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Avoiding OTT’s
Top 5 Mistakes
March 26 Sponsored by
11:00 AM CT
Audio Recording Playback
Parks Associates invites you to view and listen to the webcast recording.
Click link to view recording:
https://register.gotowebinar.com/recording/6406174055078848513
www.parksassociates.com © Parks Associates 2
Speakers
Brett Sappington Barry Nolan
Senior Director of Research Chief Strategy Officer
Parks Associates Swrve
www.parksassociates.com © Parks Associates 3
Avoiding OTT’s Top 5 Mistakes
Closures in OTT Video Services
Top 5 Mistakes
Examples and Lessons Learned
Obstacles to Growth
Ways to Successfully Drive Growth
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OTT Market Entry and Exit
United States OTT Video Services Breakout, 2013-2018
Parks Associates OTT Video Market Tracker
70 New Services Closed Services
60
50
# of OTT Video Services
40
30 61
20 44
31
10 21
0
8 7 9
10 17
20
30
2015 2016 2017 2018
Source: OTT Video Market Tracker 2014-2018 | © 2018 Parks Associates
www.parksassociates.com © Parks Associates 5
Leading Causes
High competition in a small niche
Monetizing a small niche
Going against trends
Failing to meet internal expectations
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First Mistake: Ineffective Use of Data
Common data use
Marketing / advertising
Base metrics
Knowing your customers and niche
Identifying viewing segments
Positioning content in the interface / carousels
Content licensing decisions
Getting user data from aggregators
www.parksassociates.com © Parks Associates 7
Misconceptions of Subscribers
Subscriber Attitudes: Online vs. Traditional Pay TV (Q1/19)
Among US BB HHs Subscribing to Specified Service
Online Pay-TV subscribers Traditional Pay-TV subscribers
My lifestyle and home often impresses my friends and family
Purchasing products and services from well-known brands is
important to me
I am willing to pay more to get higher quality products and
services
0% 10% 20% 30% 40% 50%
% Rating "Strongly Agree" (Rating 6-7 on a 7-pt. Scale)
* Asked of a Subgroup of 3,378 US BB HHs | "DT9005. On a scale of 1-7, please select your level of agreement with the following statements:" | "DM6005. To which of the following video services does your household subscribe?" | "DT1053. To which of the following online
video/online pay-TV services do you pay a monthly fee to receive a bundle of TV channels?" | "DT1065. Which of the following describes your TV service? " | Source: American Broadband Households and Their Technologies Q1 2019 | N=6,755, ±1.19% | © 2019 Parks
Associates
www.parksassociates.com © Parks Associates 8
Second Mistake: An Underperforming Experience
Basic personalization at a minimum
Offering a dynamic experience
Catering to your niche
Driving viewership
Adapting with an evolving market
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Consumer Expectations
OTT Expected Feature at Incremental Pricing: User Experience (Q3/18)
Among U.S. BB HHs Surveyed, n ~ 1,000, ±3.1%
30% Recommendations
% Selecting Specified Feature
25% User profiles
20% See what friends are
watching
15% Downloads for offline
viewing
10% 4K video quality
5%
0%
$1.99 $4.99 $7.99 $9.99 $14.99
"Q6715A/B/C/D/E. Which of the following features would you expect at minimum to be included in an online video service priced at $1.99/$4.99/$7.99/$9.99/$14.99 per month?" | Asked of a Subgroup of 5,006 U.S. BB HHs Source: American Broadband
Households and Their Technologies Q3 2018 | N=10,000, ±0.98% | © 2019 Parks Associates
www.parksassociates.com © Parks Associates 10Third Mistake: Inadequate Customer Acquisition
Understanding purchasing behaviors
Position related to other services
Partnering / aggregation
Targeting your niche
Adapting to the online world
www.parksassociates.com © Parks Associates 11Trials and Conversions
OTT Trials and Conversion – Past Six Months (Q3/18)
Among U.S. BB HHs Surveyed, n = 5,006, ±1.39%
Trialed but did not
subscribe, 14%
Trialed and subscribed,
20% Did not do trial, 66%
"DM6070. How many online video services have you trialed in the past six months?" | "DM6080. To how many of these trials did you subscribe after the free trial ended?" Asked of a Subgroup of 5,006 U.S. BB HHs | Source: American Broadband
Households and Their Technologies Q3 2018 | N=10,000, ±0.98% | © 2018 Parks Associates
www.parksassociates.com © Parks Associates 12Fourth Mistake: Limited or No Churn Strategy
Building a fan base
Regularly proving value
Connecting with consumers
Good and bad churn
www.parksassociates.com © Parks Associates 13Relative Rates of Churn
Video Services: Annual Cancellations as % of Current Subscriber Base (Q1/18)
Among U.S. BB HHs Subscribing to Specified Type of Video Service
100%
Those Canceling Service in Past Year
as a % of Current Subscribers
75%
50%
25%
0%
Online pay-TV service OTT service Traditional pay-TV service
(n=479, ±4.48%) (n=3,220, ±1.73%) (n=3,879, ±1.57%)
"DM6030. Which of the following services did your household cancel over the last 12 months?"
