How to Monetize: AVOD, TVOD, or SVOD?
Barriers to Cross-Bundling
For those in a media group, there are a number of issues identified as barriers to profitable cross-bundling.
- "Unified measurement, ROI measurement, and how to measure success rates."
- "We do not see SVOD as a viable long-term option. We are focused on transactional and/or AVOD."
- "The end user is mainly looking at traditional media services as one bundle and OTT as another bundle, as these two are not integrated around the world and the message has not reached the common man."
- "Multiple payment management including ‘add to bill' integrations without incurring bill shock, multiple authentication management including social nets, device control and content licensing, introducing discounts, promotions and coupons across the business and managing consumer loyalty across triple and quad play services."
- "Convincing consumers that subscribers for one part of your service see the value in the other offering."
- "Acceptable integration of existing delivery, billing, and accounting methods" as one respondent stated, as well as "seamlessness of payment billing arrangements."
- "The return investment on print is less than OTT, but the branding has more value in the marketplace."
How to Best Obtain Customers
Is the content too niche, are customers hard to find, or are there other reasons why OTT providers have difficulty obtaining customers?
- • "Advertising conversion."
- • "Cutting through the noise—especially of larger competitors—is always an issue."
- • "Bundling all services from a provider in order to prevent skyrocketing costs."
What About Retaining Customers?
After the uphill battle of obtaining a customer, we were curious what OTT providers face when it comes to retaining customers.
- Some talked about the time sensitivity of their content, and the limited shelf life: "A large portion of our programming is time-sensitive content, and customers only need access for 3–6 months."
- Others discussed a need to continue "adding new features without destabilizing the service."
- Still others, most likely those that use AVOD for monetization, mentioned an "inability to get media buyers to place ads on our network."
Finally, technical issues were a big challenge in retaining customers.
- "A cost-effective TV Everywhere solution that is fully developed without bugs."
- "We're just about to switch from a year-long free structure to a 30-day free with subscription—[will] know more in a few months."
- "Giving them a reason every week that reaffirms their decision to subscribe."
But even a few with technical concerns admitted that a lack of compelling content can cause customer retention issues.
- One respondent said his company was plagued by a "lack of programming and more important lack of honest technical delivery systems."
- Another said that "technical issues and lack of interesting content affects mostly customers not returning to our service."
Metering as a Way Forward?
A unique set of questions in this survey centered on the concept of "metered usage," where subscribers have a limit to the amount of content they can consume in a given time period, as a way to either limit overall consumption or raise overall OTT revenues.
While almost two-thirds of respondents were familiar with the concept of metered usage, adoption of metering hasn't penetrated the industry as deeply. More than two-thirds of respondents felt that metered usage for SVOD was less likely to lead to easier subscriber acquisition than traditional approaches.
- "Metered usage is popular in other markets (i.e., EU); in U.S. it requires changes to consumer behavior."
- "[S]eems to be customer unfriendly and might not be smart while people are still switching from traditional to OTT."
- "One monthly price to keep it simple as the market is still in its adoption phase."
- "Users seem scared away from metered plans even when they have low likelihood of ever reaching the limits. The buffet of unlimited is a huge advertising advantage."
- Still, as one respondent noted: "I think ultimately metered usage will lead to an increase in subscriber acquisition as metered usage if done properly can help mitigate some of the high costs incurred by the consumers."
- Equally forthright is this respondent's comment: "I do not believe in metered usage as a viable way of doing business."
- When it comes to choosing metered consumption options, survey takers are split on how best to approach metered usage. Some see the best approach as a "cap on hours per session" while others suggest "Free TVOD plus medium pricing for SVOD."
- But some say they won't consider metered consumption, with one respondent noting, "Whoever thought this does not understand [the] potential audience [or] their usage of multiple devices."
I mentioned at the outset of this article that it would be nontraditional and "in their own words," consisting mainly of raw quotes from survey respondents giving insights into OTT monetization.
This approach allows you to read honest assessments of the challenges faced by OTT providers and content owners alike; it's an opportunity that few other industries have the luxury of providing. Our industry is still in its engineering infancy. It's tasked with solving a highly technical challenge that truly has a global impact, so any insights into the growth, design, and monetization of OTT services should be viewed not as a deterrent to join the streaming revolution but rather as a primer to the challenges the industry as a whole needs to solve.
One of those challenges is clearly monetization. The lack of revenues and subsequent profits could delay the march toward a global "television" experience that we inevitably need in this third decade of streaming.
Analyzed results from the survey itself will be available soon, perhaps answering the age-old question that Streaming Media, Unisphere, and the survey's sponsor
set out to answer: Is it better to AVOD, SVOD, or TVOD? Stay tuned for those results!