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YouTube Red Launch: 4 Lessons for Companies Looking to Break Into SVOD (Guest Blog)

The recent introduction of YouTube’s subscription video service exposes pitfalls and opportunities for those lacking Google’s resources (i.e., everyone)

While YouTube Red, Google’s recent move into subscription video on demand (SVOD), represents a big change for the company’s business, the move wasn’t much of a surprise. After the success of services like Netflix, HBO Now and Hulu, it seems like every content company is looking to get a piece of the pie — look no further than Univision and the Smithsonian, which both launched SVOD services last week.

But don’t let the flurry of new services fool you. The truth is, launching an SVOD offering is tougher than most content providers realize. For YouTube Red, many are of the opinion that the service is off to a rocky start. Its overall model has been met with skepticism by the larger online video industry, and it has lost its relationship with ESPN. But while its value is questionable (which I’ll address), YouTube has done a good job of executing on a very difficult task.

Like many other companies going direct-to-consumer, YouTube is entering unfamiliar territory. But if a brand with access to Google’s resources hit a few bumps, imagine what the average content owner will experience when they go direct-to-consumer. For those content providers not endowed with YouTube’s means, there are some important lessons that can be learned from the Red launch.

How do I meet my subscribers’ expectations?

When it comes to ad-supported streaming services, consumers have more tolerance for the occasional misstep — they aren’t paying for the content, so incorrect metadata mislabeling a video or a link that directs them to the wrong video, is no sweat off their backs. But for SVOD, the margin for error is essentially nonexistent.

With this in mind, SVOD services should strive to provide a seamless, enterprise-level experience similar to the 24/7 availability viewers have grown accustomed to on cable and satellite. With consumers paying for direct access, the content is expected to be front and center with no interruptions and/or glitches.

How do I keep my service viable AND valuable?

While consumers enjoy being able to subscribe to and cancel SVOD services with few repercussions, this poses a problem for direct-to-consumer services who are looking to retain their subscribers. Churn is a threat for anyone in OTT – even YouTube. To take a serious bite out of the market and keep consumers tuned in, consider offering special features or perks that will help consumers reconsider before hitting “unsubscribe.”

YouTube has successfully tackled this issue by enabling “download to go” functionality as well as providing access to the world’s largest streaming library, YouTube Music. Not only do these thoughtful additions enable consumers to be connected to YouTube content wherever they go, but access to YouTube Music can even save subscribers money by allowing them to cancel their current competitive music streaming service.

How do I determine what my viewers want?

Getting to know your viewers should be paramount to every OTT and SVOD service provider. But since it’s impossible to meet them in person, the next best thing is incorporating comprehensive analytics into your platform to monitor their consumption habits. More specifically, the analytics should track and offer actionable insight on user experience, user viewing, browsing behaviors, and interactions relating to payments, subscriber accounts and marketing. Evaluating blended, 360-degree big-picture data can enable content providers to predict the desires of their subscribers and develop campaigns and promotions that discourage churn by giving the consumer what they want, or in some cases, what they didn’t even know they wanted.

Thanks to Google’s proprietary analytics services, YouTube is ahead of the game. Its analytics platforms enable the company to track a variety of user metrics and behaviors. But for those new to the SVOD arena, it’s crucial to evaluate and select a set of analytics and data that will provide meaningful and actionable results for your business.

Should I consider an ad-supported option?

Many content owners looking to go direct-to-consumer think they need to focus on subscriptions alone in order to succeed. This is far from the truth. As Hulu, and now YouTube Red, have shown, AVOD and SVOD can complement one another in the same service. The AVOD model functions as a great way to acquire new customers, while the SVOD tier retains them with premium features, creating a scalable path to prosperity in OTT.

Transparency is the key here. No consumer appreciates paying a monthly fee only to be interrupted by ads in the middle of their binge-watching session, or worse, discovering that the next episode isn’t available. If a service is asking its customers to pay a fee, it needs to be prepared to give them all the content they love upfront, no questions asked. With that comes the importance of selecting a technology partner that is capable of seamlessly managing multiple monetization models and all that comes with it: multifarious rights access, separate catalogs, billing, subscriber management, customer support and ad insertion.

Succeeding in OTT isn’t just about “keeping up with the Joneses” and launching a Netflix doppelgänger — it’s creating a service that meets the needs of the consumer, showcases the content, and allows for scalability. YouTube Red is likely to become another household staple, but in order to reach the same heights, prospective SVODs should double down on creating the ideal service that will get it right from the start.

VP, Product Development for Clearleap, David has over 15 years of three-screen product development experience. Most recently, he was Director of Media Solutions for Yahoo! where he led a large portfolio of mobile, online, and interactive TV applications and managed some of the companies' largest mobile and telecom partnerships.