"DM6005. To which of these video services does your household subscribe?" | Asked of a Subgroup of 5,011 U.S. BB HHs
Source: American Broadband Households and Their Technologies Q1 2018 | N = 10,015, ±0.98% | © 2019 Parks Associates
www.parksassociates.com © Parks Associates 14Approaches to Address Churn
Adequate Incentives to Not Cancel an OTT Subscription (Q1/19)
Among 20% of US BB HHs Cancelling At Least One Online Service, n = 688, ±3.74%
Ability to put my subscription on hold
Guarantee of my original subscription price
Free upgrade to higher service tier
A $1 per month discount
Family members can access the service remotely
Selection as a Platinum Member with exclusive benefits
Someone replying to my emails / messages
0% 5% 10% 15% 20% 25%
% Selecting Specified Incentive
"Q6080. Which of the following would have prompted you to not cancel [service]?" | Asked of a Subgroup of 3,378 US BB HHs
Source: American Broadband Households and Their Technologies Q1 2019 | N=6,755, ±1.19% | © 2019 Parks Associates
www.parksassociates.com © Parks Associates 15Fifth Mistake: A Vague Path to Profitability
Adequate marketing spend / effort
Adapting business models
Understanding the challenges of
international markets
A sustainable content strategy
www.parksassociates.com © Parks Associates 16Consumers and Business Models
Subscription OTT Service Use vs. Free / Ad-based OTT Service Use (2017-2018)
Among Surveyed U.S. BB HHs in Specified Year
100%
Subscription OTT
% Using Specified Combination of
service user
75%
Free / ad-based OTT
Service Types
service user
50% User of both
25% User of neither
0%
Q3/2017 (n=5,009, ±1.38%) Q3/2018 (n=5,006, ±1.39%)
"DM6005. To which of the following video services does your household subscribe (do not include services that you are using on a trial basis)?" "DM6040. You indicate that you have used an online video service that offers free
access to TV shows and movies. Over the past 30 days, which of the following video services have you used?" | Source: Multiple Surveys: American Broadband Households and Their Technologies | © 2019 Parks Associates
www.parksassociates.com © Parks Associates 17OTT’s Top Five Mistakes
1. Ineffective use of data
2. An underperforming experience
3. Limited or no churn strategy
4. Inadequate customer acquisition
5. A vague path to profitability
18
Photo by Marcos Ramírez on Unsplash
www.parksassociates.com © Parks Associates 18Swrve makes it easy for brands to unlock the value of real-
time relevance at massive scale
Know and personally message each
user natively across all your OTT
platforms
1.2 BN 720 TB 14 BN 99.998% Uptime
Active users Customer targeting data User Decisions Tracked Daily 2018 Performance
19
www.parksassociates.com © Parks Associates 191. Ineffective Use of Data
– KPI vs KYC
– Data unlocks real-time relevance
20
www.parksassociates.com © Parks Associates 20Connecting with today’s OTT consumer
It gets ever more complicated
Digital time spent by platform
Desktop Only
6.0%
Multi-Platform
62.0%
Mobile Only
32.0%
21
www.parksassociates.com © Parks Associates 2175% of signups 75% of viewing
● Tazmin - AndroidTV,
Real-time understanding of each customer across all platforms Samsung Galaxy S8
● $40 Monthly Sub
● Not seen 10 days
● Bradley Cooper Obsessive
22
www.parksassociates.com © Parks Associates 22KPI
KEY
PERFORMANCE
INDICATORS
Track performance
across all your
platforms
23
www.parksassociates.com © Parks Associates 23Kate - APPLE TV Mira - Roku, iPhone 8
Acquired via Facebook Ad LTV: $249
1st app Open Last seen - 21 days
Day 1 Free Trial ago
KYC
KNOW
YOUR
CUSTOMER
Real-time
Relevance
Tazmin - Samsung Galaxy S8 Joe - iPad Pro
$40 Monthly Sub Entertainment package
Not seen 10 days Just abandoned
Bradley Cooper Obsessive sports purchase
24
www.parksassociates.com © Parks Associates 24Most people simply don’t have enough time to absorb so many demands on their attention.
