The biggest challenges facing direct-to-consumer services, and how to address them
One of the most popular challenges for direct-to-consumer services today is the 'binge-and-bolt' phenomenon, as recognized by Colin Dixon, Chief Analyst and Founder at nScreenMedia during the recent Videoscape Europe conference in London. This is where people subscribe to something, watch the best content (or at best, the programming that interests them), then disappear.
\”We possess a discussion relating to this challenge every day, at this time,\” said Alexander von Woikowsky, Managing Director at 7TV, the German streaming platform that's co-owned by ProSiebenSat.1 Media and Discovery. \”You cannot stop it, especially if individuals are registering with watch a football match. And people will binge-watch a popular German series after which go.\”
The option would be and give people other reasons to stay, obviously. \”You must find the content that brings it well on a weekly or monthly basis and you have to build a long-tail of content [that contains titles that attract them],\” he advised.
A key ambition for 7TV would be to ensure that even if someone leaves one of the paid content offers (Eurosport and also the Maxdome SVOD service sit within the app) they will keep watching the disposable content (such as the various ad-supported channels from ProSiebenSat). Customers register and log-in to the plan to see free as well as paid content, which means the value of viewers can be maximised for advertising, thanks to a much better knowledge of their demographics and location.
'Binge-and-bolt' is fundamentally a person retention issue and for the direct-to-consumer market, as with other OTT services, it comes from rapid nature of contracts – having a month now the standard. Dan Fahy, VP, Commercial & Content Distribution at Viacom International Media Networks (VIMN), which has been slowly expanding its DTC efforts, agreed with the 7TV retention strategy and added that short-form content is one method to maintain engagement beyond peak programming.
Arlen Marmel, General Manager at VRV, the brand new SVOD aggregator of Ellation (which runs the Crunchyroll anime service) noted the DTC market does not take advantage of the inertia that is developed by a traditional Pay TV bundle. \”The challenge has enough to keep customers returning over and over again,\” he agreed.
If you can engage customers beyond video, this can help to grow a diversified entertainment brand but additionally boosts loyalty to the video service, he reckons. Ellation looks to expand its curiosity about games and live events and Marmel even pointed to cinema viewings as another layer to a real-world, content driven community.
Retention isn't his first concern, however. \”One of the biggest challenges in direct-to-consumer is getting the customer to begin with. If your clients are already there, that's 80% of the battle [won]. Avoiding binge-and-bolt is really a 'champagne problem' to possess,\” he declared.
When it comes to acquiring customers, there is a list of potential strategies, a few of which were covered throughout a DTC-focused panel at Videoscape Europe. VRV, for instance, uses a free channel like a conduit by which the populace in particular can get to the SVOD aggregator logo and the help within. The organization monetises non-subscription viewers with advertising and tries to upsell them with incentives like exclusive content or better viewing windows.
Scott Kewley, COO at TV Player, the UK-based multichannel online bouquet that mixes a variety of free-to-air channels with some Pay Lite subscription bundles, traced buying challenge to its source – the prominence that standalone apps is capable of inside a world filled with OTT as well as broadcast services. \”Thematic and niche OTT services have to create their share from the user interface. How well you accomplish that decides if you survive or not,\” he told the London audience.
One option is app onboarding. Maxdome, that is among the best recognised SVOD brands in Europe, was one of the first to follow along with this path when it was integrated onto Unitymedia cable set-top boxes four years ago. But Pay TV operators (like free-to-air platforms) aren't looking for countless bespoke partnerships of this kind, to ensure that window of opportunity is just limited. App stores on STBs and Smart TVs offer less exclusivity.
Few DTC (or OTT) providers are likely to achieve the type of co-marketing and repair deal Maxdome has using the Deutsch Bahn train service in Germany. The ProSiebenSat.1 Media owned SVOD service provides onboard entertainment for travellers on ICE trains and you may even purchase a 'tickets-plus-Maxdome' bundle!
As von Woikowsky at 7TV pointed out, broadcasters (like ProSiebenSat) also provide the way to drive viewers from the linear world in to the OTT domain. They could show a programme on classic TV as a taster and make the rest of the series available on-demand, on a digital service, for example.
The whole point from the DTC marketplace is that you cut out the platform owner who previously acted as the aggregator and retailer, but as Ellation's Marmel highlights, this also removes a layer of the marketing funnel. Pay TV bundles help to drive consumers towards all content within the bundle.
\”In the direct-to-consumer world you need to construct your own funnel – that is a fundamental difference.\” Marmel warned: \”This is not a case of 'build it and they'll come'. You need to think about where you stand likely to find your audience.\”
Miles Weaver, Marketing Director at Airbeem, the cloud-based SaaS provider specialising in UX, analytics and monetisation that helps media companies launch and operate a DTC offering, advised the Videoscape audience to search out the online communities who definitely are interested in their content. They may be on Reddit or Facebook, as examples.
This type of marketing gets to be more necessary, as well as more powerful, inside a world where you can segment audiences inside a more granular way. And as Marmel pointed out, it will help if you can identify different consumer segments and serve several, meaning an adaptable method of your service model and marketing.
