With the pay-TV industry expected to serve 1.1 billion subscribers generating service revenues of $320.3 billion by 2019, operators need to focus on a wide range of factors beyond content if they hope to remain profitable in a highly completive market. In part 2 of this IBE Market Briefing, we examine how subscriber management software and processes can deliver tangible results to increase ARPU and reduce churn, including the role of analytics.
Subscriber management techniques for increasing ARPU
Like any subscription-based business, the ability to sign up, understand, target, and retain subscribers is a combination of the product and an ability to engage with potential customers. With tough and growing competition within the pay-TV sector, sales and marketing has a major role to play in maintaining customer engagement, upselling additional services and mitigating churn.
Subscriber management software has the ability to become a powerful tool in support of sales and marketing activities due to its ability to gather and present data around subscriber spending, product selection and consumption habits, especially within video on demand environments. The subscriber management software can also be used to enact a wide range of sales and marketing tactics such as free trials, discount codes and promotional schemes such as two-for-one offers or discounted upsells.
Through analysis of data generated by the subscriber management software, sales and marketing teams can start to work out new bundling strategies based on patterns unearthed by how users subscribe and pay for different items. The subscriber management software can also act as an anchor point for the creation of highly targeted offers. For example, subscribers that have opted for ‘parental control’ being turned on for their accounts could be potential customers for a mailshot on discounted access to a ‘family movie’ package. Alternatively, subscribers paying for a sports bundle may be great targets for a targeted email offering access to a major PPV sporting final.
As the central repository for subscriber billing and account management, the subscriber management software can help sales and marketing teams react to subscribers who have downgraded subscription packages or asked to terminate services. For example, subscribers who have stopped taking a particular movie package might instead be unaware that the pay-TV provider also has a pay-per-view VOD service – could a timely phone call or email help the customer find a better way to keep using aspects of the wider service?
Finally, the subscriber management software can also prove incredibly useful in helping sales and marketing teams to gauge the effectiveness of media campaigns and promos. By correlating subscriptions to different packages, promo-codes and ad-campaigns, marketers are able to understand the effectiveness of different approaches as they relate to attracting or retaining subscribers.
The role of the subscriber management software in supporting sales and marketing is varied and it is valuable for managers to be involved in the selection and deployment processes. Every subscriber management software or service should be able to confidently answer:
- Can the software deliver subscriber information to my sales and marketing team in a format they require – for example as a Microsoft Excel spreadsheet or on the move via the web?
- Are there any dashboard tools to help understand how, when and for which products or channel packages subscribers are signing up for?
- Can the subscriber management software process promo codes along with a degree of flexibility such as duration and expiry dates?
- Can we easily export data from the subscriber management software into other sales and marketing tools such as Gigya, Janrain, Salesforce or Oracle PeopleSoft to allow deeper analysis?
Subscriber retention strategies
Although KPIs such as acquisition and ARPU are important, as markets become more competitive, reducing churn is vital to deliver a profitable and sustainable pay-TV business. The reason for subscriber churn is varied, but a recent survey from PwC suggests that roughly one in three subscribers are at risk of switching pay-TV service provider. In response, successful operators are using subscriber management technologies to mitigate the causes and improve longer term profitability.
Factors for churn 31% Reduce cost - subscriber believes they can get the same services for a lower price 22% Better bundles - subscriber feels another multi-play offering (TV, phone, broadband) is more beneficial 18%Better service - subscriber believes another provider offers a better service 16%Poor customer services including a single bad event (2%), ongoing issues (6%), poor service quality (8%) 13%Other factors including changes to home circumstances and viewing habits With 34% of subscriber citing ‘service’ as a reason for leaving, it is a major area where adoption of better processes and subscriber management techniques can help. Over the last few years, many organisations have increasingly opted to outsource customer service functions – and the pay-TV industry is no exception. The rationale is compelling. Firstly, even with the rise of web-based self-service tools, many customers still prefer to deal with telephone-based agents to handle queries around billing, bundles, service activation, and technical support. For a pay-TV operator to open up a call centre, train, retain and scale customer service agents against fluctuating demand is both a significant capital expenditure (CAPEX) and major operating expenditure (OPEX). In addition, customer service functions need to be delivered with the highest degree of professionalism and sensitivity, especially when dealing with non-payment issues.
