Streaming Video Services Attempt to Solve the Monetization Puzzle

“Direct-to-consumer” and “scale” might be the monetization buzzwords of 2018, but what actual strategies increase content services’ ability to generate revenue? Companies often won’t talk about their secret sauces, but we got Ellation, Xumo, FandangoNow, and other experts to chime in with insight and advice about how their monetization strategies are paying off.

According to Deloitte, streaming crossed the chasm last year, with 55 percent of U.S. households holding paid subscriptions, compared to 10 percent when the company first surveyed consumers about the topic in 2009. In another Deloitte report called “Digital Media: The Subscription Prescription” (2017), the company predicted that, by the end of 2018, 50 percent of adults in developed countries would have at least two online-only media subscriptions (this includes all media: TV, movies, music, news, and magazines), and this will double to four by the end of 2020. The report predicted that 20 percent of this same consumer group would have at least five paid subscriptions by the end of this year, and by the end of 2020, they’ll have 10 accounts, and their aggregate spend will be more than $100 per month.

There’s been lots of news about how Amazon and Netflix are spending their way to success with their investments in original content. However, not everyone has those kinds of budgets, so the companies we spoke to for this article have gone about things differently. What makes viewers stay tuned and keeps the lights on at media companies? Original niche offerings, easy access, 4K, exclusive live events, well-curated content, and of course, advertising. First, the T-shirt test.

Ellation: The T-Shirt Test
“[About 4 years ago] we had a strategy to build not just Crunchyroll but a ton of other different SVOD [subscription video-on-demand] properties focused on niche passion audiences; everything from arts and crafts to auto enthusiasts to Korean drama. While we were going through that strategy we realized that everybody was going and trying to do the same thing,” says Eric Berman, head of content partnerships and business development at Ellation, which owns anime SVOD service Crunchyroll.

Ellation decided consumers didn’t need more single-purpose apps. Instead, the company built VRV, a fan-focused aggregation platform where other complementary niche SVOD properties could reach their audiences without needing to hire large engineering or product teams to work on audience development. VRV works with traditional linear partners to deliver anime, gaming, tech, and cartoon content, and it continues to grow the breadth of its offerings. “At VRV we have something called the T-shirt test. For every brand that we bring on the service you should see someone walking around a mall proudly wearing that logo on their shirt, because it defines who they are as a person,” says Berman.

“Our users come for what we call appointment viewing,” says Berman. Each quarter, Ellation acquires 30 to 40 new series directly from Japan. Each season is 20-plus episodes, and each episode can range from 22 to 44 minutes in length. This binge-worthy content keeps viewers tuning in.

Behind the scenes, Ellation is using data-driven insight to shape everything on its platforms. “Establishing a data-driven decision platform is probably the single most important technology innovation that a streaming video business should work to take advantage of,” says Michael Dale, VP engineering, Ellation. “There have been several innovations that have facilitated better surfacing of actionable data, and leveraging these data points has helped our video streaming business succeed.” Those innovations include data normalization and server-side data integration via companies like Segment and Datazoom. Dale says Ellation was able to integrate with those platforms in a matter of weeks instead of “[what] would otherwise be a massive cross-platform integration project to build and maintain.”

These data platforms enable Ellation to measure the video experience against metrics such as the impact of video quality on churn or how the number of ads impacts minutes watched by viewers over time.

“We send most data into a central hub that lets us pipe video view events into several services for everything from targeted messages to user journey funnels that help us model our users into behavioral cohorts for further analysis,” says Dale. “[We can] connect the events into our marketing CRM similar to how we connect in our data analytics platform. This can enable triggering an email to users that experienced a streaming issue through the same system as other customer messages.”

VRV has a million monthly viewers, a good portion of whom are watching ad-supported content. Viewers can subscribe a la carte to individual channels or buy an unlimited, ad-free subscription called VRV Premium for $9.99. “It’s the only bundle that exists of all of these channels in one place,” says Berman. The pricing is fixed, so viewers get the benefit of new content without seeing the price go up each time Ellation adds new partners. That’s good news for viewers, especially Nickelodeon fans. This past summer, VRV launched an exclusive NickSplat channel from Nickelodeon featuring almost 300 episodes of nostalgic, animated content, and Dale says the company is beginning to partner with other linear cable channels.

read more here: streamingmedia.com