Netflix generated $45.2 billion in revenue in 2025. That’s a 16% increase from the year before. And that’s just one platform in an OTT market now worth $400.51 billion.
OTT isn’t the future of how you watch content. It’s already the present. Over 5.27 billion users worldwide are expected to stream via OTT platforms by 2026. That’s more than half the planet choosing apps over traditional TV.
But here’s what most people skip: How Do OTT Platforms Make Money? Building an OTT service is one thing. Understanding the revenue models and the costs behind them tells a very different story.
What Is An OTT Platform?
An OTT (Over-The-Top) platform is a digital streaming service that offers video content through the Internet, bypassing traditional cable or satellite TV providers. The content is delivered directly to the consumer’s device: whether it’s a smart TV, laptop, smartphone or tablet.
This digital service stands on three key aspects:
- Content delivery : OTT platforms deliver video content over the internet. The internet is a big factor in the difference between OTT and traditional TV.
- Content distribution: These platforms distribute their licensed and some proprietary content directly to the consumer’s device without involving any third-party providers. This is what differentiates UGC-oriented platforms like YouTube from OTT platforms.
- Content production: OTT platforms are also, most of the time, the producers of the content they distribute or stream. For example, Netflix’s popular show, Stranger Things, is a Netflix original and can only be found on its platform. This gives exclusivity and makes the platform more desirable for consumers.
OTT VS CTV
OTT are not to be confused with CTV (Connected TV). To understand how does ott work, it’s important to note that while both deliver video content over the internet, there is a difference in how they are accessed and consumed.
OTT platforms are often accessed through dedicated apps or websites on devices like smart TVs, streaming boxes or gaming consoles. On the other hand, CTV refers to any television set that can connect to the internet and access online content. This includes smart TVs, gaming consoles, and streaming devices.
The key difference between the two is that OTT platforms are subscription-based, while CTV can access both free and paid content.
Aspect | OTT (Over-The-Top) | CTV (Connected TV) |
|---|---|---|
Definition | Streaming video over the internet without needing cable or satellite. | A device that connects your TV to the internet for streaming (e.g., Roku, Smart TV). |
Device Dependency | It works on any device with the internet: smartphones, tablets, and laptops. | Requires a TV and a connected device like a Smart TV or streaming box. |
Content Access | Stream-on-demand content from apps like Netflix, Hulu, Disney+. | Lets you watch streaming services on your TV through apps or devices. |
User Experience | Watch anytime, anywhere on your personal devices. | More of a big-screen TV experience, similar to traditional viewing. |
Ad Targeting | Ads are personalised using ott advertising platforms and your data. | Ads are shown on your TV but are less targeted than OTT. |
Interactivity | More interactive: pause, rewind, get personalised suggestions. | Limited interactivity but a more immersive, big-screen experience. |
Examples | Netflix, Hulu, YouTube (works on any device). | Roku, Amazon Fire TV, Apple TV (requires connection to a TV). |
How OTT Platforms Earn Money?
The OTT business model has matured a lot since 2007, when Netflix launched its streaming service to the US market, and there was no competition. Today, platforms like Netflix, Hulu, and HBO Max are fighting for dominance in the highly competitive marketplace.
But how do OTT platforms make money? Here are some of the main ways streaming services make money:
Subscription-based Revenue Model
This is the most common way OTT platforms make money. You pay a flat monthly or annual fee. In return, you get access to the platform’s entire content library. No per-view charges, no à la carte pricing. Just steady access.
Netflix pioneered this approach. It started with flat-rate subscriptions during its DVD rental days and carried the same idea straight into streaming. That bet paid off. Most major platforms copied the model.
Here’s what Netflix’s US plans cost after its March 2026 price hike:
- Standard with Ads: $8.99/month. Full access, but you sit through ad breaks.
- Standard: $19.99/month. Ad-free, up to two simultaneous streams.
- Premium: $26.99/month. Ad-free, Ultra HD, up to four simultaneous streams.
Other platforms like Hulu and HBO Max follow the same playbook: tiered plans, different prices, same core idea. Pick a tier based on how much you watch and whether you can tolerate ads.
Advertising-based Revenue Model
Not everyone wants to pay $20 a month for streaming. Some platforms figured that out early. They show you ads during content and offer a lower-priced or free tier in return. You watch, they earn from advertisers. Simple trade-off.
Since 2023, 71% of net new streaming subscriptions in the U.S. have come from ad-based plans. Ad-supported net adds jumped from 19.8 million in 2023 to 27.4 million in 2024. And 62% of OTT users now say they prefer ad-supported tiers to cut monthly costs.
