How exactly do Subscription Video On Demand (SVOD) services successfully grow their audience and monthly recurring revenue (MRR) over time? It’s easy to set a subscriber base goal before launching a VOD business and hope to reach that golden number eventually. What many don’t realize though is all the work it takes to run a lucrative streaming service and continuously surpass subscriber base goals. Want to know the secret? The trick is to give your business a thorough health check each year and use the data found to optimize your business.
Conducting a Business Health Check for SVOD Businesses
At least on an annual basis, there are certain components SVOD businesses need to keep track of to have a thriving subscriber base and revenue stream. Let’s go over each of these components together and later you can use this knowledge to build a thorough health check for your SVOD business.
Monthly Recurring Revenue
A great place to start is your monies! How much was your MRR? Did you generate new MRR on top of your starting MRR (revenue from existing subscribers)? How much of your MRR did you lose because of churn? We recommend creating a bar graph that shows your starting MRR, new MRR and churn MRR each month, so you can visualize how your business performed financially each month.
Similar to your MRR, analyzing data from your subscriber base can provide valuable insight. Pull your subscriber numbers from each month and create a bar graph that shows your starting subscribers, new subscribers and churned subscribers. Are your starting and new subscriber numbers exceeding the number of your churned subscribers? Are you seeing continuous new subscriber growth or do you see it slowing down throughout the year? A well-performing SVOD service should see their new subscribers outweigh their churned subscribers each month.
Free Trial Conversion Rate
Typically, SVOD services provide a free trial period for subscribers to test their offerings. This ‘freemium’ model is a very effective tactic but can be unfortunate if a subscriber doesn’t convert to a paying customer. Take a look at your free trial conversion rate to understand the percentage of customers converting from their free trial to their first auto-pay. Successful SVOD businesses have a conversion rate anywhere between 80-90%. If your conversion rate is significantly lower, keep reading to discover tactics that will help you strategize a way to keep subscribers past the free trial period.
Pro Tip #1: Create a program for subscribers to follow to boost engagement during the free trial period.
Content is king and it’s important to analyze how your subscribers are engaging with your material. What are your top completed videos? Which categories get the most engagement? What days of the week are your subscribers most engaged with your content? The answers to these questions can help you develop an effective content strategy moving forward and inspire you to produce more of the content your subscribers love!
Pro Tip #2: Promote your top videos to subscribers during their free trial period and hook them with the content your paying subscribers engage with the most. If they love it, your free trial-ers will most likely love it too!
Cancelation can be a touchy subject, but it’s extremely vital to investigate. Are subscribers canceling before their free trial period ends? How many times are subscribers re-billed before canceling their subscription? Analyze these numbers month-by-month and discover your average subscriber retention. Pinpoint the times subscribers are leaving and strategize a way to avoid this from happening.
Pro Tip #3: The first 3 months are the most important time for a new subscriber. Throughout this time, they’ll decide if they want to continue past the “intro” stage or cancel your service. Be sure you’re staying engaged with your subscribers during this time.
Another cancelation metric to examine is cancelation survey feedback. You can’t make everyone happy — and that’s ok! Cancelations are inevitable, however, they provide a valuable opportunity to collect feedback from your audience. There’s always something a business can improve on, so being proactive about cancelations is imperative. Include a survey in the cancelation process and discover why your subscriber canceled. Use this data to optimize your VOD business!
After All That, What’s Next?
Phew! That was a lot to go through, right? The secret is to stay on top of this data month-by-month and combine it all to create a comprehensive, annual health check to analyze. The goal is to use all these components and create action items to optimize your SVOD business for the new year. This health check is the key to continuously grow your MRR and subscriber base over time.
Not sure where to start?
If you need guidance in doing a health check for your SVOD service, contact Intelivideo! We work closely with all of our clients to help them analyze how their business is performing. It’s a marathon to run a lucrative SVOD business. That’s why we’re here to provide the insight and data that clients need to continuously optimize their digital video offerings. If you’re interested in learning more about tracking all this data, please send us an email at firstname.lastname@example.org.