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The many roads to personalisation and monetisation

By Paolo Cuttorelli

Last year, the pandemic ushered the Over-the-Top (OTT) streaming industry into a state of change, following strict worldwide lockdowns, stay-home orders, and shifts in consumer behaviours. In Asia, 57% of viewers increased their streaming habits during the pandemic, and the majority (73%) plan to continue the trend in the year to come. With OTT streaming being one of the fastest growing media channels in the region, it comes as no surprise that consumers believe they’ll consume more OTT content in 2021 compared to 2020.  

OTT streaming’s potential was undeniable, but it came with its own challenges. Subscription fatigue was and is a significant issue in a saturated industry, which has led to higher customer churn. By the third quarter of 2020, churn rates stood at 38%. Pricing and experimentation contributed heavily to this number as subscribers frequently jumped from one platform to another to take advantage of free trials of different content. Once these trials ended, viewers would unsubscribe and move on to other free trials from alternative streaming services.

Aside from these factors, poor user experiences and service quality have also contributed to an increase in subscriber churn. As a result, streaming platforms have leaned on personalisation in a bid to curb churn.

OTT streaming gets personal

In the new normal, consumers seek freedom of choice and convenience. They want intuitive platforms – ones that make decisions for them even before they realise they have to make a decision. To meet this need, streaming platforms have adopted tech such as artificial intelligence (AI) and big data to personalise subscriber experiences from start to finish.

For instance, when a subscriber logs into a streaming platform, what they see likely differs from what their friends, relatives, or colleagues see. Based on previous viewing behaviours, AI recommends content that may pique subscriber interest, all in a timely manner. This prevents churn as it simplifies the decision-making process for the subscriber, all while giving the subscriber the freedom to choose which content they’d like to view. It also means the subscriber knows that they are accessing a service that is tailored to their particular needs and tastes.

Service providers have taken personalisation to the next level, leveraging it throughout the customer lifecycle when consumers may encounter issues and need support, including when they key in their details for final payment. Making payment processes as simple and frictionless as possible is crucial, as a complicated process deters consumers from making that last step to purchase.

One way that services have simplified this is by offering payment methods to individual subscribers based on characteristics such as the user’s city and the type of device they’re using. Aside from credit cards or bank transfers, a customer from China on a Xiaomi phone, for example, may be given the option to pay via Alipay, while a customer from Indonesia on an iPhone would be able to pay via Doku Wallet.

The battle of on-demand

On the topic of money, pricing was another key factor that contributed to high churn numbers. In 2020, subscription video on demand (SVOD) was most popular with new entrants in the OTT streaming space. However, unemployment was rife in a pandemic-struck world, so balancing multiple monthly recurring subscriptions became a challenge for subscribers. In fact, when the pandemic first hit, 17% of subscribers had already unsubscribed from at least one streaming service.

Demand for other forms of streaming has also been high. In the United States, 65% of consumers wanted access to advertising-based video on demand (AVOD), which comes at little to no costs for viewers. Many are willing to sit through ads if it meant paying less for their subscription.

While such a model may attract larger audiences, it may not be enough to sustain costs needed to produce original content. Moving forward, an SVOD, AVOD, or transactional video on demand-only model may not be sufficient. To generate the revenue required to provide services that meet the needs of consumers, blended monetisation models are likely to best meet the needs of subscribers.

Blended monetisation becomes critical

In the past year, we’ve seen innovative pricing models such as the “freemium” model increasing in popularity. This model was tapped on by streaming services such as Viu in Asia. Consumers contemplating a subscription to the service were given access to a select catalogue of content, while premium content was only offered to those who subscribed to the service. To fund free content in this model, services relied on AVOD.

Disney+ has also adopted this model with its launch in Singapore, taking a different approach by teaming up with local telco provider StarHub to offer the streaming service as part of a bundle. New or existing StarHub TV, broadband or telco subscribers will be able to access the streaming service for free.

A blended monetisation model results in a win-win situation for service providers and consumers. OTT service providers (and traditional pay TV providers in the case of bundles) are able to target larger audiences and generate alternative revenue streams, while consumers are given the power to pick an offering most suited to their budget and viewing habits.

Services that have adopted this model over the last year have seen subscriber numbers grow, along with their average revenue per user. Many of these services have worked with subscriber and revenue management partners to pivot their strategies efficiently and in an agile, cost-efficient way. For example, Evergent’s platform is flexible and supports a broad range of pricing models, from SVOD, TVOD, and even hybrid or complex business models like B2B, B2B2C and B2C. By working with service providers, streaming services can maintain an agile posture, ensuring systems on the back end remain resilient and future-proof.

The year to come

Competition will likely intensify this year in the OTT streaming space, with a new slew of large and niche players announcing plans to launch in Asia. Consumers will once again be bombarded with added choices for content and subscription fatigue is likely to intensify.

It’s even more crucial now for streaming services – and traditional providers like telcos and pay TV operators – to use platforms and services that are flexible enough to weather change and that are adaptable to new competition and business models.

Aside from taking a blended approach to monetisation, technology must be adopted and maintained to create unique subscriber offerings and experiences across the full customer journey, from acquisition to checkout. By doing so, service providers might just thrive in the streaming wars.

Paolo Cuttorelli is Vice President and General Manager, Asia, Evergent.

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