A little more than 10 years ago, Netflix launched its digital video service. The rest, as they say, is history. There are now countless over-the-top video services catering to consumers around the world. In the U.S. alone, there are more than 200.
Just as the number of OTT providers continues to rise, so do consumers’ expectations. They want premium content. That’s a given. Many of the leading players have invested billions to commission and produce it. But consumers also want that content to be curated for them. They want it to adapt and change as their tastes and preferences do. Consumers want choice, but they don’t want to do the choosing themselves.
How can OTT providers meet those needs and secure consumers’ commitment to their platform? The key is relevance. Without it, OTT providers, like their counterparts in many other industries, risk losing significant revenues. In fact, research shows that companies in the U.S. collectively stood to lose $1 trillion annually by not remaining relevant to their customers.
So, how should OTT providers go about ensuring what they offer passes and keeps on passing the test of relevance? First, they need to build their business model with the consumer, not content, at its heart. They then must scale that consumer-centered approach across their existing and future customer base. Finally, they need to continue growing by developing multi-revenue strategies to capture additional income streams.
OTT providers will need to work out what each customer’s values are and then go about creating offers that suit them. Take pricing, for instance. OTT content accounts for a much larger proportion of consumers’ viewing time than its relative share of their monthly spending on media. Of course, a straightforward price hike across the board may be the simplest way to redress this apparent imbalance. But in a very competitive landscape, it’s unlikely to be a very sustainable strategy.
Give ’Em What They Want
Instead, providers need to think about precisely what customers want to pay for and charge accordingly. That might be no ads or fewer ads. Consumers who aren’t willing to pay a premium for zero advertising might be interested in a hybrid approach that shows them just some ads for some of the time. Or they may opt for any one of a number of different choices. But the point is, they are being given a choice, which is denied to them today.
How about catering to those customers whose appetites fall short of all-you-can-eat buffet offerings, but may want to select the odd morsel that tickles their fancy? Making it easy for them to make micro-payments for specific slices of content could generate additional revenues, build subscriber loyalty and grow the customer base. Rather than having to pay for a whole season of sports, for example, one U.S. media company is giving fans the chance to make a very small payment (less than $1) for access to the final quarter of a game.
Understanding what customers want and tailoring relevant offers depends on data. And lots of it. With a solid foundation of data, OTT providers have the chance to start making highly targeted offers to likely buyers. That could mean access to special content or a higher quality video feed. But it may also open the way to charge for one-off events, cross-product promotions or game experiences. The rise of AR and VR will further expand the possibilities.
The ability to make new offers to customers is one piece of the relevance puzzle. How they’re made is just as important. To grow a base of valuable customers, those customers need to feel valued. That means real personalization. It means offering an experience that consumers didn’t even know they wanted before it’s offered to them.
Agility Is Key
Achieving that degree of predictive and personalized insight requires highly developed data and analytics capabilities. And those have to be supported with an agile technology infrastructure that can turn insights into action at scale. That requires agility and responsiveness in every aspect of the customer experience, making it easy for customers to engage with and pay for the content they want to view. Crucially, OTT providers must become adept at changing those offers and capabilities to meet consumers where they are today and where they want to be tomorrow.
It’s a party to which OTT providers need to arrive early. 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 upward spiral where the seamless exchange of customer insights and information continually tightens the customer/provider bond. As they become increasingly synchronized with their providers, customers will become more committed and less likely to look elsewhere. The OTT provider will build greater market share and grow its revenues. And that’s the prize that every OTT provider needs to keep their eyes on.
Lynn McMahon is managing director and media & entertainment lead in North America for Accenture.