OTT, or over-the-top, refers to content that is delivered over the internet and does not require a traditional broadcast or cable video infrastructure to distribute it. OTT video is perhaps one of the greatest transformations in media since the advent of radio and television.
While everyone acknowledges it’s the future of media — and some innovative OTT businesses are leading the pack — few companies have figured out successful business strategies to win in an extremely competitive market.
To succeed, here are 5 top strategies from Kevin Westcott, TMT Global Consulting Leader at Deloitte, and Kevin Towes, Head of Business Development, Adobe Digital Video & Audio, for acquiring, monetizing, and scaling video subscribers globally in the OTT video market.
According to a recent Digital Democracy Survey (a multi-generational view of consumer trends in technology, media and telecom), “every technological trend around media consumption we’ve seen in the last ten years has started with the youngest generation. It starts typically in the teenagers and the 19 – 24 year olds and grows upward. OTT may have been introduced early on by the teenagers, but now the Gen Xers and the Baby Boomers are using these services. The number of services subscribed to the household are larger in the younger generation, but growing in the older generations.”
It’s not just who is watching, but how they’re watching, and what they’re watching, and when they’re watching.
A recent report from Adobe (Digital Index’s Digital Video Benchmark Report) notes: “We’re starting to see a stabilization of the devices that consumers are watching on. We also know that the consumption is happening in the same place which creates an interesting opportunity. If you know where people are watching from, it helps inform how you engage with that audience and how you monetize them either through subscriptions per household or advertising.”
Usage data is critical. If you think about full subscription services, where there aren’t transactions happening except for the monthly ones, you want to look at actual usage. But in general, gather all the data you possibly can to get a comprehensive view of your subscribers.
For example, think about the opportunities presented by gathering third party information about your sports subscribers. When you dig in, you may find a mom or a dad with two young children. This creates an opportunity to target them with children’s content.
This is why getting to and understanding the customer through data is critical, because every customer is not single dimensional. Someone may be a sports fans on weekends, but what are they doing during the week? You can’t know unless you have all the data.
To increase revenue per person, use data to figure out what else your customer might want and sell it to them!
Customer acquisition is extremely expensive in the OTT video business, and thus customer retention is extremely important.
If your problem is customer acquisition, you need to figure out how to lower the cost of acquisition and make for a smooth registration process so customers find it easy to sign up.
There’s too much content available through too many channels. If you make someone go through an authentication and registration right up front, you’re turning away customers.
If your problem is churn, how do you fight that?
If you can identify someone who may churn six months before they actually churn, it will be a lot easier to retain that customer than to attract a new customer. So how do you identify the potential to churn? Is it through their use of subscription? Is it through some activity on social? Are they moving? What else can you identify that gives you a trigger to do something to give them the next best offer to retain them? Think of churn risk triggers that can help you retain your customers.
Sometimes retention is about downselling. While that can sound negative, downselling can be a win. If you can take someone who’s currently spending $79 a month and retain them at $59 a month, that’s a lot better than losing that customer altogether.
As new companies unencumbered by preset business models and systems experiment with new ideas around content, delivery, and monetization, existing media companies have to balance the tried and tested with the new and promising.
The biggest challenge for them is ‘how do I deal with this emerging new set of challenges without killing my existing business models?’ It sounds real easy: jump digital. But they can’t simply abandon their consumer base. Many have millions of existing customers and managing the transition is probably their biggest challenge.
At Zuora, in our work supporting hundreds of media companies including a number of OTT players, we see a lot of activity around strategies for revenue generation. There’s the traditional route where companies can continue to build out a subscriber base, but we are seeing another novel approach of “How do I sell other things to my customers such as events and merchandise?”
These revenue models aren’t completely baked yet but it’s about increasing monetization of an existing subscription and building on top of that existing subscription with tailored offerings. And these new revenue streams won’t only add revenue in the short-term, they help you increase engagement and retention as you continually delight new and existing customers.