The OTT sector is in rude health.
According to German research firm Statista, in October 2015, Netflix alone boasted 67 million paid subscribers in North America. While the European figures aren’t quite as rosy, the company is still estimated to have snagged 12 million users in the three main markets of Germany, France and the UK, with the number growing all the time.
With statistics like these, it’s perhaps no surprise that other companies are trying to replicate Netflix’s model, not to mention its success. Whether it’s from new entities such as Amazon Prime, established broadcasters like the BBC, which has entered the market with its recent BBC Store launch, or niche players like Germany’s Kividoo, which serves up video content for the under 13s, competition is hotting up and there’s a land grab for VoD subscribers.
Reports of the death of the traditional broadcast TV model are clearly exaggerated, but the rapid growth of the OTT sector clearly demonstrates that today’s viewers wants much greater control over what they watch, when they watch it, and on which device.
It’s this desire for personalised content that has fuelled the growth in the market. However, now that there are many more market players – all of which purport to offer subscribers personalised content – what used to be a differentiator is in serious danger of becoming a ‘me too’ feature.
So how can OTT providers continue to evolve their offerings in order to stand out from the crowd?
The first priority should be enhancing the quality of the recommendation engine. It goes without saying that the content library should be as extensive as possible, but it’s just as vital that customers can navigate their way around the platform. After all, what’s the point of investing in high quality content if no one can find it? Slick menus that steer users directly to the content they want, at the very moment they want it, should be a key feature of any recommendation engine.
Broadcasters found it relatively simple to serve up relevant, timely content. They knew the whole family would sit down together on Saturday evening, and would schedule prime time shows accordingly. The situation is considerably more complicated for OTT service providers. They need to build up a complete picture of the subscriber; identifying what they have watched before, how much of it they watched, how much they liked it as well as what else they browsed. They also need to know how many viewers are in each household and get each person to set up an individual profile.
By collecting and analysing information about each customer’s viewing habits, providers can dramatically boost the effectiveness of their recommendation engines. In the future, we might even see providers forget about listing shows by genre, and introduce mood categories, such as ‘Childhood Memories’, which are tailored to the individual subscriber.
Secondly, OTT providers should consider striking deals with like-minded partners. Signing exclusive partnerships with major sport or entertainment brands can be expensive, but it often pays off, as it draws in new audiences and delivers instant loyalty. The trick here is for service providers to complement this blockbuster content with new fresh shows that will keep people coming back for a variety of reasons.
Not all partnerships have to be about content. For example, premium service providers might want to consider joining forces with lifestyle brands that target the same audience segments; offering gym passes or free tickets as a way to increase loyalty.
Finally, never overlook the importance of free trials. With ever-increasing competition, free trials have become a necessity for providers trying to attract new customers. The skill is in converting these viewers into full subscribers and not losing them to free or ad-led providers such as YouTube.
by Adrian Jenkins (pictured), VP Europe, Vindicia