Subscriber-based video on demand (SVOD) is a relationship business. When it comes to monetization strategy, course correction and adaptation are the norms, not the exceptions. Companies able to deliver a truly differentiated experience can be successful, but once you’ve got an audience’s attention, is there a golden compass that keeps you on a path of profitability? It’s all about making your destination and content offerings relevant and valuable to each member — a service worth paying for.
If your commerce goals can be effectively summed up as “maximize the lifetime value of subscribers,” then job one of your commerce strategy is to effectively chase a constantly moving target. The purpose of this paper is to bring together many of the considerations you should include in your market strategies, and share how we address them with the Advanced Commerce tools that reside within our mpx Video Management system.
Advanced Video Commerce: SVOD Whitepaper
Comcast Technology Solutions
ADVANCED VIDEO COMMERCE: SVOD MEMBERS JOIN FOR THE CONTENT, BUT CONTINUOUS VALUE IS WHAT KEEPS THEM. LEARN NEW TECHNIQUES THAT LENGTHEN AND STRENGTHEN SUBSCRIBER RELATIONSHIPS. Subscriber-based video on demand (SVOD) is a relationship business. When it comes to monetization strategy, course correction and adaptation are the norms, not the exceptions. Companies able to deliver a truly differentiated experience can be successful, but once you’ve got an audience’s attention, is there a golden compass that keeps you on a path of profitability? It’s all about making your destination and content offerings relevant and valuable to each member — a service worth paying for. If your commerce goals can be effectively summed up as “maximize the lifetime value of subscribers,” then job one of your commerce strategy is to effectively chase a constantly moving target. The purpose of this paper is to bring together many of the considerations you should include in your market strategies, and share how we address them with the Advanced Commerce tools that reside within our mpx Video Management system. WHAT DRIVES YOUR BUSINESS? Depending on your goals, a mature SVOD approach gives you a host of tools to meet your business drivers head on: • Entice and Convert: Offer free trials, introductory pricing and subscriber privileges to entice new customers, or target specific consumer segments with tailored promotions. Engage your growing subscriber population to help expand your base organically with gift vouchers and internal incentives such as refer-a-friend rewards. Implement short-term “test drives” like weekend or one-day access. • Maximize customer lifetime value (CLV): Identify minimum subscription periods needed to recoup subscriber acquisition cost. Implement automatic renewals and rollovers to keep members connected with your service, customers only cancel when they actively choose to do so. Robust reporting should maintain the highest awareness on consumer churn, with the resulting insights poured into loyalty and retention campaigns. • Build Loyalty: Advanced commerce tools should bake in lots of flexibility to cater to a wider array of potential customers, including a la carte product bundling, “cross-grading” across platforms, and flexible billing options (such as the ability to skip payments or get warranted refunds easily) all add up to a lower-pressure financial relationship with members that reduces churn. • Enforce Access: Control your subscriber ecosystem with an Entitlement Data Service that makes accurate, informed decisions for every playback. Ultimately, the goal is to give each member an experience that keeps them engaged with your offerings – maximizing the value of your content library. It takes a flexible technology and process stack to get there. Whether it’s deployed as a complete platform or integrated with existing billing systems, product managers can now have more control over how they package, market, and monetize video content. It’s more than just delivering your service on any platform or device. Subscribers may take more than one device path to your door, so it’s important that your relationship building is as effective on every device as your playback experience. THE PERFECT SUBSCRIPTION MODEL EVOLVES WITH YOUR BASE Do you see a theme here? It’s this: your technology choices support your ability to meet each viewer on his / her terms, no matter what that means today – or what that might mean tomorrow. That’s no easy feat, and there’s certainly no “one right path” to connect you with a perpetually moving target. Within the realm of SVOD flavors, there are plenty of ways to build your subscriber relationship: Subscription terms: annual, monthly, or both: One of the main benefits of SVOD is the promise of predictable revenue. A once-per-year payment model certainly improves the predictability outcome (as well as lowering monthly churn – they’ve already paid), but it comes at a higher cost of entry, thus making your service a non-starter for commitmentaverse potential