Recent stories about forthcoming streaming services from heavyweights like Disney and Discovery Communications reflect how dramatically the video landscape has shifted in this post-Netflix world. Direct-to-Consumer (D2C) services are all the rage.
Following D2C fashion, content companies have begun betting against the bundle and are hard at work building walled gardens of programming available through IP-delivered apps.
Bundle breaking, not cord-cutting
Customers still want and subscribe to video content. With more D2C choices from vMVPD bundlers like Sling and DIRECTV NOW, plus a growing list of à la carte SVOD services, "cord cutters" have simply found a way to break existing bundles from traditional cable, satellite, and telco providers and build their own substitute video packages from newly-available subscription options.
Easy come, easy go
App-based services benefit from no-hassle installation on consumer-owned devices. With so little risk, the lure of a free trial is regularly dangled in front of customers. The genie is out of the proverbial bottle: customers newly-empowered by choices who are comfortable managing devices and apps. These customers pose retention challenges. Just ask DISH: growth of its Sling TV service has slowed dramatically as customers point their streaming devices elsewhere.
D2C win-back will redefine segmented marketing
Email win-back efforts from D2C providers appeal to former customers with two familiar messages:
- Free trial periods or aggressive promotional pricing
- Artwork featuring new or compelling show titles
Promos targeting former customers fall under Marketing 101 with wide-net value propositions. ("Free" is generally considered a great value.)
If delivering a free trial or promo to a former customer sounds like old hat, what comes next is segmentation gone wild. Look for targeted email messaging featuring artwork from programs that remind customers what they are missing by not subscribing to a service-- matching the featured program in the marketing message to actual viewing history.
Netflix might not have Marvel titles for much longer, but while it does, the company knows its former customers who are superhero fans and can lead win-back emails with "Thor Ragnarok." Likewise, Hulu knows who binge-watched the first two seasons of "Rick and Morty" last year and can re-market to those former customers with targeted finesse.
Constrained by paychecks that aren't growing, D2C video services allow consumers to stretch their entertainment dollars by choosing a few options from an increasingly-appealing menu. Expect higher churn rates than seen from traditional video bundles as customers jump in and out of services.
These D2C services may be hoping you never can say goodbye, but they aren't counting on it. Don't worry, they'll want you back.
At Telogical, we’re always studying the competitive landscape. If you have a topic you’d like to discuss with us, please reach out. We look forward to working with you.