5 steps for streaming services to increase user acquisition

5 steps for streaming services to increase user acquisition

As evident from our monthly industry overviews, the streaming industry is booming and especially so in Asia. Revenue for record labels from streaming grew an estimated 31% last year. This growth can at least in part be attributed to the growing mobile audience in Asia, due to the fact that the region has skipped several technological steps (i.e. desktop devices) and content consumption is driven primarily thanks to mobile devices.

But there are also challenges ahead to the growth of the streaming industry due to demographic differences in the region as compared to Western markets. Technology adoption (both smartphones and streaming services) follows the classic Roger’s bell curve:

In Western markets almost everyone has a smartphone and expendable income which means “innovators” are the ones who are simply more interested in new technologies. But in Asia the adoption of new technologies is heavily dependent on income.

Most people do not have money to buy a smartphone so they cannot simply be an “innovator”, even if they wanted to. As smartphone prices go down, people with less income start buying smartphones and consuming digital services as well. With lower income hindering growth, how can streaming services continue to grow?

#1: Using localized pricing and payment methods

The key reason in Asia for why people cancel their music or video streaming service is high pricing. If local pricing is not applied to services, price sensitivity of users with lower income leads to either not trying out the service in the first place or cancelling it after the first invoice arrives. User spending is very different across the world. For example, we can take a look at two merchants using Fortumo:

  • Social network: average payment size in Germany is €3.99; in India €2.1
  • Game developer: average payment size in Germany €11.4; in Poland €2.3

Furthermore, access to payment methods is different across the world. In Europe and North America most people have a credit card. This is in contrast with India, the world’s fastest growing smartphone market. Here, only 4% people and 20% of smartphone owners have access to a credit card.

#2: Offering free trials

Giving away the first period of access to a streaming service greatly helps with user acquisition significantly. This is especially the case in more price-sensitive emerging markets where users are less reluctant to give away their money. Free trials simply work: an estimated 93% of Netflix trial users convert to paying users. Whether it's with credit card payments or carrier billing, trials help grow the paying user base in the long run.

#3: Adapting the proposal

In several markets, the classical monthly subscription might not be the most suitable option for the local users and therefore also for the streaming service providers. Considering that royalties need to be evaluated, adjusting the proposal for example to also offer weekly subscription packages or a la carte content can strongly grow revenue, reduce churn and increase user acquisition.

#4: Localizing and personalizing content

People are more willing to pay for digital content that is familiar to them. Understanding what is being streamed is an obvious presumption for asking users to pay for the service. In a majority of emerging markets, people simply won't understand the content without localization: only 0.8% of Chinese, 5% of Brazilians and Russians and 10% of Indians speak English. Localizing content and personalizing it to match user preferences gives people more incentive to pay for a streaming services.

#5: Partnerships and promotions with mobile operators

In emerging markets, carriers are very often the biggest consumer companies with the best marketing channels to access mobile users. As streaming services in mobile-first markets are primarily delivered through smartphones, it makes perfect sense for streaming companies to seek out partnerships with mobile operators, whether it’s free access to the service or free data for the users. For the mobile operator, such partnerships are beneficial as well as they increase the value for subscribers from staying on that network, thus reducing churn.