advertising, sponsorship, paywalls, and donations are some of the ways to monetize live video, and often, a combination of these tactics makes sense.

Exploring the tactics

In most cases, advertising is not a great way to monetize live video out of the gate, unless you’re advertising your own goods and services. Ads are generally disruptive to the viewing experience, and most third-party brands and advertisers require a sizable audience before investing ad budgets. As the platform grows, advertising may become a viable option, because an established audience will be more likely to tolerate small disruptions and advertisers will be willing to pay for the inventory. An exception to this generalization, banner ads promoting your own goods and services can make sense early on, since consumers are already engaged with your product, and select advertisers may be interested in your niche market. A more organic approach, sponsorship usually entails a customized player or branded content within a live stream, which is less disruptive, but still requires that the platform to have a certain degree of scale before advertisers would come on board, or a very niche audience that’s attractive to a specific advertiser.

For platforms just starting to monetize live stream content, the most effective approach will be to use a multi-pronged strategy leveraging paywalls and donations, and also offering free content. Making content available on a “freemium” basis allows viewers to get a feel for what’s being offered without a financial commitment, and that experience ideally motivates them to purchase further access. This approach can be deployed in countless ways, but Twitch streamers CriticalRoleare a great example of how to do it well. Their videos are free to view live but a subscription is required to view archived content.

Even when content is offered at no cost, platforms still gain value from consumers in the form of data. Platforms receive analytics as to how consumers are interacting with content and when, and with that data, can extrapolate insights that can inform future content creation. It can also be used for consumer personalization. When displayed ads are relevant to the viewer, they are less likely to negatively impact their experience.

If you build it, will they come?

Websites and apps with live stream features need content creators to attract an audience; however, to attract creators, an audience is necessary. It’s a bit of a chicken and an egg scenario, but this is why content is king and experience is queen. Offering a top-notch viewing experience requires delivering content that lends itself well to a live format, while also making sure the monetization strategies are well aligned with what’s being delivered. Beyond subscriptions and paywalls, creators can be paid for their efforts via virtual currency or goods like Twitch’s Bits. By offering a virtual currency or goods that consumers can then donate or award to creators, platforms encourage audience participation and engagement, while also bolstering the earning potential of creators as well as platform revenue.

To acquire initial users, grow an audience, and raise visibility for content, a complementary marketing campaign is often warranted. That said, one of the amazing things about the state of technology today is that the tools are readily available to manage some of the more cumbersome aspects of live streaming, allowing you to reach a potentially global audience and create hyper-focused communities.

How do I build it?

The idea of making money off your website or app is exciting but the prospect of (securely) collecting payments and managing all that entails can be daunting, especially if your audience is global. Unless you’re a large well-resourced company versed in regulatory compliance, you’re going to want to enlist a merchant solutions provider, like Stripe, or go through the App Store or Google Play. Hooking into these providers is usually a simple matter of integrating with their API, though the right partner will depend on where you need to have credit card coverage. You’ll also want to think about how to manage customer service, which is critical if your live stream application is in ecommerce. By using third parties for specialized tasks, you can reduce implementation complexities and accelerate your time to market. Since many of these services are pay-per-use, companies will often pursue this path as it keeps costs low at the outset, and when expenses grow, it’s because the audience (and source of revenue) is growing in tandem. Though, as companies scale, some opt to take more aspects in-house.

In many cases, development resources are best focused on building innovative, creative platforms, rather than spending time making the live video aspect work. Building out the necessary infrastructure and points of presence required for live video delivery is a massive undertaking, as is developing software to properly utilize those resources. Solutions like Amazon Interactive Video Service (Amazon IVS), a managed service for high quality, low latency, many-to-many live streaming, allow you to offload the technically and logistically challenging aspects of ensuring a seamless viewer experience, while also helping platforms minimize costs.

Determining platform pricing

Figuring out the appropriate cost for platform content comes down to production value, frequency, and your overall content strategy. For some, the focus is on growth and user acquisition, in which case it’s beneficial to keep consumer costs and interruptions low, then reevaluate once the audience size hits the intended target.

It’s also important to be mindful of comparable services and how your content offering fits in. For example, before pricing a class or channel subscription fee for a fitness live streaming app, you’d survey the current landscape. A Tonal smart home gym membership is $49 per month, and includes thousands of live and on-demand workouts as well as a high degree of personalization, whereas a single training session can cost more than $40. Classes led by instructors with greater followings might cost more than those led by instructors who are just getting started, and class capacity could also affect pricing. Looking at all these factors together may seem like comparing apples to oranges but exploring the value that other platforms and similar services provide can help guide how to establish your own pricing model, and at the same time identify gaps in the market.

What else do I need to know?

Although best practice guidelines exist, there aren’t any hard and fast rules, and the landscape is fluid. One thing is for certain: building with the right set of tools that allow you to adapt and grow can translate into a multitude of monetization possibilities for many-to-many live streaming. Fortunately, those solutions are readily available and accessible, lowering the barrier to entry and enabling the creation of interesting, diverse communities. All that’s needed is a great idea and the motivation to chase your vision.