One of the major trends in the subscriber management industry is the rise of managed service providers that offer pay-TV operators an end-to-end approach – starting from subscriber registration, through to payment validation and processing, and ongoing technical and service support. This can range from simple tasks such as resetting passwords to dealing with major service outages and even complaints - the customer service desk is one of the most important factors in customer retention and building a trusted brand.
It should be considered a standard function that a subscriber management solution can tie into both the web-based self-service tool and telephone based agents to allow potential subscribers to sign up, pick packages and make payments via the channel they feel most comfortable with. But past that point, the subscriber management software should act as a conduit to allow customer service functions to tie into the technical operations and sales and marketing sides of the business.
For example, a subscriber complaining of an inability to connect to a pay-TV/OTT service may well be experiencing an issue with an out of date piece of software on their laptop. The fault maybe nothing to do with the pay-TV service but a good customer service function should be able to both eliminate and fix simple root causes and then, if needed, escalate an issue to a 2nd level, potentially to the pay-TV operator’s internal technical department. In another scenario, a customer who has changed banks causing a scheduled bank transfer payment to fail could be pre-emptively contacted by customer service in a friendly and polite manner of assistance instead of being immediately cut off from service access.
The subscriber management software acts in part as a CRM and OSS but should also have the ability to channel data into existing systems within a pay-TV operator’s infrastructure. Although meeting and dealing with subscriber queries is of paramount importance, customer services can also provide important feedback on how the pay-TV service provider is meeting quality of experience (QoE) and wider expectations of the subscriber. ‘Subscriber management as a service’ providers can run soft questionnaires and gain feedback from customers who have made inbound requests. These types of high touch engagements can help pay-TV operators truly understand how customers feel about services, value and the wider brand.
However, outside of all these benefits the two factors that make moving customer service functions to a service model so attractive are cost reduction and improved flexibility. Pay-TV operators using this approach can define resourcing and corresponding costs based on a number of metrics. This can include a fixed number of agents, a per-subscriber model, or combinations of both. The level of service can also scale up for times of peak demand, for example at the start of a sporting season, during a marketing campaign or just prior to a big PPV event, and then, just as easily scale down to conserve resources. Services can also offer different levels of granular coverage, for example, meeting the needs of varied times zones and languages. Grow a successful pay-TV business model through analytics
Starting and growing a pay-TV operation is a considerable challenge that combines expertise across technical, financial and processes management skills. For senior executives charged with delivering sustainable and profitable businesses, the model of procuring, delivering and monetising content depends on understating the underlying business metrics.
Some of these metrics are dependent on the wider market. For example, how much competing services are charging for subscriptions, pre-existing rights deals and what content customers are demanding. Pay-TV operators also have certain CAPEX and OPEX constraints that are hard to reduce such as playout, STBs and CDNs costs.
However, pay-TV providers are in a fantastic position to adapt and modify content acquisition and service offerings, providing they are able to understand how the subscriber base is accessing and paying for the service. For example, if the first series of a particular TV show generated few VoD sessions, maybe the next round of contract negations for buying the second series should start with some hard bargaining. Or if a certain set of thematic shows, say stand-up comedy, is proving popular with a particular demographic of subscriber, maybe more could be purchased and potentially a new bundle created at a premium price point?
As the subscriber management software intrinsically maintains a database of what each subscriber is entitled to watch, billing information and potentially some demographic data, it is a natural starting point for creating, analysing and tracking key business metrics. The subscriber management software also acts as a conduit for more granular understanding of the business, particularly in relation to real time activity.
For example, how many subscribers are currently signed up to watch a PPV sporting event tomorrow? If the number is low, should the operator run some more promos spots? Maybe a social media blast to subscribers defined within the subscriber management software that have taken a sports bundle? Or maybe subscribers who have previously watched a VoD on a related sporting event should be targeted? Potentially, an email and discount promo to males within the 18 to 25 category who typically are the most ardent fans of that particular sport would deliver results? The options are wide-ranging but are also dependent on visibility of the underlying subscriber and business metrics.
The starting point for these types of strategic decisions is the real time data generated by the subscriber management software but the end point for resulting actions may well reside in the marketing department or even a third party provider offering social media engagement services. Either way, the subscriber management software can act as a trusted data source to ensure that each part of the business, from executive levels down to operational teams, are able to deliver against a known and consistent set of benchmarks.
The subscriber management software can also provide validation of the effectiveness of a particular approach as well as longer term trending to help plan wider business strategy. For example, if the PPV sporting event last year attracted 50,000 subscribers, how much should the pay-TV provider offer to pay for this year’s rights? Did any promotional activities generate a notable uplift in subs? Did these subscribers also watch other PPV events and if so, could a yearly ‘all access pass’ deal prove a more attractive options for viewers and a profitable upsell for the pay-TV operator?
