All too often, a promising new D2C OTT platform gets launched with much publicity and fanfare, boasts of an extensive content library, grabs eyeballs by the millions….and then, slowly and steadily, stagnates. Or worse, it fades away. It is not that the platform didn’t have its launch strategy right. Instead, the reason for stagnation is that the initial enthusiasm of seeing an idea turn into reality can make promoters and investors of D2C services miss out on long-term OTT challenges.
We often hear OTT service providers expecting off-the-shelf technology to help them scale. However, from our collective experience, the reality is that while technology is most certainly a vital enabler of success, scaling D2C services needs insights and actions beyond tech.
Scaling a D2C OTT service: challenges, pitfalls, and solutions
In our experience, there are four broad truths that successful OTT service providers recognize:
Content is more ephemeral than you think:
More viewers are switching to OTT platforms and watching a lot more of it. The result is that OTT Services often underestimate their content requirements simply because viewers are running through their libraries more quickly. This quickly translates to a lack of good content, which has a significant impact on viewer churn. In 2021, 34% of new OTT subscribers 2021 planned to cancel their subscriptions because of a lack of new content.
To prevent such situations, we recommend that D2C OTT service providers have at least 500-1000 hours of content before launch. Post-launch, the platform owner would need to monitor content resonance and work towards maintaining a similar number of hours of new content. In addition, there should be at least one launch every Friday – yes, the old movie tradition still works – to catch the weekend audience.
Catch content creators early:
There was a time when big movie studios had directors and producers at their beck and call. OTT has turned this legacy model on its head. With OTT platforms burgeoning, competition for talent has reached cutthroat levels. As a result, content creators have choices like never before and are making the most of them. Even niche content producers are finding that there are OTT platforms that cater to precisely the same niche. This, in turn, has made the retention of top creators challenging.
The solution is to always be on the lookout for new talent and never underestimate how quickly a novice becomes the next star. If you see promise content creators, rope them in. Multi-year contracts are the way to go, giving you an assured content pipeline. They also save you the trouble of continuous renegotiations. Make your contracts performance-based as an additional hedge so you know you are always rewarding good creators.
Balance performance marketing with brand marketing:
Another factor that D2C OTT providers must consider is long-term marketing costs. With multiple OTT service providers wooing the same audience, the cost of acquiring and retaining viewers has grown, and churn has increased. In addition, audiences have become more fickle and demanding, making quality content a hygiene factor. They always want more and expect you to deliver on it.
Even when content is the sole driver, your OTT service needs to market your X factor to succeed. The first thing to do, of course, is to maintain a consistent brand image and presence. Rather than spending the bulk of your marketing budget on the launch phase, make a substantial allocation to long-term brand-building post-launch. The other significant consideration is that offline marketing is critical for scaling a D2C service. Viewers have a life outside their devices – go beyond digital media and catch them there. Events, promotions, celebrity appearances and brand tie-ups amplify your message and make your D2C service relevant to your audience, even when they aren’t consuming it. One of the mistakes we often notice in the OTT marketing ecosystem is the relentless focus on performance marketing alone. Sure, you need that for customer acquisition. But your brand marketing investment will keep your viewers coming back for more. Finding the right balance between the two is crucial. The more you are a part of your viewers’ lives, the more loyal they will be to you.
The local market is global:
As OTT platforms get niche increasingly, they appeal to audiences more for their content than on geography alone. Given that whatever you stream can be consumed anytime and anywhere, it becomes critical that your D2C efforts go beyond your traditional catchment area. For example, regional Indian language channels like Hoichoi and AHA have an enormous fan following outside their local markets. So, Hoichoi’s audience is not just Bengalis in Bengal but includes the Bengali diaspora. 50% of its viewership is outside Bengal, and 15-30% is outside India. Similarly, AHA rapidly built a colossal viewer base in the Telugu market – 50 million users, about 10 million monthly users, and 2 million paid subscribers – by addressing Telugu-speaking audiences in 100 countries worldwide.
Tapping global markets to attract and retain viewers is a sound idea but has unique challenges. Each geography has its preference of technology platforms on which content is viewed. Skill sets vary, and making consistent content quality is also a challenge. Payments, too, are governed by diverse regulations. So, the challenge is to vary your offerings by the market while still maintaining a consistent viewing experience and brand image.
Choosing the right technology partner can help with this. It should address not just the technology side of your operations but also serve as an advisory to keep you on the right track. In addition, its experience should include integration and tie-ups with billing and content partners so that you enter a market fully prepared to address its nuances.
Scaling a D2C service has its challenges, but is critical to the success of a D2C OTT brand. A judicious, long-term approach is the only way to go about your scaling aspirations.
By mixing good content with great marketing strategies, OTT service providers can succeed in their own markets and create new ones globally. This will ensure that they maintain a loyal and ever-growing- viewer base to drive their future success.
Finding the right partner on this journey is crucial. The challenge with many OTT tech stack providers is that their business model is product-led. There is hardly any human interaction, with OTT brands just signing up for the SaaS product and starting streaming. Find a partner with immense experience working with OTT brands who understands the challenges and nuances of your sector and your viewers like the back of their hands and, more importantly, is willing to share this expertise with you. Relevant, experience-based advisory will be critical to your D2C OTT brand’s growth beyond your tech stack partner’s product offerings.