There is a 'demand curve', because he calls it, which at the very top end features the 'whales' who're willing to spend good money to feed their thematic passion with your content. But there are also potential super-fans who are not prepared to give you a dollar, but who are able to still evangelise about your service should you provide them with the chance. This explains the willingness at Ellation to offer some free content.
'Free' also plays a role in the creation of the marketing funnel that ultimately feeds your core subscription services. \”Our priority would be to widen that funnel and increase engagement and increase the number of individuals then taking our premium offering,\” Marmel confirmed.
Meanwhile, VRV is taking a leaf out of the Pay TV book and taking advantage of aggregation and bundling to produce greater audience scale, creating a 'bouquet' that can help feed each SVOD offer under its umbrella. \”For our partners, we are creating a marketing funnel, in addition to a service that appeals to the slightly more casual fan,\” Marmel said from the bundle that provides a hefty discount when compared to cost of registering for nearly twelve DTC offers individually.
\”We are resolving the consumer problem related to fragmentation [of content distribution] and achieving a lot of prices and [consumer-to-media subscription] relationships. Our partners tend to be very good at content curation and brand building, however they struggle with product and customer acquisition, therefore we help by bringing a crowd together under one roof.\”
Marmel declared himself \”bullish about bundling\” due to the way it will help cope with customer acquisition and retention challenges. \”I think you will see some return to bundles,\” he predicted.
The panellists agreed that channel brands remain highly relevant in an increasingly app-populated world, with von Woikowsky arguing they give consumers a sense of orientation, with a clear pointer as to the type of content continues to be curated for them. Marmel believes channel brands have become even more important in a global where consumers have to pull content towards them instead of get it pushed for their door.
Specialist and thematic OTT brands can be powerful, too. \”There are people wearing Crunchyroll tee-shirts; you don't see lots of people wearing Netflix tee-shirts,\” he observed.
Companies by having an established thematic SVOD/DTC service can now make use of the trend towards OTT service stacking, where households subscribe to several online services simultaneously. John Armah, Chief Operating Officer at Marquee TV, the ad-free, subscription streaming service focused on the arts (theatre, dance and ballet) predicted that cord-cutting will increase and individuals will require 3-4 OTT services in your own home.
\”We think they might take one associated with film, one for children entertainment and perhaps one for sport, and something focused on their passion. Hopefully that if their passion is culture, they will choose Marquee.\”
All the panellists were inspired to name the company metric that's most important to a DTC service. For Marmel it is engagement, as this is closely correlated to the lifetime value of a customer. It was also flagged like a key metric earlier within the day by Armah, whose service is now in the united kingdom, U.S. and Canada. He said his biggest competitor is someone having supper or drinks having a friend, or attending live arts performances. \”There is really a small window in which you could be doing a variety of things, and one of those is consuming culture from us,\” he acknowledged.
Armah isn't concerned if your subscriber does not go back to Marquee TV every single day, or even every week. \”We know we should have 2-3 compelling things around the platform to ensure they are stay and continue subscribing,\” he told the Videoscape Europe audience.
For Dan Fahy at VIMN, a key metric is conversion figures – how many customers you've acquired and who also start spending money on content. \”That returns to marketing, and that's why marketing is a big slice of our business costs.\” There was a similar answer from von Woikowsky at 7TV: he cares a great deal concerning the number of registrations that may ultimately drive a pay relationship.
And the other challenges do companies with a DTC strategy face? von Woikowsky flagged the necessity to understand, 100%, exactly what the customer needs at any time, anywhere.
For Fahy and VIMN, the biggest challenge of all (speaking as a media company with an established distribution model) is knowing where direct-to-consumer fits into your overall market strategy. \”What is our TV business, so how exactly does DTC fit into that, and how will it all come together?\”
Viacom has always been a firm supporter of Pay TV operators, which might explain why it's yet to make a really big relocate the direct-to-consumer space in the core markets. The company continues to be expanding its DTC interests occasionally, however. There is a growing relationship with Amazon Channels, for instance, using the pre-school kids offer NOGGIN now available on the U.S. version of the SVOD/DTC aggregator offering, and Nickelodeon and MTV MIX recently put in Japan.
Viacom is known to be preparing for any bigger DTC presence within the U.S. but Fahy were built with a warning for everyone heading down this road: it is very hard making the direct-to-consumer business model work. \”You should not consider DTC as a standalone exercise,\” he emphasised.
Scale is another challenge, flagged by Marmel at Ellation. He observed the biggest pure-play SVOD providers grew their streaming business from another thing [Netflix from DVD rental and Amazon from online retail]. \”There is no example of a cold-start OTT service that gained huge audiences on the back of the unknown brand,\” he added.
You need what Marmel calls an unfair advantage to grow a DTC offering and that he believes VRV has established this for itself, being an SVOD aggregator, by drawing upon the existing scale of Crunchyroll and it is a million subscribers. This service has become part of the VRV bundle, which targets the standard audience as well as includes some third-party content (including from VIMN and AMC).
He also offered some choice advice for thematic content owners: you cannot replicate the Netflix model on the smaller scale and expect that to operate. But you can find your personal place in the streaming world, particularly with Netflix so firmly rooted to the centre ground. \”As it grows, Netflix is going to be perceived as a quality 'everything store', he suggested. And as the Crunchyroll tee-shirts confirm, there is money high is passion.