As the video on demand (VOD) industry continues to grow, the costs associated with it are skyrocketing. Netflix, on its own, plans to spend $7 billion on content this year, and that figure represents only a small fraction of the investment producers and distributors will make in over-the-top programming.
The massive size of the VOD industry has created a market opportunity a new company plans to seize. OTT Lending, run by Timothy Cherotti and Arben Kane and backed by their VC firm Rosebud Ventures, will offer financial assistance to video on-demand platforms and the people who create content to stock those platforms.
OTT Lending will primarily focus on the advertising-supported segment of the VOD industry (aka AVOD). According to a October 2017 report, AVOD expenditures will reach $29 million globally by 2022, which will more than double the industry’s $12 billion value from 2016. In particular, OTT Lending will hone in on Roku, where it plans to assist ad-support channels. The company is also expected to fund producers and creators who will license and sell content to streaming services like Netflix.
OTT Lending will qualify the sizes of the loans it metes out by analyzing reports provided by its loanees. Once the company’s offers are accepted, the borrowed funds will be made available almost immediately.
The speed of those payments is important, as OTT platforms often take several months to pay out revenue to partner channels, hindering the pace at which those channels can reinvest their resources. The terms of Roku Direct service, for example, indicate that payouts can arrive “60 days after the end of each month in which Roku receives payments through the Roku Billing Services.”
More information about OTT Lending is available on the service’s website.