Return on Relevance
Engagement = Retention, Monetization, Reduced COGS
Dynamic/Real-Time
OTT In-App Messaging
70% Engagement
when relevant to an individual
and in context
Push
Messaging
30% Engagement
when relevant to an individual
@ Segment @ Individual
email
1%
1% Engagement Engagement
26
Static/Batch www.parksassociates.com © Parks Associates 26Relevance = real-time understanding every user, at scale
Has watched A Star Is Born 3 times in the last 22 days
Bradley Cooper
Fan?
Drama, Music,
Romance, Fan?
27
www.parksassociates.com © Parks Associates 27Relevance = real-time understanding every user, at scale
Has watched A Star Is Born 3 times in the last 22 days
Has watched > 6 movies with Bradley Cooper in the last 3 years
28
www.parksassociates.com © Parks Associates 28Return on Relevance
Engagement = Retention, Monetization, Reduced COGS
● Tazmin - AndroidTV,
Samsung Galaxy S8
● $40 Monthly Sub
● Not seen 10 days
● Bradley Cooper Obsessive
29
www.parksassociates.com © Parks Associates 292. An Underperforming Experience
– Why Test?
– Benefits of A/B testing experience
30
www.parksassociates.com © Parks Associates 30Reality: Progress is the sum of all tests
Cumulative gains from A/B testing
Normalized business
without A/B testing gainsWhich UX drives greater engagement?
Test every aspect of your UX
+18%
shows
watched
32
www.parksassociates.com © Parks Associates 32Will the new app update have any impact?
Hamburger
Tabs
Winner
www.parksassociates.com © Parks Associates 33Which upsell message performs best?
Test every marketing message
Winner
34
www.parksassociates.com © Parks Associates 343) Limited or no churn strategy
- Churn should be your No1 focus
- Churn mitigation strategies
- Embrace episodic churn
35
Photo by Casey Botticello on Unsplash www.parksassociates.com © Parks Associates 35Churn is the one metric that determines OTT success.
CUSTOMER
ACQUISITION
Churn is a statement from your
customers about how habitually valuable
NEW CUSTOMERS
your service is to them.
Optimizations & messaging can
meaningfully reduce churn.
MARKETING $$
Understanding why people churn is TO REPLACE
CHURNED
essential to addressing chronic churn.
CUSTOMERS
CHURN
36
www.parksassociates.com © Parks Associates 36The cost of churn:
Lower revenues, increased marketing spend, lower profitability.
Month 24 Best-in- Average-
$10m Picture Industry Industry Difference
Best-in-Industry Churn Churn Churn
Revenues
Cumulative
Monthly
Revenues $226m $182m $44m
$7.5m
Industry Average Churn CAC recovery $13 $52m $39m
marketing $$$
Cost of churn
Month 0 Month 12 Month 24 - 1m paying subscribers, at $9.99/mo.
Cohort Months - $120 Customer Acquisition Cost (CAC) per
activated new user.
37
www.parksassociates.com © Parks Associates 37Progress is the sum of all tests
Three key Spotify tests that drove retention
Family Plan Discovery Playlists
Spotify churn = 5.5%.
38
www.parksassociates.com © Parks Associates 38We can now predict who is at most risk of churning.
Insight you can act on
Marketing engagement collapses as users AI/Machine Learning enables us to Deploy a messaging schedule
start to disengage predict who’ll likely churn to re-engage
11%
reduction in churn
It’s easier to re-engage a
disappearing subscriber
than a churned one
39
www.parksassociates.com © Parks Associates 39Speak with churned users
After 3 rounds of price reductions no effect—this media
app surveyed users as they churned.
