The first answer to the question in the title is of course: great content! Therefore, media companies that own premium content that they believe people will be willing to pay for, are looking for ways to monetize it online, and a paid video service is the most profitable alternative. Nevertheless, content owners used to hesitate before getting involved in the delivery of paid content online because offering secure and easy access to content for authenticated users on multiple devices is far more complex than the normal OVP service. Most media companies assume this requires over-sized initial investment, synchronization between several providers and very specific know-how, but is that really what effectively selling content online requires?
Following the success of Netflix, Hulu Plus (Hulu’s subscription based service) and others, an increasing number of media companies are interested in delivering paid video Over-the-Top (OTT). The summary below presents some of the key characteristics they should be looking at when choosing a video platform for this purpose. These guidelines reflect aggregated experience gathered in pioneering projects in the pay-OTT arena.
- Deliver content to users where they are used to get it – on any device that may be. Users are willing to pay for an online service only if it brings them tangible added value. A true cross device experience, for example one in which users can search and book content on their iPhone in advance, start viewing it on their PC and finish on their TV, brings this type of added value (just ask Steve Jobs for iTunes’ revenues before and after they introduced its multi-device service…). Even content owners interested in initially launching a service aimed only for PC users, must keep the option of long term expansion to additional devices available.
- Offer a variety of subscriptions, pay-per-view packages, coupons and vouchers. It is still unclear which business models work best or what the prices different audiences are willing to pay for different types of content. Therefore, a successful video store should have the flexibility to test any type of business model and pricing structure over time. The ability to grant online vouchers and coupons helps in creating effective partnerships as they provide added value directly related to the corresponding partner or sponsor.
- Support a variety of local payment methods – The offered payment methods highly affect a video store’s ability to reach one of its main goals: lowering the purchase barrier to a minimum. The popularity of online payment methods significantly varies from country to country, for example: while PayPal and credit cards are essentials in US and Europe, they are not as popular in South America, where any paid online service must support Merkado Libre. They are even more rarely used in Russia, where most online payments are performed through a pre-paid kiosk system.
- Protect your content, on any device – In order to enable users to access premium content from multiple devices, a video store should be prepared to support multiple DRM mechanisms at once. For example, Widevine DRM is required for delivering content to some Connected TV brands, Marlin DRM is essential for delivering content to PlayStations, and Microsoft PlayReady is the only way to get to X-Box users.
- Use automatic allocation of revenues to the various content providers – Video Stores normally gather their content from multiple providers. While ads based revenues are fairly easy to allocate (according to the number of views), the different subscription structures (as well as vouchers and coupons) in a video store require for a sophisticated financial reporting system.
Renting out videos across connected devices may be more profitable than serving ads based content, but it is indeed a more completed business.
