Are you ready to make the most important financial decision for your company?

With this article, we will clarify some doubts about which model best suits your needs, capital, and long-term financial vision.

We all know that when acquiring assets, the same questions always come up: Should I buy or rent? But have you really asked yourselves: What is better, or for whom is it better to buy or rent? Banks with their annual interest rates clearly show that they take the biggest cut by working with our money to reinvest it. It’s no secret that large companies today have adopted this same business model—why? Simply because it works. And from there comes the Opex model.

Nowadays, we see more and more companies offering #IPTV/#OTT services charging their end customers only under the #Opex model in order to fix their #ARR (Annual Recurring Revenue) with contracts from 3 to 5 years. But really, who benefits from this model more—the end customer or the company selling its services?

Let’s take an example: if I buy an IPTV/OTT platform under an Opex model for 20,000 licenses at $1.20 each, that would be $24,000 per month, which is about the average price seen today in the competition. The good news for many is that there is no startup or setup cost. But if you calculate without considering SLA costs or licenses per app over 3 years, we’re talking about a total cost of $864,000 to maintain your platform.

I’ve seen Tier 1 and Tier 2 companies having to cancel their contracts within the first year because the numbers don’t add up to keep paying an Opex model at those costs.

Now, what if I told you that a #Capex model doesn’t have to be as expensive as everyone imagines, and that banks are not always the enemy—would you believe me? Because this is not about demonizing one model or the other; it’s about understanding the #CORE of the business to make the best decision.

To simplify: if I propose as an example the Capex model (perpetual licenses), the cost for the same 20,000 licenses over three years could be around $100,000 instead of $864,000. Which sounds better to you?

You may ask, where is the hidden cost? There simply isn’t one!
Capex models always have a setup cost, which can vary with moTV between $35,000 and $60,000 depending on the project size. So, if we calculate a 3-year Capex project with us, with $60,000 for software and $100,000 for 20,000 licenses, the total 3-year cost would be $160,000 versus $864,000. Still more economical, right?

Here, economic experts might say it’s better not to put all your eggs in one basket, but what if in this case the basket is a bank? Let’s imagine this scenario: our platform with a Capex model costs $160,000 to start, and you have 30% saved to invest—that’s $48,000. You would need to request a bank loan for $112,000 with a 5-year financing plan, resulting in monthly payments of about $1,866. That’s still cheaper than paying $24,000 per month, don’t you think?

In today’s economy, economists recommend not investing everything at once to keep capital available for other projects. But if we see banks as friends rather than enemies—or better yet, find an investor for the project—then you are basically buying a Capex model with Opex-style payments.

When in doubt, math doesn’t lie. We want to choose what provides the most financial stability medium and long term, and that is only for you to decide, as you know your company’s current financial situation.

So here are the pros and cons of each model for you to draw your own conclusions:

Cons

Capex:

• Higher initial investment

• Requires local server installation

Opex:

• Fixed payments with 3-5 year contracts

• More expensive to maintain in the long term

• The platform is rented

• Costs for SLAs and per app licenses

Pros

Capex:

• Increases your company’s capital

• No hidden costs

• Local servers make your service more stable

• More economical to maintain long term

• No need to store traffic in the cloud

• Perpetual licenses, single payment

Opex:

• Recommended for small operators (0–3,500 users)

• No setup costs

 

I’ll end this comparison with a question: Do you prefer to make payments on an apartment you own, thus increasing your capital, or do you prefer to pay rent on an apartment forever without building any savings?

Contact us – moTV.eu, we will gladly help you choose the most suitable financial model.