OTT Pricing Strategies

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The first step to moving to OTT 2.0 is to adopt creative pricing strategies, and to ensure you have the flexibility to execute and iterate on these strategies. Having a system to support multiple pricing models – and the ability to test new pricing models rapidly – gives subscribers more ways to engage with you, which gives your business a competitive advantage.

Pricing well is an art, and there’s no one right pricing strategy for every company, or even every OTT business. Experiment, and keep experimenting. Align your pricing with your company goals and subscriber demand. And make sure you have a platform that will support your testing and various pricing plans. Flexible pricing and packaging is key to the success of your subscription business whether you go for a freemium model (giving visitors limited access to free content), promotional rates, content/format bundles, or a fixed fee all access plan.

Here are some of the more common pricing packages that you may want to consider:

freemium pricing

This model increases the probability of customer acquisition, since your OTT content will be accessible to subscribers who are not yet ready to make a commitment. If free content such as pilot episodes help to convert prospective subscribers to paying subscribers, your commerce system will certainly need to accommodate this model.

Promotional pricing

To help convert prospects to customers, you may choose to offer marketing promotions, which can be:

  • Time-based (e.g., 50% discount for the first 3 months)
  • Volume-based (e.g., tiered pricing, whereby additional units become progressively cheaper)
  • Or both.

Eligibility for promotions can be dictated by a multitude of factors such as geographic location, customer type, usage, etc.

The lure of promotions to increase customer acquisition rates is powerful. The downside is that an over-reliance on promotions can erode value and train prospects to demand a promotion before signing up.

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Cross platform packaging and bundling

Since viewers are demanding access to OTT content on multiple devices, you will need to offer bundled pricing for different content formats. Subscribers have also shown a willingness to pay a premium for the ability to access OTT digital content on multiple devices and platforms like phones and tablets.

Today’s customers expect a variety of services and pricing plans, so they can choose one that best suits their needs. With a multitude of pricing approaches at your fingertips, an important consideration will be the number and types of service packages to offer. Your commerce system must allow you to support numerous service configurations, rapidly experiment with new plans, and change dynamically as market or competitive situations dictate.

One-time charges

While you may not adopt it as a component in all your offerings, your system should support the ability to charge customers a one-time fee to get started with your service, or to monetize viewing single non-recurring content such as sporting events and award ceremonies. This is an important touchpoint to convert such viewers to ongoing, paid subscriptions.

recurring charges

Your system should allow your subscription pricing model to have a recurring component. It should provide the flexibility to define different time intervals for the recurring charges such as weekly, monthly, quarterly, or yearly. And support additional complexities, such as when recurring charges are calculated (e.g., 1st of the month vs. anniversary date) and what proration rules apply (e.g., for partial months).

In addition, your system needs to support different types of recurring charges for OTT content. Recurring charges might be fixed – a flat fee that gets charged each month to customers. Or they might be variable – a charge calculated by multiplying units purchased (e.g., number of articles downloaded) by a set price. Or, they might be calculated based on detailed usage statistics, a model slowly being adopted by the media industry.

pay-as-you-go charges

You will sometimes have customers that don’t want to commit to a subscription, and only wish to pay for what they use. One of people’s pet peeves with cable has been the fact that they are forced to pay for channels they neither watch nor want. OTT, with its increased flexibility, has the opportunity to capture such audiences. Your system must be flexible enough to offer and manage this level of detail and customization.

b2any pricing

Leading media companies have adopted sales models that include both businesses and consumers as their end customers. For example, The Wall Street Journal and Spotify sell subscriptions to consumers, and also sell bulk subscriptions to businesses. Leading educational and medical publishers often have both direct consumer and enterprise customers.

Many of your OTT subscribers will have both B2B and B2C characteristics. You should not have to deploy separate platforms to manage the different pricing strategies. Your system should be able to meet the pricing, promotion and discounting requirements of high volume low touch consumer sales, and low volume high touch enterprise sales within a single unified platform.

multi-currency pricing

The internet makes it possible for your content to reach subscribers across geographic boundaries often opening new and significant sources of revenue. You will need to decide whether you’d like international customers to sign-up for your service. If yes, you must make it easy for them to pay for it in their local currency. For this, you will need a system that supports multiple currency types and date formats. In addition, you may also need a system (and particularly a web self-service portal) that can be localized in the languages of the countries where you primarily do business.

Consumers choice

Consumers are shouting out the message loud and clear that they want to be able to choose the programs they want, when they want them, and how they want them. OTT content providers need to cater to consumers by packaging and pricing fresh content in compelling ways in order to lure in – and hold on to – subscribers.

For more on implementing the OTT Video 2.0 strategy, download our Blueprint for a Subscriber-Centric OTT Video Business. Based on best practices that Zuora has arrived at working with leading media companies, the blueprint highlights the five key areas to consider when developing or transitioning to a subscriber-centric OTT Video 2.0 platform.

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