John Griffiths explains why revenue generation for OTT services all hinges on the experience. So how do you make sure people keep coming to the party?
Jeff Bezos once compared Amazon’s approach to customer experience to hosting a party 24/7. “We see our customers as invited guests to a party, and we are the hosts. It’s our job, every day, to make every important aspect of the customer experience a little bit better.” Bezos’ comments came way back in 2004. But they could just as easily be describing the challenges facing broadcast media today as brands look for growth in the OTT market.
Confused? Let’s explore the metaphor further.
Imagine you’re throwing an exclusive party; it’s ticket-only and premium-priced. You’ve spent big on an awesome venue and a world-famous DJ to bring in the crowds. And you’ve doubled down with a free bar and a legendary mixologist to tantalise tastebuds. All the ingredients are in place: it’s going to be a humdinger. But, as the masses arrive, you suddenly realise your ticketing system has misfired, front of house is overwhelmed, and long queues of disgruntled punters are sprawling round the block. Guests slowly trickle through, but – just as the party gets going – the power fails, the lights go out and the dance floor empties. The crowd wants its money back.
This nightmare scenario is a relatable parallel for OTT brands as they battle to build audiences and bolster revenues. The message is clear: you can bet the farm on big names and great programming, but if you don’t take care of what goes on in the background, your party will fall flat. It doesn’t matter how good your content is or how well you price it, if the user experience doesn’t stack up, your brand will end up feeling like the spotty adolescent at the school disco that nobody wants to dance with.
The party theme is a useful jumping-off point for discussion of the biggest challenge facing streaming businesses: revenue generation. However, the metaphor isn’t perfect. Whilst most shindigs are constrained by fixed timelines and venue capacity, OTT is the party where everyone’s invited and guests can turn up whenever they like; all day, any day. There are obvious exceptions – like live pay-per-view sports and special events – but, generally speaking, OTT is a 24/7 party, 365 days of the year. The music never stops.
Talking ‘bout my generation
Revenue generation is a hot topic for broadcast media as the OTT market continues to expand. It’s front of mind for established players looking for new ways to stimulate growth. And it’s top priority for new entrants who are late to the party and three drinks behind. Everyone, it seems, is talking about revenue generation.
There are three fundamentals to optimizing revenues. The first is obvious: content is King. Cliché or otherwise, the importance of great content is unarguable. If you haven’t got content that people want to watch, you might as well go home. The second fundamental, intrinsically linked to the allure of your content, is an audience. A sustainable audience is the foundation of your business model, whether that’s through paid subscriptions, advertising or sponsorship. Again, if you haven’t got an audience that’s either willing to pay you money or an attractive demographic for advertisers, you haven’t got a business.
The final component – often overlooked – is the user experience (UX). In my opinion, UX is the key to revenue generation. Modern audiences, increasingly spoilt for choice for streaming services, are quick to unsubscribe if an experience doesn’t meet their high expectations. UX encompasses everything from the user interface and ease of use to how quickly a viewer can get from sign-in to streaming. Every element of friction that obstructs that process threatens your ability to generate revenues.
There are, of course, exceptions. If the content you’re offering is exclusive and valued – live sport being a good example – viewers will likely tolerate a degree of poor experience. However, if it’s available elsewhere, they absolutely won’t. And even if they do, their patience won’t last long.
UX is the glue that binds your content with your audience, the music that keeps the dancefloor crowded. It’s fundamental to revenue generation.
Churn baby churn (disco inferno)
Some organisations make the mistake of defining ‘revenue-boosting activity’ as the development of new features. It’s much bigger than that. Ultimately, everything about your OTT service is linked to revenue; whether it’s on-screen or behind the scenes, every tiny detail should be generating revenues or driving cost savings, with the sole objective of reducing churn. However, if a glitch in your infrastructure damages the experience, it will cost you subscribers and nullify revenue gains. Ultimately, nothing burns profits more than poor UX.
So how do you ensure that your OTT service is the 24/7 party that never skips a beat? The answer primarily lies in optimizing a goldmine of data that’s too often squandered.
OTT services generate a colossal amount of data from multiple sources across the supply chain. That data spans everything from video performance to ad serving technology and everything in between. It’s complex – but understanding it is key to delivering a quality experience. Therein lies the problem. In the transition to OTT services, broadcast media has struggled to make the most of its data assets.
Perhaps the biggest challenge is data aggregation and visualisation. Many businesses are obsessed with capturing data but are unable to leverage it to improve the experience. Building big data sets is all very well, but if you can’t understand what that data is telling you – or identify the actionable insights that could fine-tune your UX – you’re missing a trick.
Data can give you an accurate picture of the factors driving customer churn. Moreover, it can give you the evidence you need to build a business case to invest in new features, new functionality or new markets. These opportunities can help you generate new revenues to invest in quality content, which in turn will have a domino-effect on growth. However, success hinges on deep understanding of how diverse data interact. That requires a holistic approach.
Many businesses still work in functional silos and struggle to connect the dots. For example, it’s not uncommon to see product managers whose sole concern is how their product is performing, while marketers in the same organisation are only interested in measuring conversions – they don’t care about churn further down the line due to poor UX. But these two activities don’t exist in isolation; if you’re converting 1000 people a month but losing 500 due to suboptimal experience, half those conversions are wasted. You need to connect the dots to understand what’s causing the churn. Getting there requires developing a 360° picture that gives management – at a strategic level – a clear view of all the working parts. That’s not just about capturing data, it’s about aggregating it, interpreting it, visualizing it and acting upon it.
It isn’t easy. When a user logs into a service to search for content, their journey passes through countless split-second checkpoints – sign-in, catalogue systems, entitlements, subscriptions, etc. At the same time, the content delivery network is pulsing data. One seemingly simple request to browse content and press play generates hundreds of interactions, all data points that contain vital information. The question for the brand is always: is that user experience smooth? Can we reduce the number of clicks and make it a more efficient process? Or can we eliminate some friction that’s delaying the journey? To answer those questions requires aggregating data across tens of thousands of users and looking for trends that tell you the story.
Such is the complexity of data aggregation that it’s unlikely you can do it on your own. An external partner is often a useful addition to the team, bringing domain expertise, independence and perspective to the table. A good partner will establish your most salient KPIs and develop a process to map them across multiple data sources. They will customize systems that collect diverse datasets – such as log files from niche services or quality of service data from larger platforms – and be able to aggregate and visualize it to show you the end-to-end picture. And they’ll use that visibility as the foundation for Quality of Experience audits that help you diagnose problems and engineer solutions.
Fundamentally, it’s only by having a holistic view of your entire business that you’ll be able to spot opportunities for revenue generation. Getting there is all about making the most of your data and empowering teams to make evidence-based decisions. If you can do that – through purposeful data aggregation and meaningful visualization – you’ll be well on your way to optimizing UX and maximizing revenues.
Then it really will be time to party.
About Spicy Mango
Spicy Mango is an expert media technology consulting and software delivery organisation. The company has been building service provider grade video platforms, media technology solutions, and delivering high quality consulting services since 2015. Our customers include RTL, NBC Universal, Discovery, Two Circles, Eurosport and Vodafone.
To find out more: www.spicymango.co.uk