• by Wayne Friedman , August 24, 2017

Although subscription video-on-demand platforms are poised to grow into a $108.6 billion business in nine years, according to one estimate, many new platforms will continue to make mistakes.

In a recent white paper, video technology company Ooyala spelled out five problem areas.

The first is looking at “unrealistic expectations of paid subscriber growth.” It notes that few OTT services will hit 100,000 in the first year of operation -- let alone one million subscribers. Specifically, it says more important metrics to consider are churn, engagement and subscriber satisfaction, instead of subscriber and revenue growth.

Second mistake: Trying to emulate Netflix and Amazon Prime Video. Looking to build a large library -- a la Netflix or Amazon -- isn’t the way to go, especially with a vague, less-than-specific target audience.

Third problem area: Ignore the consumer at your peril. Consumer service areas are crucial. This includes easy content discovery, a good recommendation engine, smooth consistent navigation, minimal load times and buffering, and simple payment and cancellation consumer tools.

Fourth misstep: Defending an old business model. Better to consider new metrics, including monitoring monthly subscribers, videos per viewer, quality of service, content licensing/production costs or marketing expenses, and individual customer metrics.

Fifth mistake: OTT platform’s reluctance to experiment and pivot.

Ooyala says every aspect of the SVOD service should be considered for possible change, including A/B testing on a regular basis. This includes determining the right price point. For example, the report notes that nearly two-thirds of consumers said cost was one of the top three reasons they would cut a SVOD TV service.