subscribers. Still, with the same free trial as a monthly model, an annual term accelerates you past the break-even point much quicker. Monthly subscriptions could be used as a churn mitigation strategy, or both could be offered right out of the gate, with an annual rate that’s priced lower as an incentive to commit. Hybrid SVOD and TVOD (with a side of AVOD, perhaps?): Incorporating a transaction-based (TVOD) component into your subscription is a phenomenal way to maximize the value of your premium content with flexible monetization options. In addition, some larger subscription services have also started experimenting with ad-based (AVOD) content, developing non-intrusive ways to bring advertising revenue to bear for high-demand content that can support it. In any case, the improved revenue picture of a hybrid approach can offset expenses and allow you to offer reduced rates, or other ways to keep customers that may otherwise churn completely. To grow your base organically, a free trial is just the first step. Create new promotions, select offers, and deploy a flexible array of options that invite deeper participation and investment from your subscriber base. The commerce functions within mpx provide a dynamic, scalable toolbox that helps you create new video packages and pricing offers for your audience; with merchandising support to ensure that customers can easily find and purchase your products — in any currency. The goal is to provide a centralized location to: • Bundle video content for specific audiences by category: such as genres, series, sequels, and trilogies. Or, dynamically bundle content targeted for specific devices and access rights (e.g. one movie for the iPad, two movies for all devices, or a collection of media that dynamically changes). • Create and apply pre-set access rules and pricing templates for videos including pay-per-view, season passes, download-to-own, movie bundles, and subscription access. • Apply product tags at the video and bundle levels, enabling deep search and comprehensive query capabilities within your storefront UI. • Build in discount and pricing windows and special promotions that can be easily applied and retired to multiple products. • Set up flexible billing for video products. Easily enable one-click transactions, as well as automatic recurring billing. MAKE IT EASY TO LOCATE AND BUY CONTENT Every opportunity to shorten the path between content and consumer is worth exploring. The right technology can do this, creating opportunities for product managers to bundle, merchandise and customize offerings in new ways to increase the lifetime value of each subscriber. There are ways to package and manage your offerings to keep everything clear: • Describe each asset in words and images – in multiple languages • Classify items according to a customizable tagging scheme and keywords, or according to its product rating • Stage items in advance of sale and retire them automatically • Create bundles offerings or refer to IDs in external systems • Define what payments types can be used to make the purchase • Provide the storefront with product placement hints (e.g. “New Releases”) WORKS WITH ANY STOREFRONT UI Your user experience (UX) and user interface (UI) design has a huge impact on the subscriber experience. A groundup redesign isn’t always necessary to implement new functionality – it’s a decision that’s going to be unique to your relationship building, but again the more your workflow supports agility, the more you can focus on what’s right for your subscriber base. Within Comcast Technology Solutions’ mpx video management system, the commerce suite operates as the engine behind your storefront UI, once it is integrated with your existing components or UX partners. It’s a streamlined way to configure your checkout workflow with one-click purchasing, shopping carts, billing options, and localized currency. CREATE TAILORED PROMOTIONS AND CUSTOM OFFERS The best content, and the best viewing experience, are the initial seeds for growing your audience. As you build your SVOD brand on vibrant relationships over simple transactions, personalization takes precedence. Apply promotional pricing to products and subscriptions that are offered in your video storefront, and tailor offers that are applicable specifically to existing subscribers. The right approach is constantly evolving, providing the technology to develop acquisition and retention offers for both subscription services or for individual products. Flexibility is key – offers are created and targeted based on your business rules, and then adjusted based on your results. • Code-based promotional offers: Used as subscriber acquisition or retention strategies, or as loyalty awards – offers can be tied to specific code words, such as “enter the code FREEWEEK for your introductory discount” • Choose your criteria: Promotional price discounts can be a discount percent, discount amount, fixed price, or free. • Cycle-based offers: Special introductory subscription pricing that factors