A whole host of difficult questions can potentially be answered with data supplied from the subscriber management software and two of the most pressing are average revenue per user (ARPU) and churn. With pay-TV customers loathe to sign into lengthy service agreements and also presented with a huge amount of choice, pay-TV operators need to continually upsell and bind customers to the service while quickly negating negative customer experience issues.
The subscriber software can highlight to management underlying problems that may be causing customers to leave the service or areas where the operator is missing out on potential upsell opportunities. For example, if the customer service team is receiving a high volume of calls from upset customers who can’t seem to access a particular feature within the user interface, maybe the pay-TV operator should consider having a UX expert to come in and modify the interface or maybe update its online or UI help files.
Also, if certain content areas are under-watched on a service compared to industry averages, this may mean the metadata attached to the content should be refreshed to make it more relevant and visible to personalisation systems. Potential upsells can also be found with payment options managed by the subscriber management software. For example, an international OTT service that sees a large number of customers paying in Japanese Yen or Thai Baht might consider offering upsell packages of popular Japanese or Thai movies and potentially testing the water with promo emails to these identified customers. The list of possible questions, answers and validation elements are almost limitless and the subscriber management software can expose much of this data directly in a wide variety of reports or even act as a data source for Business Process Engineering or other analysis tools.
Irrespective of whether subscriber management is delivered as software or as part of a service provider offering, senior executives should be able to confidently answer a number of questions:
- Can the subscriber management solution provide a real time view of subscriber information such as the split between different bundles, VoD sessions and PPV subscriptions?
- Can information flow down to different departments, for example for operations and marketing that is visible and relevant based on job role?
- Is critical and potentially sensitive data securely held, and made available using industry best practice such as SSL or HTTPS connections?
- Can valuable business insights uncovered by the subscriber management solution feed into other systems such as analytics, BPM and ERP systems to allow more correlation and trending?
- Does the subscriber management software offer Application Programming Interfaces to allow additional customisation of management processes to ensure it remains relevant to innovative new business models?
- Can the subscriber management software delivery management reporting in the format required to meet local regulatory requirements with the ability to adapt to evolving best practice?
Subscription management in the real world
Realising the benefits of subscriber management is best understood in context. Take, for example, Racing UK - as Britain’s premier horseracing channel, broadcasting live racing from 33 of the best courses in the UK, where 90% of coverage is exclusive to the channel. Racing UK launched in 2004 as a subscription channel available to Sky Digital Satellite (DSAT) homes. Today the service is available through Sky, Virgin Media, Freeview and IPTV, as well as via online, mobile and business premises. With more than 43,000 residential subscribers, Racing UK is also shown in 3500 clubs and pubs in the UK, and is continuing to grow each year.
Racing UK wanted to implement a TV Everywhere strategy that would take advantage of the monetisation opportunities presented by multiple devices. The broadcaster wanted to make the channel available to subscribers across any and all commercially viable platforms without creating significant overheads in the management of subscribers in databases.
Racing UK selected Paywizard to develop Racing UK Anywhere. It chose the Paywizard AgileXtra platform to provide end-to-end subscriber management and consolidated billing across DSAT, web, iOS, Android and hybrid Freeview HD set top box, enabling the service to be available to over two million additional households. Not only does AgileXtra allow viewers to subscribe to Racing UK on an annual or monthly subscription but also across a selection of devices using a tiered payment model depending on how many devices consumers want accessibility across.
Paywizard AgileXtra ties into the TV Everywhere experience by allowing customers to update preferences at any time and view customisable race cards, an extensive database of information, news, features, columnists and betting options. This level of customisation is simplified for the user by a single-sign-on capability and all costs are dynamically calculated so that consumers can see what they get and what it costs. AgileXtra also provides Racing UK with a single view of the customer in real time and allows the channel to manage the types of platform the viewer will be entitled to consume content, and provides Racing UK with sophisticated marketing functions which can reduce churn and win back customers.
"By upgrading its subscriber management system with Paywizard, Racing UK can manage the specific platforms on which viewers will be entitled to consume content, future-proofing the company as new devices come to market,” said Clive Cottrell, director of marketing, Racing UK. “In response to consumer demand and trends for access to content across a number of different platforms, we have launched on multiple platforms and screens. But we found that having different systems for multiple devices and multiple relationships meant that gathering payments became problematic, and we therefore required a ‘one account’ approach. Upgrading with Paywizard was seamless and provides exactly what we need to enable a smooth and consistent consumer experience across all screens."
