Over the top (OTT) video networks distribute diverse types of content and attract unique audiences, each with specific expectations. As such, the strategy for managing an OTT business will differ depending on the way in which users engage with the service, with much of the variation in user behaviour based on content. This paper discusses the ways in which content variation affects key aspects of the service, including subscriber monetisation, viewership, and content management. Understanding these differences allows for better planning for resource allocation when launching and growing an OTT network.
In October 2015, Verizon launched their mobile-first over the top (OTT) network go90 with much fanfare and a healthy budget. In fewer than three years, it was shuttered. Comcast, through their subsidiary NBC Universal, tried their hand with Seeso, a comedy-centric OTT network, in early 2016. It survived for a little over a year and a half. Just last year, Turner Broadcasting’s Filmstruck, a service for classic, rare, and foreign films, closed its doors after two years of operation.
These services did not fail because they were unable to garner attention or even an audience. go90 was estimated to have 2.1 million monthly active users, while Seeso and Filmstruck saw subscriber numbers in the hundreds of thousands. Rather, the cost of each service was such that the necessary return on investment could in no way match the expected lifetime value of a customer. Paradoxically, the money spent to force these networks into success was the very thing that doomed them.
While these are some of the most public cases of failure, they are not fully representative of the market as a whole, which is estimated at $11.4 billion in the US for 2019, with a 3.1% CAGR. The size of this notable examples belies the scale of the opportunity for OTT networks with a modest number of subscribers who nevertheless face the exact same questions. What is the value of a new customer to their service? How engaged will new customers be with a network’s content, and on what devices? How much should networks spend on customer acquisition?
In many cases, the answers to these questions are difficult to find until well after a network has been budgeted, developed, programmed, and launched to market. Services may try to increase customer lifetime value after launch by enhancing product features or lowering acquisition costs with focused marketing efforts, but these changes serve at best as marginal improvements. They do not address the fundamental challenges of the business: what video content should be offered, to whom, how, and for how much. The following research posits that one key factor influencing the strategy of every OTT service is the type of video content.
By analysing both viewership and subscriber data across Vimeo OTT, the following analysis evaluates clients from myriad backgrounds with diverse audiences and a range of content types, all of whom leverage a consistent product offering. This allows for a stable baseline across which to measure the effects of differences in content. By grouping similar content together, measuring a range of business metrics and comparing each to the others, it is the goal of this research to indicate what value is created by content type alone and thus positions any organisations managing a network with said content to not only survive but thrive.