How Do Short Video Platforms Make Money? | Business Model of Short Video Platforms

Alan Joseph Alan Joseph
Jul 20, 2022 7 min read
How Do Short Video Platforms Make Money? | Business Model of Short Video Platforms

The arrival of TikTok has increased the craze for making short-form videos worldwide. Short video platforms are on the trend. TikTok was the most used Short Video Platform in India which had been downloaded over 611 million times. Ever since it got banned in India on June 29, 2020, over national security issues, after a fallout between both the country. To fill up the gap TikTok left, there has been an onslaught of new short-video platforms. Instagram launched "Reels" immediately after TikTok got eliminated from India.

There are various short-video platforms that have entered the market like Josh, Moj, MX Taka Tak and many more and they are growing exponentially. The reason is that the mobile data price has dropped since the arrival of Jio. And also, android phones with good cameras are available for a reasonable price which led to an increase in the consumption and creation of short video content in India.

Age Group of short video platform users
Age Group of short video platform users

Now, anyone with a good internet connection and a good camera phone can create and upload short video content. The short video platforms have a wide range of business models and the way of making money differs from one company to another. Moreover, these platforms provide free services to their user which require experiments with the business model. In this article, we will talk about how short video platforms make money. So, let's get started.

How Short-Video Platforms make money?

Promotion Of Brand
Sponsorship
Affiliate Marketing
Collaboration
Transactional Video on Demand (TVOD)
Subscription Video on Demand (SVOD)
Ad-supported Video on Demand (AVOD)
Hybrid Model

Promotion Of Brand

85% of Marketers consider Short-Video Platforms as the most-effective medium for Brand Promotion
85% of Marketers consider Short-Video Platforms as the most-effective medium for Brand Promotion

Short Videos are enjoyed by people scrolling on social media. Be it Reels on Instagram or TikTok videos, if it's entertaining it's bound to catch your attention. There are many brands that introduce challenges in this video platform and ask people to participate. The brand gives money to the platform to introduce the challenge, this way the promotion is done, and people get to interact with the brand while doing the challenge, and thus their work is done.

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Sponsorship

Sponsorship is another way of earning money for the Short Video platforms. Many companies willingly sponsor short video apps to reach the masses. As these videos are watched by people in bulk, sponsoring them is beneficial for the company to be known by a large number of people who can be their potential customers. It is a win-win situation for both the platform and the sponsor as the platform gets to earn money through it.

Affiliate Marketing

Brands give money to the platform for Affiliate marketing. Here, the platform has to present a video regarding the product of that brand where all information about it has been provided in the video. As people are now attracted to videos more, affiliate marketing helps brands to increase their sales. Thus, nowadays some companies are taking the support of short video platforms and are using them for affiliate marketing.

Collaboration

Whenever there is a new film or a music video is going to be released, the stars or the singers collaborated with the video platforms. This way they get to promote their films or music videos whatever it is and can be presented to many people. Collaboration brings money to the short video platforms and thus it is one way to earn.


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Transactional Video on Demand (TVOD)

In this type of business model, a customer normally pays a one-time fee or rents it to watch videos or live events. It is more commonly known as pay-per-view. This helps you to choose the entertainment videos you want to watch; you can just pay for the content you require and that increases the popularity of this model. It is considered cost-effective as you can choose what type of entertainment you want to watch rather than subscribing to everything in bulk.

TVOD helps to concentrate and offer content to a specific market. You won’t be getting unwanted or unrelated video suggestions and would receive video suggestions according to your likes.

You can find video platforms like YouTube or Instagram using this method to suggest videos. The platforms would keep a track of your activities and give you suggestions on content according to your choice.

That’s the reason most of the time you would be able to find the content according to your choice. The only difference is that you can view videos and content for free on these video platforms.

Subscription Video on Demand (SVOD)

In this subscription-based model, a customer will have to pay an amount monthly, quarterly, or yearly. Through the subscription model, you will be able to view an unlimited amount of content on their platform along with the recently released content.

There will be different subscription models. The services you receive would be better as you pick the most premium version of the models.

The main difference between different subscription models would be that there would be a difference in the prices. Also, you would be getting added services and certain advantages. Most of the time, the in-demand videos would be available for premium subscribers.

This Revenue model is mostly followed by major OTT platforms such as Netflix, YouTube and many more. The subscription model of YouTube is known as YouTube Premium. The main advantage here is that you can choose what you want to watch on these platforms.

Ad-supported Video on Demand (AVOD)

In this model, a customer can view the content for free. It is a platform where you can view the content for free but would receive ads in between your content. The platforms get their major revenue from the ads.

The platform would charge different rates from the advertisers according to what time they would want to play their ad. For example, an ad played at the beginning of the video would cost more than the ad played at the end of the video. The main example of this type of model is YouTube.

On certain platforms like YouTube, even the content creators would receive a specific amount for the ads being played in between their videos. This would encourage the content creators to make and promote more of their content which will indirectly improve the financial position of the platform as well as the content creators.


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Hybrid Model

This is the type of business model normally adopted by companies that want to increase their reach. It is a combination of all the above methods. The platform would want a customer to view it for free at the beginning where they would play some video ads and later convert the customers into the subscription model or transactional video model.

The company would generate revenue from the beginning stage and it would attract a lot of customers as well. This model would provide the customers with a lot of options to choose from. You would be able to choose the model you prefer according to your budget or your likes.

Conclusion

Number of Active Users of Short Video Platforms in India
Number of Active Users of Short Video Platforms in India

The demand for short video platforms would keep on increasing in the coming years. The number of active users on Short-video platforms is expected to reach over 650 million by 2025. We would be able to see a lot of content creators and a lot of viral videos being uploaded. With the ban of TikTok in India, there are a lot of new apps coming up along with new features such as Reels, introduced by Instagram to promote short video content.

YouTube has become a platform where people create content as a full-time profession. Short video platforms are going to flourish in the coming future as the entertainment industry is gaining popularity.

FAQs

What is the Business Model of TikTok?

TikTok primarily gains its revenue through advertising.

Which countries have banned TikTok?

TikTok is banned in India and Pakistan only. Though Bangladesh, the United States and Indonesia have attempted a ban on TikTok but later lifted it.

Why is TikTok banned in India?

The Indian government in a statement stated that the decision to ban the app was "to protect the data and privacy of its 1.38 billion citizens".

Which is the best platform for short videos?

The best platform for short videos based on its features are as follows:-

  • Instagram
  • TikTok
  • Moj
  • Josh
  • Likee
  • Taka Tak
  • Snapchat
  • YouTube Shorts
  • Dubsmash

Which short video app is best to earn money?

The best short video app to earn money are as follows:-

  • Kwai
  • Instagram
  • Likee
  • TikTok
  • Moj
  • Josh
  • Taka Tak
  • Vigo Video

Which app is best for short video editing?

The best video editing apps are:-

  • InShot
  • KineMaster
  • Movavi Video Editor Plus
  • FilmoraGo
  • ActionDirector
  • Adobe Premiere Rush
  • Funimate.

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