By Evelina Grines – VP Media & Entertainment | MPP Global
Building an OTT platform doesn’t have to be a choice between an advertising or paid content model. In fact, you’re safer long-term if you don’t choose between advertising and paid content.
Contrary to popular belief (and the dominating shadows of Amazon and Netflix), the OTT business remains a shifting frontier. The biggest competitors to global players are actually local platforms, which have global ambitions and equally powerful storytelling. It makes sense: If Netflix’s long-term strategy is to make niche content, what’s more niche than a local OTT that focuses only on one culture or demographic?
Australia-based Stan, for example, is often compared to Netflix in its local market. Its first original show, No Activity, became the first-ever SVOD program to be nominated for a Logie Award in 2016.
To become a powerful niche player, you need to be determined and smart about revenue. Not everyone can swallow the risk of going ‘paywall-only’ from day one, and history has shown it’s a bad idea to rely exclusively on advertising. Below are a few strategies that can fuel your thinking on building an adaptable, dynamic and hybrid revenue model that works for you.
- Meter your content. If you’re strictly paywall, consider letting people get a sense of what you offer by giving away a number of video plays, or limiting free views to a certain amount of time. Netflix and Amazon Prime offer 30 days free to new subscribers, but you can actually be more playful.
In the spirit of how news sites meter stories, meter video players by platform (“Three free plays on desktop, five via mobile”), a certain content category during a slow period (“This weekend: All short films starring cats are free!”), or even a chosen array of content to celebrate something happening in the real world (“The top five election-related films, free on Inauguration Week”).
In addition to giving people a sense of what they’ll be paying for, you’re conveying some personality, too. And that goes a long way.
- Day or weekly passes. Not everyone wants to commit to a month or year-long subscription, especially in the Uber era. People want to keep options open, so show them you get where they’re coming from. Consider day or weekly passes in a non-recurring subscription model that gives them the flexibility to try your service for a lower fee, without having to commit for longer than they’re ready for. You can also net higher margins on a short-term pass: If your monthly subscription is $16.99, a day pass could cost $6.99.
- Play with tiers. We’ve seen OTT players utilize three content tiers to great success: Ad-based, mid-tier (a lower pricepoint with some advertising) and premium (all access, ad free, extra incentives). This enables them to address different markets with the offering that suits each best.
- Go freemium! Act like an app developer. In October 2014, nine of the top 10 apps in iTunes’ US App Store were “freemium.” People are often willing to pay for the pro version once they’ve become reliant on the free one; it gives them the chance to see how something fits into their lives.
How this works in practice depends entirely on you. You can have a completely ad-supported tier of content, or be a little more creative—releasing some content for free after a certain period of time (say, season 1 of a show once season 2 begins), or within a given window (all first episodes free, all summer long). Just give people a reason to keep coming back.
- Subscription bundles. Some free apps include in-app purchases—meaning the core service is free, and small extra add-ons incur a minor fee. A model like this can help you modularize your paid offering based on what makes the most sense to people. Maybe you offer free, ad-supported content as a baseline, but charge a small fee to remove the ads some or all of the time. Maybe you also charge a small fee to enable access to your service across different devices, or permit more than one user.
In other words, let the user help you build the service they want to pay for—their ideas may surprise you.