April 7, 2016

Starz Walks The OTT Route

Starz announced this week that it was releasing its own standalone OTT app. For $8.99/month fans can watch original series like Outlander and Black Sails, along with a host of new and classic movies (everything from Ant-Man to Fat Albert to Guardians of the Galaxy). In doing so, they join fellow premium cable networks like Showtime and HBO, who have also launched their own standalone apps.

Is this a smart move that will help Starz build its audience or is the network just setting itself up for increased churn?

We fear that Starz is just making it easier for fans to pick and choose when they pay for the service. The network has a few hit series and many fans will likely subscribe when those series are on and then cut the service when their favorite show is done. While Starz does have a movie library, it’s relatively small, and at $8.99/month, the service is just one dollar less than Netflix, whose library dwarfs Starz. It’s just too easy and too tempting for fans to hit the “pause” button until the next season of Outlander comes back online.

Compare that to the deal the MVPDs offer to premium networks like Starz: the service is bundled together with other premium services like HBO and Showtime as part of a “titanium” or similarly titled package. That package includes high speed internet and landline service, and consumers are locked in for a two year period in order to ensure a lower price. Should the consumer be brave enough to spend the time necessary to wade through the various phone chains necessary to reach the person who can cut Starz out of their package (said person having received training on how to talk them out of such an action) — they will often find that their monthly bill increases, rather than decreases, since the package was constructed in a way that requires the customer to take all features in order to receive a lower price.

The Seeso Way
There is a way to create an OTT app, however, that doesn’t result in churn, and that’s to follow the model of NBC’s Seeso app. Seeso is a $3.99/month service that gives viewers access to NBC’s library of comedy shows. This is not a bad value proposition, especially if you are a fan of Saturday Night Live! Seeso goes one step further by offering up almost two dozen original series that are only available on the app.

These series are created by well known comics such as Amy Poehler and a few have already started to generate some buzz. It’s a brilliant tactic, because it gives someone who is currently a pay-TV subscriber a reason to get the app too, in order to gain access to these new web series. In addition, it creates a farm team of sorts for NBC, who can then “promote” some of these Seeso shows or talents to full-on network shows. That’s a clever strategy and one TDG would urge more networks to adopt as they move into the realm of OTT.

Stick with TDG and stay ahead of the curve.

Alan Wolk is one of the industry’s most influential thought leaders and futurists. He writes frequently on advertising models, OTT and social TV.

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