For a pay-TV operator to create a successful business, different parts of the organisation must meet the requirements of the overall operating model. Irrespective of whether the product is a subscription-based streaming service or transactional VoD offering, everything from service creation to subscriber registration, payment processing, content delivery and support needs to be capable, and cost effective.
For brand new pay-TV services, building an engaging content product with a viable business model in today’s highly competitive landscape is challenging. However, newly launched and existing services also need to continually evolve if they want to succeed in customer retention and growth. According to research by Oliver & Ohlbaum, a media strategy agency, 10.3% of surveyed pay-TV subscribers in the UK expected to change their pay-TV service during 2013. This 10% ratio is often reported in other developed nations and is an indicator of the importance of ensuring that subscribers are properly managed across the entire lifecycle of the relationship, from sign up and all the way through to pressing play.
But when it comes to growing and retaining customers, a pay-TV service is only as good as its weakest link. If listed content is occasionally unavailable, potential subscribers cannot pay via a preferred method, or customer services fails to effectively deal with queries, then subscribers will find an alternative pay-TV service that is able to meet their expectations.
If there is one final point to be made, it is that above all else, pay-TV operators need to remain flexible. If the last two decades of massive change has taught our industry anything, it is that business models, customer expectations and the technologies that underpin service delivery are evolving rapidly. Subscription management processes that fail to change in line with the industry are ultimately a burden not a benefit.
Subscriber management software and service vendors (descriptions in their own words / alphabetical order)
Enterprise Data Technologies
Enterprise Data Technologies offers the business solutions to meet the demand for convergent subscriber management and billing. Solutions that can be deployed quickly and at a sensible cost, tailored to fit the specific market needs and technology environment. Enterprise Data Technologies’ range of solutions leverages on our products’ unique flexibility, technology leadership, and business focus.
Great Lakes Data Systems (GLDS)
Great Lakes Data Systems (GLDS) provides the cable industry’s leading Windows-based billing, subscriber management, and provisioning solutions. GLDS has installed software for over 300 operators in 49 US states and 40 countries worldwide, offering “tier one” features at significantly lower prices.
JACON is a European software development company specialised in delivering solutions and services focused on DVB-related operations. Its core product, Customer & Subscriber Management Suite, is designed to serve a wide range of customer needs, providing solutions ranging from simple subscription management to a full-fledged billing solution for both pre-paid and post-paid products. Additionally, JACON delivers value added consultancy services in DVB, data processing, and content sales strategies.
MagnaQuest is a leading Customer Management & Billing (CM&B) solutions provider, delivering world-class solutions to organizations providing Video, Data, and VoIP services. MagnaQuest’s flagship product, MQSubscribe is a cost-effective, modular, flexible and scalable solution enabling service providers to effectively provision, rate and accurately bill for all their basic and advanced services including Direct to Home (DTH), Interactive services, Cable TV, Pay Per View, Video on Demand, and High-speed Broadband services. MQSubscribe has been deployed in more than 20 countries globally. Headquartered in Hyderabad, India, MagnaQuest has offices in Malaysia and USA.
MPP Global Solutions
MPP Global Solutions are the leading provider of Payment Services and eCommerce Solutions to the Media and Entertainment Industries. With over 11 years' experience providing universal and secure eCommerce Payment Solutions MPP offers a breadth of payment functionality which has helped to attract such high profile clients as BSkyB, News International and Universal Music Group. Together with being fully compliant with PCI-DSS and regulated to process, store or transmit payment details meaning MPP Global Solutions are a name to trust.
Pay-TV operators around the world are growing their traditional and multiscreen TV businesses by partnering with Paywizard. Our easy to deploy SaaS platform combines with our expert services to increase subscriber acquisition, retention, up-sell and cross-sell. Paywizard builds your pay-TV revenues so you can achieve profitable growth. With our marketing suite you can quickly launch targeted campaigns to attract new subscribers, increase customer lifetime value and ARPU while decreasing churn. We know the TV market, see the challenges our clients face and understand how to drive revenue opportunities in a multiscreen world. For leading TV service providers such as BT Sport, NBC Universal, Setanta Sports and NHK Cosmomedia Europe, Paywizard is putting the profit into pay-TV.