With the streaming age well underway, 62% of adult American consumers subscribe to a streaming service at this point. Leaving only 29% of American adult consumers who haven’t subscribed to a streaming service at some point. Subsequently, video streaming remains one of the largest streaming markets, currently valued around $11.34 billion.
Digital streaming is increasingly becoming part of our daily lives and many savvy entertainment businesses are hoping to take advantage of that trend. The big question is, how can an independent streaming service hope to compete against major providers like Netflix, Amazon or Disney?
In this post, we’re going to explore ways in which niche streaming services can be competitive and find success within the OTT video industry.
How Niche Streaming Services Can Find Success
In October 2018, the niche streaming market was struck a blow when WarnerMedia announced it was closing FilmStruck, a streaming service for classic and art-house films. But, since this was part of the organization’s restructuring of its portfolio of direct-to-consumer offerings, this was not a cause for alarm among niche streaming providers.
In fact, FilmStruck’s closing could be seen as a boon for niche streaming services. With an estimated 100,000 subscribers, that’s 100,000 potential new customers searching for art-house and classic film providers. Far more niche streaming services persist and so far, closures have been the exception. See Fandor, Midnight Pulp, and Tawzer Dog, just to name a few.
But you can’t just rely on visitors stumbling upon your videos as they search for a new service to adopt. Here are some ideas to enhance your niche streaming service’s ability to be as successful and profitable as possible.
Increase Audience Lifetime Value Through Data-driven Insights
Know Your Niche
Since the streaming giants are attempting to be a one-size-fits-all solution to the majority of consumers, the most important first step of a successful niche streaming service is to find your niche. Don’t try to be everything to everybody. The key here is differentiation. Understand and build a deep connection with your users.
The key here is differentiation. Understand and build a deep connection with your users.
As a niche service, it’s highly unlikely that your subscribers are returning to your service on a daily basis. But, according to Colin Dixon from nScreenMedia, daily usage isn’t necessary for a service to thrive. You can still find success with weekly or even monthly usage by being complementary to daily-use services.
Whether you’re looking to launch a brand new service or have an existing platform that you are looking to pivot toward a more targeted approach, investigate to see if another provider is already trying to corner that market. This is an important part of market research.
Consider Shudder, a curated streaming service that specializes in horror, thriller, and supernatural content. Shudder is a good example of what seems like a successful niche streaming service. They’ve done a nice job of aligning their content with their genre and sticking to it. Spending some time with other niche streaming services will give you some ideas on markets that are not being served just yet.
Shudder may have a solid position in the horror genre but there may be room for an Asian horror streaming provider. Or maybe an ’80s horror channel, for all the bloody summer camp mayhem someone could ever want. Tap into communities on the web to find out what resonates with people.
Know Your Audience
Which leads us directly into knowing your audience. If you’re starting from scratch, you can make assumptions based on market research. You should create a user profile to really understand who you’ll be curating content for.
- Utilize surveys
- Perform focus groups
- Evaluate with UX testing
Understand their preferences, likes, and dislikes.
- Are they looking for your content to be long-form, short-form, or both?
- How long of a trial length do they expect?
- Which current OTT services do they like/dislike today, why?
- What features are table-stakes when it comes to User Interface (UI)?
- Is their reaction to advertising in your content positive or negative?
But if you have a solid history of accessible data, you can see which content resonates the most with your audience and focus your efforts there.
- Which marketing sources are driving the most trials and conversions?
- Are there particular pieces of content new trialists are attracted to?
- Is there a particular piece of content that has a high correlation to conversions?
Another way to really understand your audience is through machine learning. A major feature of the Wicket Scorecard is called the Customer Happiness Index or CHI.® This model looks at dozens of factors across several categories to inform which of your subscribers are happy with the service and which are in danger of churning.
You can determine which movies or series your happiest customers are fans of and procure more similar content. Additionally, having this type of insight into your happiest members also allows you to try to find more people like them who may also enjoy your service. Running lookalike campaigns through popular marketing platforms can prove to be a highly-effective acquisition method.
A well-curated library is one of the biggest assets for niche markets in the OTT industry. According to Parks Associates, “Over-the-Top (OTT) video streaming services compete based on content. User experience, price, brand, and marketing are all important, but consumers pay for services in order to have something to watch.” And oftentimes, subscribers will sign up to a service largely for a particular program than the service as a whole.
One common complaint against the streaming giants is they have a lot of content, but it’s hard to actually find something to watch. A well-curated library is one of the things that FilmStruck had going for it. Their library was curated by The Criterion Collection, which has a reputation for seeking out the best films on Earth. You knew you would find something of interest to watch when you turned on Filmstruck.