Netflix’s ad tier shows where this is heading. As of May 2026, the plan has over 250 million monthly active users globally. More than 80% of those users watch content every week. In Q1 2026, the ad plan drove over 60% of signups across 12 countries. For the first time, ad-tier subscribers show higher retention intent than premium subscribers. Netflix is targeting roughly $3 billion in ad revenue for 2026, double its 2025 figure. The platform now works with over 4,000 advertising clients, up 70% year-over-year.
Across the industry, 59% of accounts on the eight leading subscription AVOD providers sit on basic ad-supported tiers. Platforms like Hulu let you choose between ad-free and ad-supported plans. In India, Hotstar, Zee5, and MX Player have built large user bases through free, ad-supported content. No credit card needed.
The global AVOD market is projected to hit $218.31 billion by 2033, growing at a 19% CAGR. By then, 170 million or more Americans will watch content from at least one ad-supported streaming service each month. That’s up from 41.8% of the population in 2022. Adults 18 to 49 already spend 63.8% of their TV viewing time with ad-supported content.
Then there’s FAST, which stands for Free Ad-Supported Streaming Television. These are platforms like Pluto TV, Tubi, and the Roku Channel that cost you nothing. No subscription, no trial, just free content with ads. Think of it as the streaming version of broadcast TV. FAST users in the U.S. will reach 131.4 million in 2026, representing 54% of all connected TV users. The FAST market is estimated at $14.33 billion in 2026, growing at 16.91% CAGR.
Transactional-based Revenue Model
The transactional-based revenue model is less common among OTT platforms. It involves users paying per content or per view rather than a recurring subscription fee.
This model is mostly used by platforms that don’t have a vast library of content and instead focus on providing exclusive or current content. For example, Amazon Prime Video allows users to rent or buy movies and TV shows that are not included in their subscription package.
Similarly, YouTube offers movie rentals and purchases for certain titles. This model can be beneficial for platforms with limited content and helps them generate revenue without the commitment of a subscription.
Syndication and Licensing
Syndication and licensing is another way for OTT platforms to earn money. This involves selling the rights of their content to other TV networks or streaming platforms.
For example, Netflix licensed “Orange Is the New Black” to Comedy Central for linear TV broadcast rights in 2017. Similarly, Hulu licensed “The Handmaid’s Tale” to Channel 4 in the UK for traditional TV broadcast.
Merchandise Sales
It isn’t just the streaming rights that bring in the money; the merchandising and spin-offs that come with popular shows are also a significant source of revenue for OTT platforms.
For example, Netflix has its own merchandise store, Netflix.shop, and “Stranger Things” merchandise has been a massive success for the company on that ecommerce store. The show’s popularity has led to spin-offs like books, comics, and video games.
Sponsorships and Partnerships
OTT platforms also earn through sponsorships and brand partnerships. You might assume this is a minor revenue stream. The numbers prove otherwise. US CTV ad spend is projected to hit $37.95 billion in 2026. For the first time, CTV upfront commitments ($17.73 billion) are forecast to exceed primetime linear TV upfronts ($16.98 billion). That crossover marks a structural shift. Advertisers are moving budgets from traditional TV to streaming at record pace.
You’ll find three main types of sponsorship deals driving this growth:
- Content Sponsorships: Brands pay to associate themselves with specific shows or movies. For “Stranger Things,” Netflix partnered with Coca-Cola to bring back New Coke as a limited edition product. The tie-in matched the show’s 1980s setting.
- Platform Sponsorships: A brand becomes the official sponsor of an entire platform or a section of it. Programmatic CTV ad spending is projected to reach $38 billion in 2026, up from $33.4 billion in 2025. Roku alone holds 32% of the open programmatic CTV ad market. That reach is why Roku partnered with Walmart to create shoppable ads. Viewers buy products directly through their Roku devices. You’ll see more of this format. Shoppable and interactive ads are projected to make up 10% of all CTV ads by 2026. QR code usage in CTV ads has grown over 3x year-over-year.
Event Sponsorships: Platforms that stream live events or sports let brands sponsor entire tournaments or individual matches. The scale can be huge. Indian OTT JioCinema brought in 18 sponsors and 250 advertisers for the IPL 2024 season.
Hybrid Model
Some OTT platforms use a hybrid model combining different revenue streams to generate income. For example, Hulu offers both subscription-based plans and ad-supported free content. Similarly, Amazon Prime Video offers subscriptions as well as transactional purchases or rentals.
Another example is Disney+, which offers a subscription-based model but also earns revenue through merchandise and theme park tie-ins.