billing cycle into the equation. Set a minimum subscription period to recoup acquisition cost. At end of contractual period, revert to a new contract that does not include introductory pricing. • Choose your threshold: Offers can have a threshold based on either quantity or price. For example, “buy 5 movies and the 6th is 10% off or spend $50 and receive a new release for free.” • Target your offer: Customizable user-qualifying business rules allow product managers to stipulate the types of customers eligible for the promotion. • Target your products: Customizable product qualifying business rules that stipulate the types of products available with the promotion. ORGANICALLY ACQUIRE SUBSCRIBERS What does it mean to “grow organically?” Simply put, it’s an emphasis on growing from the inside out. Not through ads, search optimization, or other marketing, but simply by improving the value of each relationship and cultivating a base of happy customers who will share your content with others. Just like a garden you’d tend in your back yard, organic growth starts with consistently delivering the things that keep your customers healthy – which for video includes things like a great playback experience, rich and unique content offerings, and an enduring sense of value. From there, you can provide tools for your fans to use, and incentives that make them worth using. GIFT VOUCHERS: To your customers, a gift voucher would be used in the same way as a gift certificate to a restaurant — it’s simply a voucher that can be gifted and then redeemed by someone else to purchase video products. It’s a great way to increase the lifetime value of customers. Existing customers have a way to spend more, and you have the opportunity to win new viewers with your experience. • Gift vouchers aren’t just for new business, but can be utilized for the target of your choosing. Recipients can be either new or existing subscribers, with the option to either specify the recipient by name or make the gift anonymous and redeemable by anyone. • The actual gift can be for specific transactional products, or simply set for a specific period of subscriber access. REFER-A-FRIEND: Refer-a-friend programs capitalize and build upon the relationships you’ve cultivated with viewers – enlisting customers to help build your base, and incentivizing them to do so. An effective referral marketing campaign provides a bounty for your active advocates, but it also provides a way to test offers, and to gain actionable insights to improve future efforts. Through our partner, Talkable, mpx customers can develop a robust referral program with the potential to improve acquisition numbers by as much as 20 percent. • Design new online experiences easily, tailored for the specifics of each program. • Use real-time data to run A/B testing based on the criteria that matters most to you. • Assess channel activity and user behavior with easy-to-use reporting and analytics. INCREASE CUSTOMER LIFETIME VALUE WITH ADD-ON SUBSCRIPTIONS Perceived value is a primary motivator for a subscriber’s decision to either stay onboard or churn. Cost-cutting is certainly a factor; but a richer relationship, with more connecting points between you and your subscriber, can provide more “stickiness” – lengthening and strengthening the lifetime value of each subscriber. Add-on subscriptions enable content merchandisers to recruit and retain consumers through special subscriptions that offer premium content with incremental pricing. Premium content might include a local sports team’s home games, limited-time access to movies related to an upcoming premiere, or even short-term promotional access to a unique media package. Combined with promotional discounts and bundles, add-on subscriptions improve customer retention and reduce account churn. In the graphic below, for example, you can see how a basic subscription evolves into a much more dynamic relationship, with multiple connecting points that reduce churn, and increase individual member value. SIMPLIFIED MANAGEMENT OF CONTENT AND CONSUMERS There’s a pervasive technology theme that gets clearer for the subscriber-centric business: the easier it is to get stuff done, the more time there is to focus on relationship building. It’s an interesting shift in “where the complexity lies,” from a workflow standpoint. Advances in device technology and high-demand data connectivity have resulted in a great screen in every room, if not every back pocket. Delivering a consistently terrific experience to a growing list of possible end-points is a daunting task; but at the same time, the ability to manage the day-to-day operations of your business can now be accomplished through one console. CONTROL OVER THE ENTIRE CONTENT LIBRARY Administrators can manage all aspects of their video library efficiently through the mpx console. Improved controls include: • Automated content processing that shortens the media management cycle, including pre-set access rules and pricing templates that are applied to videos from