08 Oct VDMS: How to Choose the Right Subscription Model for Your Content
When it comes to streaming video and content packaging, “one size fits all” doesn’t exist. Today’s consumers thrive on customized recommendations: they’re happiest when they’re given a bespoke solution that’s been tailor-made for their needs. That’s why subscription-based models, which allow customers to subscribe to the media plan that’s right for them, are booming.
Fittingly, there’s more than one type of subscription model out there, and each has different pros and cons. Here’s a quick guide to the four main subscription models and how they serve different business needs.
Ad-supported or “freemium”
An ad-supported subscription model is exactly what it sounds like: viewers agree to be served advertisements in exchange for content instead of paying a subscription fee. By collecting data from viewer accounts, content providers can personalize ads and recommend content tailored to each viewer, extending the time each viewer spends on the site, the ad revenue generated, and giving the end user a more personalized experience.
Once they build an audience with an ad-supported model, many services evolve into a “freemium” model where viewers can opt into an ad-free experience with a small monthly fee. But even though an ad-supported model is free for many viewers, it necessitates some big overhead costs initially. If a provider wants revenue from ads, they will need a sales team to sell those ads first, as the programmatic video space still lacks the inventory for content owners to monetize effectively, and that can be a large upfront cost.
Transactional video on-demand (TVOD)
This subscription model is the definition of on-demand. When customers find a piece of content they want to watch, they pay a one-time-fee and then they’re in, sans any long-term commitment.
Typically, the TVOD model is deployed for content providers that focus on live sporting events, concerts or other content that has a short relevancy window. However, it can also be useful for content under a pay-per-view licensing model.
A regular payday per video sounds great – that is, if you can keep it regular. TVOD content providers must make sure customer acquisition is a major priority. These providers need to seek out new customers every time they launch new content. A streamlined login and purchasing process can reduce friction and quickly turn one-time customers into repeat ones, but if the content is not there, you can’t easily forecast overall revenue for the platform day to day.
Download to own
In this instance, customers log on, download a video once and then own it forever. Since content doesn’t have to be constantly accessible, this model requires less overhead in the long run, making it an especially useful model for smaller content providers.
However, for larger providers, this model has its downsides: for instance, there’s no opportunity to collect viewer data for a more tailored viewing experience.
The recurring subscription model is popular among content providers partly because it’s so predictable and gives content owners the ability to focus on reducing churn and content. The customer creates an account and pays the same amount each month, no matter what they watch. However, content providers need to be sure that viewers will pay cold, hard cash to continuously tune in.
With so many factors at play, it can be challenging for content providers to decide which subscription model, or mix of them, will best suit their business. Our platform can conform to any number of subscription models, ensuring a convenient and frictionless viewer experience that keeps subscribers coming back again and again, no matter what subscription model is in place.
Jason Friedlader is Director, Marketing at Verizon Digital Media Services.
For more information, please visit www.verizondigitalmedia.com.