M&E Daily

Ooyala: SVOD Providers Have Unrealistic Subscriber Expectations

Having an unrealistic expectation of rapid subscriber growth is among the most common mistakes that subscription VOD (SVOD) providers make, according to a new Ooyala whitepaper.
Because of all “the hype around online video, it’s easy to understand why” SVOD service providers expect huge success immediately after launching a service, the company said. But that’s unrealistic because it “can take a long time to build a loyal, engaged and sizeable audience,” it said.

When setting up an SVOD service, it’s “important to manage expectations and set appropriate, and achievable, subscriber goals,” and success should be defined by more than just subscriber numbers, Ooyala said, adding: “Few services will hit 100,000 subscribers in less than a year, let alone (one) million, so don’t lose heart if subscribers don’t immediately flock to your service. In the early stages, look at metrics like churn, engagement and subscriber satisfaction instead of subscriber and revenue growth as your key measures of success.

“Use data to uncover what your subscribers like and produce more of it. Furthermore, measures of success, and overall objectives, will vary hugely between companies.”
Another SVOD provider mistake cited by Ooyala was trying to emulate or compete with Netflix or Amazon Prime Video – moves that makes little sense because those “two players have unmatched scale of content offerings, along with very deep pockets,” Ooyala said.

Many recent SVOD efforts failed because they “tried to follow in Netflix’s path by building a large, non-differentiated content offering with no specific target audience,” and they’ve “foundered due to a content catalog that is neither attractive to viewers looking for everything, nor to viewers interested in one specific content genre,” it said. To avoid making that error, Ooyala said it’s important for SVOD providers to “identify the specific genre, or niche, they want to excel in, size their target audience on a national, regional or global level, and move from there.”

A third major mistake is ignoring consumers, or “worse,” making them unhappy, Ooyala said. While identifying a niche and audience, “you must make it as easy as possible for subscribers to register, pay, enjoy the content and — importantly — unsubscribe, as a number of studies have found that consumers value the ability to add and drop services at will,” it said. To avoid making that mistake, it’s important to “put the consumer front and center at all times,” it said. SVOD users have “come to expect a range of features and functionalities from online video,” including simple content discovery and a good recommendation engine, ease of use with consistent navigation, short load times and buffering, simple payment and cancellation mechanisms, responsive customer service, secure handling of personal information and, maybe most important, content that’s “unique and refreshed regularly,” it said.

Mistake No. 4 is “defending an old business model,” Ooyala said, noting: “As newspapers and record labels have found out over the last 20 years, the rules of engagement online are very different from those offline.” Among SVOD failures in the past few years, one “common theme” has been that they were “launched by broadcasters or TV platforms with one foot in the old world and a reluctance to adapt to the new business rules in the online world,” it said. To avoid making that mistake, it’s important to “embrace the economics of SVOD as opposed to existing business models,” Ooyala said.

The last mistake Ooyala cited was a “reluctance to experiment and pivot.” Although companies have “always experimented and pivoted, digital has made this easier” and cheaper than in the past, it said. So, it’s important to conduct tests, monitor data and “go with what works,” it said, adding: “We strongly recommend experimenting with practically every aspect of your SVOD service.” All SVOD services must have an “attractive price point” and the market “seems to have coalesced around a less-than-$15-per-month price point for most content offerings, though the price for your service should naturally be tailored around your content, technology and marketing expenses,” it said.

In a separate whitepaper, Ooyala highlighted the best practices for advertising video-on-demand (AVOD) to “get the most from your video and earn more from video advertising.”
One important key is to “engage,” Sergio Santos, Ooyala strategic media consultant said, explaining: “If you rely on advertising, your site is your most important platform. The two most common ways to optimize a site for viewer engagement are: with a separate VIDEOS page, and with video everywhere else on your site.” If you opt to create a dedicated VIDEOS page or section, you should use a large, prominent main video player, he said. To “boost engagement, make sure the first video that plays is popular or trending,” he said, adding it’s also important to take advantage of autoplay, but put it on mute for a better viewer experience. Another good idea to consider is a watchlist, a group of videos a viewer creates to watch later or share with friends, he said.

Another key is successful monetization, he went on to say, noting the basic formula for making money with video ads is: (Number of Video Views) x (Sell-Through Rate) x (CPM) = Revenue. To earn more, one can optimize any part of the formula, such as by selling out inventory or expanding the inventory via new ad types, optimizing ad loads, using ad re-insertion/anti ad-blocking, streaming the content live or trying new devices, he said.

Personalization is also a key, he added, noting that once you attract viewers to your site, it’s important to “keep them watching with content that speaks to them.” Making basic content recommendations is important, as are making session-based and data-based recommendations, he said.

He called data “the backbone of any good video strategy,” but said that “without the right approach it can be an overwhelming job to find the pieces that matter.” It’s a good idea, he said, to start by asking basic business questions including: Which videos perform best and why? Do some genres perform better than others? Which videos have the highest drop-off? What is the ideal clip length for each video type? Are there certain geographies we should target?

Locating the data that will answer those questions is important, he said, adding that it’s also important to create a central repository for that data, “decide on a cadence to update it,” and then “do so — consistently.”