ingest to publishing. • Ability to establish role-based access into the system (e.g. you can provide marketing with the ability to create products and set pricing, while still restricting administrative system rights and media management). • Support international businesses with enhanced features, including multi-currency pricing and multi-language product descriptions. • Customer service features that allow your team to review purchase history, credit users with additional video access rights, issue refunds, and more. • Order history reports are available in mpx and can be exported to your analytics system. STREAMLINED WORKFLOW Our approach to the video commerce workflow is to integrate it directly into mpx, so that it takes its place as a component of a complete, streamlined media management plan. The resulting experience is one where product managers can easily create products, product bundles, and apply pricing policies across a wide range of products as early as media ingest – again, all from a single console. Other integration benefits include: • Products that are easily formatted to the right device • DRM restrictions and permissions that are automatically applied to each video MANAGE CUSTOMER RELATIONSHIPS Direct customer contacts are make-or-break moments in a relationship economy. These interactions are often prompted by a concern or problem, so they become a litmus test where a provider can demonstrate just how well it knows its customers. Built-in customer care support offers complete transaction history, with system wide and per-consumer views. With one-contact resolution as a top priority, administrators can credit users and issue refunds directly from the console. Service queries include: • Orders by consumer • Orders by product, or by scoped item within a larger product • Payment gateway codes • Transaction types • Payment instrument types • Full ledger view Email alerts can be automated for both customers and administrators. Use the email system to confirm customer purchases, send billing notifications, and promote new content and specials offers. INTERNATIONAL SUPPORT A successful SVOD destination is likely to attract a global audience. We’ve poured our own experience as a global provider into a design that incorporates full international support, including product descriptions in multiple languages and multi-currency price scheduling. TRULY FLEXIBLE DEPLOYMENT AND INTEGRATION mpx’s flexible SOA (service-oriented architecture) and open APIs allow each component of the video commerce suite to run independently of each other – so businesses can turn on just the components they need and install upgrades and enhancements down the road. This flexibility especially benefits companies who have current billing systems or payment processing systems in place. The complete SVOD management solution includes a payment gateway, taxation engine integration, ledger, and fulfillment of purchases through Comcast Technology Solution’s entitlements service. A storefront coordinator service works with the website or app to enable the checkout workflow with one-click purchasing, shopping carts, billing options, and localized currency. Supported billing services and Payment Gateways include: • Braintree • Adyen • Firstdata • DPS • Mercado Pago • PayPal Direct integrations with: • iTunes • Google Play • Amazon Fire • Boku stores Taxation engine: Fixed GST or Avalara Content is secured via one of the many DRM systems supported by mpx, including Adobe AccessTM and Microsoft PlayReadyTM. Playback of protected content is supported by the Player Development Kit and the mpx Player Service. WORLD-CLASS SECURITY As one of the largest content creators and distributors in the industry, information security is a critical component of our operations around the world. We place a high priority on the protection of your consumers’ data and your own content. • User privacy and security issues are mitigated by Comcast Technology Solution’s services: We never store credit card or other sensitive information, but act as a broker between the end consumer and the payment provider. • mpx provides the utmost security around your digital content. Playback is secured via the Player Development Kit and Player Service. Content rights are also secured and enforced by stream encryption and link protection or Adobe Access, Microsoft PlayReady or other DRMs. WE KNOW VIDEO – AND AUDIENCES You’ve got a unique vision for your own video destination, and it’s crucial that your technologies and workflows provide the support for your vision, and a flexible foundation that allows for scalable quality and highly informed trial-and-error. Comcast Technology Solutions provides solutions to industry challenges and helps forge a shared vision for the future through purpose-built technology for connectivity, media, and entertainment. To find out more about how we can help you meet your online video objectives, visit www.ComcastTechnologySolutions.com, or contact us at 800.844.1776.
Comcast Technology Solutions