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February 28, 2017 | Authored by: Kevin Cancilla

How much will subscribers pay for OTT content?

A survey from TiVo found many viewers are abandoning television shows they actively enjoy because of issues related to accessibility. Many television favorites require a subscription to premium TV channels or are only available from a particular over-the-top content provider. Overall, 37 percent of global TV viewers quit a show for these or other reasons.

Still, in the battle for subscribers, OTT is prevailing. The study revealed 21 percent of American viewers - and 11 percent of subscribers across the globe - are extremely likely to downgrade their pay-TV service over the next six months. Meanwhile, 13 percent of Americans and 8 percent of people worldwide said they would get rid of cable altogether. This reflects the dissatisfaction with cable television seen for several years.

At the same time, 58 percent of people currently pay for multiple streaming services. Netflix is the most popular, but Amazon Prime also does fairly well.

"Businesses should strive to keep their services below $30 per month."

Pricing OTT content

If consumers view exclusivity as a barrier rather than a value added to a service, OTT content providers must make sure their prices are agreeable enough to attract customers. Citing research from MoffetNathanson, FierceCable noted such businesses should strive to keep their services below $30 per month. According to a survey of 513 OTT consumers, 61 percent found this to be an agreeable cost for a video package without regional sports networks.

"Whether such a service is economically feasible at $40 is debatable," said MoffetNathanson analyst Craig Moffet, according to FierceCable. "Beyond $50, the demand falls sharply."

Twenty-three percent, meanwhile, felt subscriptions should cost even less - between $10 and $20.

Finding success by using a subscription business model requires the right balance of value and price. The services a business provides must give customers some sort of benefit over their competitors, whether that's an exclusive TV show, faster service or other offerings. However, as TiVo's survey showed, value isn't enough on its own. Even when customers found a show they liked, cost and accessibility were bigger factors in determining whether or not they continued to watch. The right subscription billing price point depends on both customer expectations, competitions and the cost of providing the service. Businesses have to determine if what they provide is enough to convince consumers to pay higher fees of if they'll sacrifice content for lower subscription rates.

About Author

Kevin Cancilla

Kevin Cancilla

Kevin was a Head of Global Marketing at Vindicia. Kevin is an industry veteran with extensive experience in strategic marketing for enterprise software companies and SaaS-based businesses. His 15-plus-year track record includes developing integrated multi-channel marketing programs and partnerships that yield financial results, expand the customer base, increase market share, and build brand affinity. Prior to joining Vindicia, Kevin held senior marketing positions at STEALTHbits Technologies, Tripwire, Epicor, Baan, and Adobe Systems. He holds a BSBM degree in marketing and business management from the University of Phoenix.