With the growth of Over the Top (OTT) streaming services, the geographical barriers to media and entertainment content consumption are diminishing.
What does this mean?
People worldwide are consuming content produced from other regions. As it’s streamed online, it’s accessible at their preferred time and convenience as long as it meets their interests. For instance, take the case of the Nordic region. Almost 70% of all hours of fiction and entertainment on the SVOD services streamed there come from non-Nordic origin.
Similarly, Spanish series have become a mainstay for international streamers & broadcasters, especially across Western Europe and the Americas.
Examples like these highlight the potential for broadcasters to monetize content globally as subscribers are truly ready to pay for it.
In sync with these examples, estimates from Digital TV Research further predict that revenue from global subscription video-on-demand (SVOD) is likely to surpass $136 billion by 2027. In the vast addressable market, one of the key elements to growing successfully as a broadcaster lies in understanding the payment culture.
(Graph source: Digital TV Research)
This blog explores the importance of understanding payment cultures across regions and extending desired and trusted local payment methods.
Payment culture: Why does it matter for OTT broadcasters?
Understanding your streaming audience’s payment culture correlates with your success at customer acquisition, retention, and resulting revenue growth. Here’s how:
- Customer Acquisition: Different cultures have different expectations for how they prefer to pay for services. Some cultures prefer to pay with credit cards, while others prefer mobile payments, cash-on-delivery, or bank transfers. Data suggests that most consumers today expect multiple, flexible spending options at checkout, including 66% of millennials and 54% of Gen Xers.
By understanding your end users’ payment culture, you can offer the payment methods that are most popular in their country or region. Doing so can reduce cart abandonment tendencies due to less-desirable payment methods and help you acquire more customers. Statistically, it’s seen that 7% of American consumers tend to abandon their carts due to a lack of desired payment options, even after completing most of the checkout process.
- Retention: If you offer payment methods that are popular in your target audience’s culture, you can make it easier for those customers to continue using your service, leading to higher retention rates. In a recurring revenue model such as OTT subscriptions, it’s not difficult to understand why retention is critical to success. There’s a Bain & Company theory that explains increasing retention by as little as 5% can boost profits by as much as 95%.
Therefore, by offering payment methods that are most popular in your clients' culture, you can influence your subscriber acquisition, retention, and revenues. On the contrary, if you offer limited payment methods that are not common in your clients' culture, you risk losing potential customers who may have subscribed to your streaming service otherwise.
Overcoming this can be as simple as identifying and offering convenient and trusted local payment methods.
What are local payment methods?
Local payment methods for OTT streaming companies refer to payment options that are popular and commonly used by streaming subscribers in a particular country or region. They are the most used payment methods in the region and may also include payment options only available in certain countries or regions.
Advantages of offering trusted local payment methods in OTT streaming
If your streaming subscription can be purchased using local payment methods that your target market trusts, you can realize several benefits. In addition to boosting your revenues and profitability, the advantages include:
- Increasing subscriber convenience to pay
- Enhancing customer trust in your service
- Building a competitive advantage against competitors offering payment inflexibility
- Seamlessly managing the different regional payment complexities, such as currency difference, international taxation, and so on
Examples of popular & trusted local payment methods for VOD (Video on Demand) services
- Bank transfers: Bank transfers are a popular payment method in many countries, particularly in Europe. Customers can transfer funds directly from their bank account to the merchant's account. In some regions, it’s as famous as direct debits—for example, SEPA direct debit or SOFORT in the Eurozone.
- Mobile payments: Mobile payments are also increasingly popular in many countries. Customers can make payments using mobile phones using applications like Bancontact.
- E-wallets: E-wallets, such as Apple Pay, Google Pay, PayPal, Alipay, WeChat are popular payment methods in many countries. Customers can link their bank accounts or credit cards to their e-wallets to make payments from any electronic device.
- Credit and debit cards: Credit and debit cards are a popular payment method in many countries, particularly in North America and Europe. Customers can make payments using their credit or debit card information.
- Prepaid cards: Prepaid cards are a popular payment method in many countries, particularly in Latin America. Customers can purchase prepaid cards with a specific value and use them to make purchases online.
As a streaming services provider, it's helpful if you're mindful of the different popular payment modes and incorporate them into your checkout flow for optimizing conversion and retention.
Want to boost your streaming revenue with local payment flexibility?
Merchant is designed to help you maximize subscriber conversion with a dynamic checkout experience. It takes care of payment processing throughout the entire subscriber lifecycle. From hassle-free recurring payments to dunning actions that reduce churn, it offers the freedom to focus your efforts where you’re most needed.
In our constant endeavor to support our customers, we’re now expanding further to include local payment methods such as Ideal, SOFORT, SEPA direct debit and soon Bancontact. This comes as an addition to the existing methods of credit card payments, Paypal, Apple Pay & Google pay.
Reduce cart abandonment and boost your revenue with payment flexibility