While a flat rate hike may not be the best strategy in this crowded competitive landscape, there is room to reap additional revenues and provide customers with welcome choices by experimenting with rate structures and product offerings.
Major areas ripe for innovation are the current subscription and advertising revenue models. According to Accenture research, one-third of consumers would pay to remove advertising from their video content—while the other two-thirds would not. Current subscription-based and ad-supported OTT services do not offer consumers the flexibility to tweak or customize their model preferences. It is currently an either/or situation—but why not offer options and let viewers choose?
Knowing what customers value—a lower subscription rate with ads, or a higher subscription rate without ads—is a powerful first step in segmenting the market to understand where customers’ thresholds lay. Or their sweet spot could be somewhere in between, with a hybrid model that trims down ads, or switches up the traditional ad formats. Segmentation and experimentation will be critical to giving customers the options they want and arriving at the right mix that optimizes revenue.
Make me an offer
Digital providers built upon a solid data-driven foundation have powerful upselling opportunities. Some OTT companies are already wading in these waters by providing premium content or services for an additional fee, such as Netflix which offers three tiers of options for additional streams and ultra high-definition content. Filmstruck’s Criterion Collection also has broader choice and exclusive commentary via a higher tiered package. What other products and services might audiences want to buy? There is no shortage of opportunities—think one-time payments for immediate experiences, dynamic products like special content, mobile games and cross-product promotions. And, just imagine the possibilities with AI, AR and VR.
Getting your weight up, and keeping it up
Of course, the key word here is “customized,” and targeting must be precise. Personalization makes customers feel special and leads to further transactions, but one-size-fits-all offers—or spam—will have the opposite effect. Successfully implementing an upselling strategy requires a deep understanding of your customers and the capability to innovate to deliver dynamic products.
This is a critical reason why OTT platforms need to be supported by 1) highly developed data and analytics capabilities that gather and analyze data across the entire consumer journey and 2) agile infrastructures that can turn these insights into action. In addition to analytics, this customer-focused approach requires capabilities like payment and CRM systems that help facilitate customer engagement and monetization.
OTT adolescence will soon morph into teenage angst for OTT providers not prepared to build two-way, synergistic relationships with customers. Achieving and sustaining consumers’ desired level of relevancy will require a data-driven operating model that understands what individual customers want, customizes products and services accordingly, and operates with a continuous feedback loop that keeps up with their ever-changing needs.
Being early to this party is critical. Not only will customers be willing to pay a premium for this type of relationship but, once in it, they won’t want to leave. Done right, this approach creates an upwards spiral where the seamless exchange of customer insights and information continually tightens the customer/provider bond, putting them perfectly in synch and resulting in increased loyalty, reduced turnover and improved market share. OTT providers that can scale this approach and use it as a base for a multi-revenue strategy will be prepared to meet the future.