There has never been a more appropriate (compulsory I may say) moment for broadcasters, pay TV operators, content owners or Telcos to reshape and rethink their digital distribution strategy. The access to technology, the high degree of digital and broadband penetration, the digital education of consumers and the abundance of content, all create opportunities like never before.
Nevertheless, it’s not only about opportunity, as the context comes with big challenges, especially for traditional distribution models, that have trouble adapting fast enough to the new consumption habits.
The content consumption has become extremely fragmented! Consumers are more fluid in their uptake and loyalty to services. People, especially young segments (18-34) are lured by social media, gaming or video piracy, which leads to a decrease in traditional linear TV consumption.
Facebook and Twitter are moving aggressively into video content distribution, including sports. Short form content has been confiscated by services like Facebook or YouTube and occupies more and more part in youngsters’ life. Mobile operators are going into pay TV, while Netflix and Amazon have taken over the long form content and now heading for live sport. http://www.independent.co.uk/news/business/news/amazon-premier-league-streaming-rights-match-bt-sport-sky-a8143106.html
With numerous options at hand, so much information assaulting customers, so many things to do, there’s a tremendous effort for reaching “customer’s daily viewing basket”.
There are a lot of aspects behind a distribution strategy and there isn’t a universal recipe for success. Each player has its own objectives and constrains, which makes this ecosystem so diversified.
However, there are few general essential points that most of the players tend to disregard, allowing the context to govern the outcome.
I’ve experienced that on my own, both as a product owner and as a service provider and I would like to share them in the following material.
OTT – The opportunity
Telcos – reach
- OTT is the easiest way to enter people’s houses. You don’t need new wiring; you don’t need to terminate an existing contract or to start a new one.
All in one, OTT services remove the emotional pain of the customer when it comes to choosing the right operator.
Let’s not forget that routine is the main enemy of change. Without a trial process, it’s pretty difficult to persuade customers.
Basically for any Telco, OTT switches the challenge of entering people’s houses into an opportunity – the opportunity to provide a good experience with their product. This should be regarded as a trial able to answer, without too much hassle, customers’ questions “Do I like the service? Does it provide the best content? Is that the most suitable service for me? Should I pay for it?” - Another aspect on Telco business is that OTT enables them to push multiple-play services, in a user friendly, non-invasive way – through content
- Create friendly offers: bundles of service + content or device + content etc.
- Better monetization of the content – usually the ARPU for an OTT service is pretty close to the basic TV package, with a minimal incremental CAPEX cost.
Enables broadcasters & Pay TV operators to create a direct-to-consumer distribution
Which can be translated in:
- Control of distribution
- The chance to reduce the cost of distribution
- A good opportunity to monetize the entire content library
- A nonlinear model allowing to surface more items and older content
- A good engagement tool
- Multiple revenue stream/ models – from subscription and transactional to advertising and sponsorships
Where to start off
User & market trends – understanding the landscape, tracking behavior and knowing the users profiles
Start from the user – design the product and the UX starting from user behavior and expectations. Don’t limit the product to your own experience! Using a specialist shouldn’t be considered as an expensive cost, as the cost of failing is so much higher.
Use data, don’t follow statements or intuition!
In my many years of working in media and broadcasting, I’ve learned that there is a big gap between declarative and real behavior when it comes to content consumption. Of course in terms of offer it’s important to have variety, but designing the right mix of content should never ignore the reality that the biggest part of consumption is driven by 10-15% of the content. Discover which it is and use it as a driver.
Content & distribution
I’m not going to stress on the importance of securing exclusive or premium content. We all know that. This paper intends to step further.
As major players are a huge threat in securing rights for premium content and seizing the audience, there’s not much room left for new comers.
However, one can always design the content acquisition strategy starting with a deep segmentation, revealing the insights, identifying blind spots and filling them in. This way, they manage to create a differentiator that will allow access to a decent chunk of market. It’s merely impossible to compete with major player with the same content.
In order to get access to premium content, there’s a tremendous opportunity for smaller players to create cross territory partnerships, without being part of a common operation.
I’d actually stress more on the “partnership” concept. As digital provides access to ALL content, partnerships could really help users accessing it without too much effort, allowing multiple players to secure customers together (more on this topic in the next paper).
As there are different consumption patterns between TV vs OTT/ digital, there is a segmentation in terms of content.
The big screen is still favored for live events and long form content, seasoned with adjacent content to the main events – shows related to events, interviews, trailers, highlights, sports talk shows etc
In digital, the content consumption is split – the live sport events are consumed mostly on OTT, while short form content, extras and spin-offs are more social media driven.
The product
Simple is more. Keep it simple! As one of my partners was saying “It has to be so simple that my mother could use it without calling me”
Registration and payment process should be simple, clear and take less than a minute. This is actually the first impression about the product.
In digital, the chance of a second impression costs too much.
Don’t lead off your potential customers! Users should never have to guess what the next step is. Create a clear journey and once the process is done, the user should be able to access the desired content.
Don’t rule out the idea of an initial filtering. This should be part of a personalization process, along with a recommendation engine.