Only 3% said it was price
Triggered
in-app
survey
No1 was a storage bug.
One code fix, fixed $2.5m in churn.
40
www.parksassociates.com © Parks Associates 40For some segments, make churn a feature, not a bug
RETAIN
Recurring usage
=
Recurring value
=
Recurring
revenue
41
www.parksassociates.com © Parks Associates 41For some segments, make churn a feature, not a bug
RETAIN CHURN
Recurring usage Episodic usage “Episodics” subscribe for a game,
an episode, or a series....& then
= = churn.
Recurring value Episodic value In reality episodics are an
enormous opportunity.
= =
Requires a new model -
Recurring Episodic transactional versus subscription.
revenue revenue
42
www.parksassociates.com © Parks Associates 42For some segments, make churn a feature, not a bug
Micro-personalized messaging is
Transactional Micro-segment Transactional Plans critical to drive transactions
43
www.parksassociates.com © Parks Associates 434. Inadequate customer acquisition
– The importance of onboarding
– Connecting acquisition & onboarding
44
Photo by Xiang Hu on Unsplash www.parksassociates.com © Parks Associates 44The importance of onboarding new users
Onboarding new users is one
of the most important jobs.
30%
Bounced
50% Most newly acquired users
Bounced
60% bounce within the first few
Bounced 65% opens.
Bounced
% NEW
USERS
Optimization and behavioral
1:1 communication is the
ACTIVE easiest way to growth.
# APP OPENS
www.parksassociates.com © Parks Associates 45Leave no new user behind
First-touch User Experience Activated
Welcome Set Up Alerts Set Up Location Continuous Onboarding
www.parksassociates.com © Parks Associates 46Nurture habits
First-time user, watched just one show yesterday
Nurture & Grow
47
www.parksassociates.com © Parks Associates 47Smarter paid acquisition
Paid Acquisition on
Instagram
User installs app
48
www.parksassociates.com © Parks Associates 48Smarter paid acquisition
Paid Acquisition on
Instagram
Only the app
doesn’t know
about the users
intent
49
www.parksassociates.com © Parks Associates 49Smarter paid acquisition
10X
Conversion
Paid Acquisition on
Instagram
In partnership
with Facebook
App responds
instantly to Ad
Intent.
50
www.parksassociates.com © Parks Associates 50The importance of onboarding new users
+200% MAU
+20.5% in viewing time
+9.4% movies streamed
+5.5% videos downloaded
+15.4% favourites saved
51
www.parksassociates.com © Parks Associates 515. A vague path
to profitability
– Track the customer journey
– Real-time relevance
52
www.parksassociates.com © Parks Associates 52Winning the moments in the customer journey
REFERRAL ACQUISITION
App Store Ratings Paid & organic
Satisfaction Surveys
Referral
Social Sharing
ACTIVATION
Ad-Triggered Onboarding
Push & Location Opt-In
REVENUE Activation Abandonment
Trial Offer UI/UX A/B Testing
Upsell & Cross-Sell Content A/B Testing
Cart Abandonment
Behavioural & Geo-triggered RETENTION
Offers Tips and tutorials
Intent New Features
Watchlists
Service Updates
Suggestions
Reminders
www.parksassociates.com © Parks Associates 53Automate customer journeys through real-time relevance
Streaming Media Viewer/Listener TV/Mobile Journey
Activate Retain Revenue Referral
View new titles by genre,
artist Review title
Renew
Watch/listen to View title recommended by search
first title history Share title
View data usage Rate title Click on ad
tips Post title to social media
Follow artist
Add title to list Earn friend referral
Watch 10th ad
bonus
Download title
Register title/artist
preferences
Upgrade to subscription
www.parksassociates.com © Parks Associates 54OTT’s Top Five Mistakes
1. Ineffective use of data
2. An underperforming experience
3. Limited or no churn strategy
4. Inadequate customer acquisition
5. A vague path to profitability
55
Photo by Marcos Ramírez on Unsplash
www.parksassociates.com © Parks Associates 55#CONNUS19
Hyatt Regency San Francisco Airport
www.connectionsus.com
www.parksassociates.com © Parks Associates 56Questions
www.parksassociates.com © Parks Associates 57Thank You
Brett Sappington
Senior Director of Research
972.490.1113
brett.sappington@parksassociates.com
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