Knowledge
Price: How can you help your streaming service stand out?
May 24, 2021 • Arlene Wszalek, EVP, Strategy & Innovation
There’s always room in the market for a good product at a good price. How can you best leverage growth opportunities in the crowded streaming marketplace? To answer, we turn to the classic 5 Ps of marketing, and take a deep dive into how you can apply them to elevate the presence of your service.
We continue with Price.
Further, the pandemic wreaked havoc on multiple economies and industries, and consumers are increasingly price-sensitive. Deloitte, in its 14th Digital Media Trends study, found that 'since the COVID-19 pandemic began, 9% of consumers both added and cancelled at least one new paid streaming video service, suggesting more churn as consumers seek value.” It reported one out of four SVOD subscribers cited 'free trial or discounted rate” as a reason for subscribing. However, 35% cited 'free trial or discount ended” as a reason for canceling.
Short-term revenues (read: keeping the lights on) are important, but pricing with an eye to LTV can mitigate churn. What are the optimal price points, and how do those vary across service types or content offerings? What kind of promotional offering resonates best?
How we approach it:
We continue with Price.
Price
The competitive field continues to grow, and we’ve already seen some evidence of post-pandemic demand flattening, as well as stacking fatigue. A recent Ampere Analysis study found that after last year’s pandemic-related spike, the overall subscription growth rate in the US and five European countries - while still growing - is doing so more slowly. Even before the pandemic took hold, a Parks Associates study found that the need to cut household expenses was a key reason cited by respondents for canceling an OTT service within the previous year.Further, the pandemic wreaked havoc on multiple economies and industries, and consumers are increasingly price-sensitive. Deloitte, in its 14th Digital Media Trends study, found that 'since the COVID-19 pandemic began, 9% of consumers both added and cancelled at least one new paid streaming video service, suggesting more churn as consumers seek value.” It reported one out of four SVOD subscribers cited 'free trial or discounted rate” as a reason for subscribing. However, 35% cited 'free trial or discount ended” as a reason for canceling.
Short-term revenues (read: keeping the lights on) are important, but pricing with an eye to LTV can mitigate churn. What are the optimal price points, and how do those vary across service types or content offerings? What kind of promotional offering resonates best?
How we approach it:
- We continually assess the LTV of full-price subs versus those which come in on promotional or trial offers. While promotional offers are good for short-term trial and sub bumps, those subscribers also tend to be the most price-sensitive and likeliest to churn.
- Where possible, we conduct multivariate testing of offers. We’ve tested short- and longer-term trial periods, promotional first-month pricing, annual pricing, and more.
- We field and review qualitative studies to assess value propositions and price sensitivity. Value props which resonate in one territory or market may not move the needle in another.
- We monitor pricing and promotions of competitive services. While this can be done manually, there are services (e.g., Parks Associates, for the US and Canada) which provide competitive data for the landscape on a subscription basis.
