Read about all the top highlights for Episode 64 of Friday Live below. For those of you who haven’t heard of Friday Live, it’s Intelivideo’s 30 minute weekly live stream where we chat about trending OTT news and discuss how viewers can build a successful SVOD business.
So let’s dive into our jam-packed Friday Live recap!
Disney Loses Over $1B from Hulu and BAMTech Investments
As always, Matt Given (CEO of Intelivideo) kicked off the show and reported on the latest activity in the OTT space. While most of his updates are about positive advances happening for OTT businesses, there are also some challenges big industry players are facing.
Disney lost over $1 billon in the last fiscal year and attributes its losses to Hulu and BAMtech – two of the company’s SVOD subsidiaries. Disney owns a 30% stake of Hulu, home to 1,000s of shows and movies for streaming, and about 1/3 stake of BAMTech, the direct-to-consumer provider for ESPN+ and more. Each didn’t perform as anticipated in 2018, but Disney remains optimistic and believes their direct-to-consumer numbers will improve in 2019. Especially with its upcoming streaming service, Disney+, launching this year!
Walmart’s Plans to Launch New Streaming Service through Vudu
Given also touched on Walmart’s new focus to release a SVOD offering through their digital arm, Vudu. Acquired by Walmart back in 2010, Vudu currently offers free ad-supported video content for streaming. When Walmart releases their new SVOD service, which is aimed to launch in Q4 of this year, it will be a huge lift on their competition with Amazon. They also plan to select a monthly price point of $8/monthly to compete in the king and prince of SVOD, i.e. Netflix and Hulu.
Monthly vs. Annual Subscription Plans
Up next, Ashley Podoll (Marketing Manager of Intelivideo) discussed the pros and cons of monthly and annual subscription plans. We regularly receive questions from clients about pricing their SVOD offering. How much should I price my plans? What’s more valuable? Should I offer both monthly and annual? Podoll covers the upside and downside for each so you can better understand how to price your subscription service.
- Less upfront money for consumers to join: Since they’re just getting to know your product and brand, consumers won’t feel the pressure of committing to a monthly auto-pay, as they would to a yearly.
- Less risk for consumers: They’re able to cancel early on if your offering doesn’t meet their expectations or isn’t a good fit for them.
- Proof-of-concept before larger purchase: They can get a feel for what your product is like before committing to a full year. Within 3 months of their subscription, you should have been able to prove to them the value of your offering. Around this time, take the opportunity to up-sell them with an annual subscription.
- Predictable recurring revenue: Monthly subscriptions allow for easier financial forecasting.
- Lower barrier to join, less to leave too: The acquisition of a new customer is much more expensive than retaining one – making it a little more difficult to build up your business and focus on content production.
- Can be too short to prove value: You have a limited amount of time to prove your value early on, which may cause you to lose subscribers upfront.
- Secure subscribers for extended period of time: They may not stay for an entire year, but in most cases will.
- Buys time to prove value: Once a subscriber has committed to a full year, you’ve bought time to build their loyalty and communicate what’s valuable about your offering. This will also help establish and define your subscriber loyalty strategy.
- Cash up front: Annual subscriptions provide your business more money from the get-go and allows for a larger budget for content creation.
- Lower rate than monthly, which removes some friction: Typically, businesses will offer a lower monthly rate for subscribers that purchase an annual subscription.
We recommend our clients to knock off about 2 months of the set monthly rate for their annual price. This gives subscribers about a 20% discount when opting in for an annual plan rather than a monthly.
- Upfront cost to subscribers: This can be a big commitment for users to opt-in on.
- Large barrier for testers of product: They may not have totally bought into your product yet, making it harder to get them to commit to a year.
- Sometimes billing logistics come into play: Make sure you have a good accountant on staff to help you forecast!
Understanding each of these points will help you strategize the best price points for your subscription business. Keep in mind, offering both monthly and annual subscription plans will give you a better chance to grow a larger audience across the board.
OTT is Only for the Brave
Our question of the week on Friday Live was, “What’s the one key to building a successful SVOD business?”.
When you get involved with this space, you have to know what you’re getting yourself into. OTT businesses are not for the weak and your offering likely won’t be an overnight success. It’s a marathon when it comes to building a profitable SVOD business, not a sprint.
Pay attention to keeping your subscribers around. Understanding what your value is will help you market your business and provide subscribers a better journey.
Win the Daily Battle
Determine how many subscribers you acquired vs. lost, today. If you can gain more than you lost each day, day-after-day, you’ll build a successful business. Develop an effective strategy to increase subscriber growth and decrease subscribers lost.
If you need help with your current SVOD service or want to learn more about launching your own, contact us today at email@example.com! We offer a premium platform to host your videos via streaming for viewers.
Thanks for reading our Friday Live: Episode 64 recap!
Visit fridaylive.intelivideo.com to access all episodes of Friday Live on demand. Follow us on Facebook, Instagram and Twitter at @Intelivideo and look for the hashtags #FridayLive and #IVLive for questions/comments from the show. Also, feel free to contact us with any questions, comments or compliments at firstname.lastname@example.org.