With an ever evolving digital landscape, we here at Cleeng often get asked what the best pricing strategy is. Of course there is no simple answer here, but ensuring that you have the right approach to pricing can mean the difference between success and failure. Read on to learn more about the top 3 most popular models for pricing sports streaming services:
Subscription Video On Demand (SVOD)
The majority of streaming services have moved away from a-la-carte pricing, like in the iTunes-days, to a subscription model (or SVOD; Subscription Video On Demand) as popularized by Netflix in the early noughties.
When looking at the sports industry, this pricing strategy is ideal for a number of reasons;
- Lowers the barrier to entry - as opposed to charging your customers a high amount upfront, the recurring monthly charge will make it easier to convert interested consumers.
- Higher prices possible - when charging in monthly installments, a larger customer base will be able to afford your services (e.g. 10 dollars a month vs 120 dollars in one go).
- Ability to upgrade - using functionalities like Cleeng’s Subscription Upgrade feature, you can allow consumers to upgrade at any time to a higher tiered subscription (for example from monthly to annual), that way your current customer-base can benefit from savings while you can secure your cash flows.
The recurring business model does have some risks associated with it to take into account as well, such as churn risk in off-season. If your platform has long breaks in programming this can lead to a higher churn rate, as customers do not want to pay for periods where they engage less with your platform. It can become difficult in these periods to demonstrate the value of your proposition. For solutions to this problem, look at the “recurring season passes” use case below.
Transactional Passes / Pay-per-view
Pay-TV is of course nothing new. Since the eighties, consumers all around the world have paid for content, but the rise of all-you-can-eat has sometimes led people to believe that pay-per-view is no longer relevant.
To the contrary, at Cleeng we serve millions of customers enjoying premium pay-per-view. This pricing strategy has some clear advantages:
- Highest transactional value possible - when compared to recurring subscriptions you can set much higher prices for events which are non-recurring, and allow you to maximize the revenue you can generate from high-profile events.
- Less friction on checkout - often only one option available which can be presented on your main landing page with a “purchase now” button. Furthermore, when a customer has previously stored their credit card in their profile using Cleeng’s Mediastore API’s on your platform, the confirmation is a single click away.
- (New) Premium pay-per-view add-on - pay-per-view can be combined with subscription prices. For example, if you have an OTT Sports service catering to multiple sports and want to combine it with a high-profile boxing match, you could offer this match at a discount for current subscribers. This has a couple of great side-effects. By demonstrating the additional value of your subscription service you can mitigate churn and even increase subscriber count while also generating income on high-profile events.
Of course, pay-per-view or transactional passes also have some downsides. For example, no recurring revenue. For every event that you want to price this way you will have to make new acquisition costs. Additionally, a lack of events can quickly hurt your bottom line - as the COVID-pandemic taught us this business model is particularly at risk of disruptions in programming.
(Recurring) Season Passes
Season passes are incredibly effective for single-license OTT sports services. By asking a one-time fee for the entire season, you are demonstrating the value of your service and are not affected by breaks in your programming. Single-license OTT sports services often have the advantage that they cater to a deeply involved user base, thereby foregoing the objections of higher up-front pricing. This is best used in combination with transactional passes, e.g. season pass and single race passes.
Some essential benefits of season passes are:
- Obvious value up front - the value of an all-inclusive, full season pass is easier to demonstrate compared to transactional passes
- Quick cash - Secure the majority of your cashflow upfront
- Ideal for revenue sharing - all your revenue is compartmentalized per season
On the other hand, as the season has started and less programming is available for the remainder of the year, you will need to adapt the pricing in order to keep the season pass relevant. Furthermore, upselling during the season can be relatively difficult as most of the value of purchased up-front
[NEW] In Cleeng we have recently launched a new feature, Recurring Season Passes! This allows you to let these season passes renew annually before your season starts. Using these recurring season passes you can get the best of both worlds; easily demonstrate the value of your platform without the risk of churn during quiet times of your season.
The number one benefit of this is that all customers that opt-in will automatically renew for the full season pass, even if in the previous year they bought the pass later at a discounted price. Furthermore, it allows you to keep your customer engaged with your platform, whilst requiring lower acquisition costs.
One other thing to note is that renewal for recurring season passes will all take place at the same time as opposed to spread out over the year due to the seasonality. This means a limited window for converting customers.
What is the right pricing strategy for you?
In this article we have demonstrated a couple of points to take into consideration when thinking about how to effectively price your product, based on experiences with many different sporting platforms around the world.
Of course there are many more intricacies to take into consideration, such as different markets, competition, platforms, etc. If you want to get more insights, feel free to contact our team and we’ll be happy to discuss further!
Or if you want to test out making your own video offers, create a free account to get started.
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