OTT Platform Expenses
When answering How Do OTT Platforms Make Money, you can’t just look at revenue. There are major expenses that eat into earnings. Let’s break them down:
Development and Infrastructure Costs
These are the foundational costs of building and maintaining the platform itself. Without a solid infrastructure, the platform can’t function reliably or deliver content. Most of the initial investment goes into this.
- Platform Development: A basic version can run anywhere from $50,000 to $200,000. If you want advanced features, expect that number to go up: $200,000 to $500,000 or more. Overall, the development cost usually lands between $150,000 to $300,000.
- Backend Infrastructure: This includes all the behind-the-scenes systems like databases, streaming servers, and analytics tools. These are essential to keep the platform running smoothly. Costs can range from $50,000 to $250,000.
- Frontend Development: This is everything users see: like the user interface and design. Mobile responsiveness is key here too. The cost? Around $25,000 to $100,000.
- Content Delivery Network (CDN): To stream high-quality content, OTT platforms need powerful servers and data centres, which require optimisation tools. This can be another significant expense that can even range to millions.
Content Costs
Content is where OTT platforms pour the most money. You’ve already seen how development and infrastructure costs add up. Content spending dwarfs them both. Without strong shows and movies, users have no reason to stick around.
Licensing popular titles isn’t cheap. For individual shows or movies, you’re looking at anywhere from $50,000 to $5 million per year, depending on demand. Think of it like rent. The bigger the name, the higher the price.
Then there’s original content. Creating exclusive shows that only your platform carries is what sets you apart. But producing a single season of a high-end drama can cost tens of millions of dollars. At that price, few platforms can afford to produce many originals.
Total streamer content spending is projected to hit $101 billion in 2026. That’s up 6% year-over-year and the first time the industry crossed $100 billion, per Ampere Analysis via Deadline. It represents about 40% of total global content spend, which is expected to hit $255 billion in 2026, per MediaPost. Global spend grew just 2% year-over-year.
Breaking that down by platform makes the scale clearer. According to a KPMG report cited by MediaPost, Comcast NBCUniversal leads at $37 billion, with YouTube at $32 billion. Disney’s DTC content budget sits at $24 billion for FY2026. The company added $1 billion, mostly for NBA sports rights. Amazon spends roughly $20 billion. Netflix is targeting around $20 billion for 2026, up from $18 billion in 2025, per BusinessStats. Their CFO has put it simply. There is “no ceiling” on content spending.
Ongoing Operational Costs
These are the recurring expenses that keep the platform running smoothly day-to-day. From streaming infrastructure to marketing, these costs ensure that the platform can grow and maintain its user base.
- Hosting and Streaming Delivery: Once the platform is live, the costs keep coming. Platforms pay regularly for infrastructure and the bandwidth to stream content to users.
- Customer Support: A team is needed to help users with any technical issues or questions. This is a continuous expense.
- Marketing and User Acquisition: To grow, platforms need to spend on advertising and promotions to attract new subscribers.
- Product Development: To stay competitive, the platform will need constant updates and new features, which will result in higher development costs over time.
- Maintenance: Regular maintenance is required to keep the platform running smoothly and fix any bugs that come up.
Other Expenses
Beyond development and content, there are various additional costs that OTT platforms must manage. These ensure smooth transactions, legal compliance, and the ability to support a growing team.
- Payment Processing: Platforms pay fees to handle subscription payments and process transactions.
- Legal and Licensing Fees: To ensure compliance and protect content rights, legal fees are another ongoing cost.
- Team and Staffing: From developers to content managers to marketers, OTT platforms need to pay their staff regularly.
Expense Category | Details |
|---|---|
Platform Development | Costs vary depending on whether the platform is basic or includes advanced features. |
Backend Infrastructure | Includes systems like databases, content management, and streaming servers. |
Frontend Development | Covers the user interface, user experience design, and mobile optimisation. |
Content Delivery Network (CDN) | Requires servers, data centres, and tools to ensure high-quality streaming. |
Content Licensing and Acquisition | Acquiring the rights to stream shows, movies, or other content. Costs depend on content demand. |
Original Content Production | Producing exclusive content can be costly but differentiates the platform. |
Hosting and Streaming Delivery | Regular costs to maintain infrastructure and provide the bandwidth needed for streaming. |
Customer Support | Teams required to assist users with technical issues and inquiries. |
Marketing and User Acquisition | Advertising and promotional efforts to attract new users. |
Product Development | Continuous updates and improvements to keep the platform competitive. |
Maintenance | Ongoing platform upkeep and issue resolution. |
Payment Processing | Fees associated with handling subscription payments and transactions. |
Legal and Licensing Fees | Costs for legal compliance, content rights, and protection. |
Team and Staffing | Salaries for developers, content managers, marketers, and other key staff. |