Streaming services like The Criterion Channel and Mubi have arisen to fill the gap left by FilmStruck. Mubi also utilizes a way to incentivize customers to sign up for their service, creating a sense of scarcity with a 30-day limit on their streaming media. Having an audience that appreciates a well-curated library that changes frequently is a quick, easy way to garner customer loyalty.
Keep Your Customers
Word-of-mouth recommendations have never been more important than they are in today’s connected digital world. Loyal customers are five times more likely to purchase again and four times more likely to refer a friend to the company. However, customers have never had higher expectations than they have these days. They want their streaming experience to be as seamless as turning on their TV and watching a show.
Another Parks report has found that “User interfaces are a key factor driving satisfaction for OTT services.” And “innovations in UIs could be an even greater differentiator contributing to their success or failure.” So, while overall programming has a gigantic impact on an individual’s likelihood to maintain a subscription to a service, UI is a very important factor as well. Make sure you give your users a pleasant experience when they use your service.
Although it is not the most important factor, one thing you’ll have to keep in mind when competing in the OTT video industry is the major streaming platforms have excellent algorithms. Both NetFlix and Amazon have billions upon billions of data points to work with. That’s going to be hard to compete with.
You’re going to have to figure out a way to offer personalization and as we’ve shown in the past, engagement is key for retaining subscribers. Fortunately, we have some tools that can help you so you don’t have to code your own recommendation algorithm:
- Attention Index provides immediate insight into which content is performing and which is not. This is one method to really see which content resonates with your audience. Helping to uncover hidden gems in your library, which are worthy of additional promotion or identify content to de-emphasize.
- Content Explorer allows you to view your top content based audience size, percentage of fans (users who watch at least 80% of available episodes for a season, with five episodes or more), Attention Index, and more.
Used in tandem, these two features can provide a powerful perspective into additional content that may appeal to others in your audience.
Offer Attractive Pricing
Not only does your content have to be top-notch to stand out in the OTT video market, but it’s also got to be affordable. You’re going to have to offer a quality service at a low enough price point to convince customers to sign up for your service, in addition to their main service provider. If you’re not going to feature millions of titles, you’re unlikely to get them to abandon Netflix or Amazon.
Don’t lose hope though. “Consumers are willing to pay more for a service that fits specific needs,” says Brett Sappington of Parks Associates. Figure out a way to offer your customers high-quality content at a reasonable rate. Many niche streaming providers offer their services for a very low price, similar to an add-on. You might consider other ways to monetize your streaming platform like offering an advertising-supported option for instance.
“Consumers are willing to pay more for a service that fits specific needs.”
– Brett Sappington of Parks Associates
And don’t be afraid of those streaming giants. Their large platforms can be leveraged as distribution channels to spur early growth, as can be done with Amazon Prime Channels, Roku Channels, the Apple App Store, and the Google Play Store.
Your Data Drives Results
Now that you’ve settled on the target niche for your OTT video service, you’re going to need to power it with data. It’s incredibly important to invest in your data architecture upfront and it has to be the core driving-factor of everything your service does. Too often, reporting and analytics is the last component to be implemented when launching a new business, but it’s never too early to collect and organize data.
- Make sure your data architecture is scalable and extensible
- Identify which data sources lead to the most relevant analytics and audience insights
- Prioritize a content metadata strategy to eliminate user frustration down the road
- And keep the data AS CLEAN AS POSSIBLE
It’s incredibly important to invest in your data architecture upfront and it has to be the core driving-factor of everything your service does.
Training your team with the habit of viewing relevant KPIs and comparing them to benchmarks will help guide priorities in managing your video service. You need insights into:
- Gains and losses for trials and subscribers
- Milestones that contributed to those gains and losses
- Identifying stalled trialists
- Key metrics like lifetime value, average new trials, free trial conversion percent, and customer acquisition cost
- Top-performing marketing sources
- App store and third-party distribution channel effectiveness
With a likely smaller content library and budget than the giants, it is highly important to know how your content and service are performing. Implementing best practices is essential to helping emerging video services down the path to success. Otherwise, you’re just shooting in the dark.
Ready To Launch Your Video Empire?
There’s still money to be made in the OTT video market if you’re smart about it. Offer exceptional video content at a reasonable price and a high-quality customer experience, and your audience will come.
Do you have a niche streaming service and want to not only be competitive but find success within the OTT video industry? If you want to know how your video content is performing and gain unique insights into your video business, schedule a demo to find out how your data, coupled with the Wicket Scorecard, can drive the results you need to be successful.
Combat Churn Whitepaper
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Tags: avod • industry insights • niche • ott analytics • SVoD