Content discovery tools! Speaking of recommendation – over 80% of digital content is consumed by referral. If you want to increase your product’s usage, operate tools to surface content. Don’t just let the users search. Help them!
Packaging and payment! Flexibility is key for favorability. Keeping customers trapped is definitely no solution. We’re in a digital environment, the two year contract is not valid here.
Create packages and bundles that allow customers to feel comfortable with giving you money.
Platform capabilities – scalability is key! Design for the maximum, build for the near future and ensure resources for upgrades.
Marketing & customer acquisition
I’d sum up the customer acquisition process as creating opportunities.
Purchasing the right content is no longer sufficient to reach your audience. You have to find the right channels to push the right content at the right moment (3RM’s as I call them – right message + right media + right moment)
Contextualization of the message is important! Segment the target, relate with content, identify moments of consumption and deliver a practical message with direct action.
Reach out to them, don’t just wait! Find their interest and stimulate it! Create the perfect funnel to drag them onto the platform and finish with a trial!
Continuous communication. Regardless if you convince or not customers to enrol, the marketing process does not stop once you have them on the platform! You have to keep targeting and retargeting them and maintain a permanent flow of communication.
The average lifespan of a paying customer is between 3 and 5 months. Your job is to make the service relevant enough to keep them paying, so work to increase the usage and viewership.
Addressing communities – come up with dedicated communication and content for communities. Especially in sports it may be appealing: add highlights of favorite teams, notifications, bundles of digital & non digital content (tickets, apparel, merchandising etc.)
And of course, ensure a good customer care. When it comes to digital video content people are impulsive. They act on the spot, never think ahead. There’s no planning in consuming videos. Yes, they may know that there’s a live event, or that they’ll like to watch a movie later on, but there’s no prior action that may affect the viewing – as paying for the event/ subscription, or registering on a new device that has never been used etc.
You should always be prepared to ingest and solve problems whenever the prime time is happening.
And never forget that the best marketing for OTT is the product itself!
Piracy
The adoption of OTT is in a reversed relation with piracy. The higher the piracy, the lower is the adoption rate. In order to attract customers, you need to provide a solid reason and a positive interaction (trial).
The best way to fight piracy it is to give users a good product with an excellent experience that will ease their hassle to watch the favorite show, or team or band etc.
Give customers a good and convenient alternative and they’ll come around!
http://www.nielsen.com/us/en/insights/news/2017/the-state-of-play-in-home-entertainment.html
Monetization
In order to capitalize the OTT distribution, is extremely important to have a good product strategy. Choosing the right business model is no longer sufficient!
As personalization is essential in designing a product, in content display or recommendation, there is no limit in providing flexibility to the user when it comes to payments.
Pay per event, pay per competition, monthly subscription, weekly or daily passes, free view or advertising based content – there’s no rule forbidding blending them all in a single platform.
As mentioned, flexibility is key.
The digital environment is about freedom, about flexibility, about options.
The best way to secure your customers is to provide them options to (want to) stay with you.
Use behavioral marketing – segment the target, understand viewing and paying habits and design packages.
Many players tend to ignore user behavior and that forbids them to ensure the maximum return.
For instance, there are sports fans that are paying a monthly subscription to watch just one week of a tennis tournament, or maybe two F1 races. Those are loyal to the sport, but may be volatile in respect to the service. Unless you manage to address them properly, there’s a big chance to lose them once they ruminate that paying for the full service is not efficient. Providing packages and pass options is a way to keep them interested.
Create multiple revenue streams! Choosing a subscription based service, does not rule out the advertising. On the contrary, it can generate the opportunity for designing special packages for sponsors, allowing users to access different sponsored events without paying, via voucher codes or special (free view) windows.
This B2B2C model (in which the revenue comes from the sponsor and the end user is his customer) can be extended to different partnerships. Bundles based upon moments of consumption, places of consumption or devices. For example beer + sports pass, or device + content, which allows device manufactures to access communities. And the list could go on.
E-commerce is becoming more and more present in the digital interaction with the customer. Digital allows generating a direct response from the customers, while contextualization of product placement creates the opportunity of a direct sales channel – switching from placement to purchase. Blend it in and let consumers ask for it.
Digital is never single screen. Video experience is about whole lot more. For instance, sports is about live video, statistics, news, social media and e-commerce, while binge watching could be go along with social media and e-commerce.
It’s getting normal for a user to consume different content in parallel, watch a video, read news, check statistics in the same time while commenting with friends, or purchasing items.
All in one, when building an OTT operation, keep in mind to start from the user, keep it simple, design the best experience, be flexible, provide a relevant content, never stop communicating, be ready to solve problems fast and innovate!
About me:
I am a marketing professional, with over 17 years of experience in marketing, project and product management, sales and customer experience.
Successfully managed, launched and re-launched over 70 local and international brands across industries, from FMCG, to banking, automotive, telecommunication, media & television.
Designed, launched and managed several digital and OTT services for major media, broadcasting and telecommunication companies