5 Features OTTs Use to Directly Drive Revenue
Offering consumers different features across various pricing tiers is one of the best ways OTTs can increase revenue. Lower-cost tiers attract new viewers who may be hesitant to spend much monthly for content, while more expensive tiers can offer advanced features that incentivize other viewers to invest in a better streaming experience. Looking across the board at companies like Paramount+, HBO Max, and YouTube, it’s clear that there are 5 key offerings that are consistently attracting users to spend the money on top tier subscriptions.
1. Ads. Some viewers don’t mind watching ads, and appreciate being able to watch ad-supported content for free (or a reduced monthly cost, as seen with Hulu’s most basic offering). Other viewers will feel it’s worth paying more each month to watch their favorite movies and shows without promotional interruptions. For OTTs it’s a win-win, as viewers who opt for the affordable or free version will make up their cost in ad revenue, while other viewers pay a higher fee.
2. Download. The ability to download content from a streaming service is a premium feature. It’s extremely important to many viewers who want to watch their favorite content without startup delays or re-buffering, or who may watch when they travel or commute to pass the time. HBO Max recently launched an ad-supported tier for budget conscious viewers, and those subscribers won’t be able to download, as it’s considered high-value. Similarly, YouTubeTV has added a new tier called 4K Plus, which lets viewers download and stream in 4K for an extra $19.99/month.
3. 4K. 4K video is another way to make streaming a more premium experience, and the tiers mentioned above from HBO Max, YouTubeTV, and others are excluding it from their lower-cost tiers to encourage viewers to pay more for better video quality.
4. Access to premium content. Obviously, content is a huge factor when viewers are deciding where to spend their budget on streaming services. Some providers are using that as a way to get more subscription revenue. NBC’s Peacock, for example, has two ad-supported options. Peacock Free comes at no cost, includes ads, but blocks certain premium shows like The Office. Peacock Premium also has ads, but for $4.99/month, viewers are able to watch every season of The Office. HBO Max also limits content for lower tiers, so that only premium subscribers can watch new content launches immediately, while other viewers have to wait for access.
5. Live TV. Some streaming providers are including Live TV as an add-on or higher tier feature for viewers. Paramount+ has an ad-free premium tier that gives viewers access to their local live CBS station. Hulu’s most costly subscription includes live TV in addition to on-demand viewing. This type of tier, however, doesn’t necessarily make sense for every OTT.
For streaming providers, it’s more important than ever to maximize value and retain as many viewers as possible. Flexible pricing tiers help reduce churn by putting viewers in control of how much they’re spending. By offering premium features like download and 4K at a higher cost, you’ll convince viewers to allocate more of their budget to the streaming experience and foster viewer loyalty, as they have a premium experience, at the same time.