| dc.description.abstract | Purpose: Content costs are rising, making future price hikes inevitable for streaming video-on-demand (“SVoD”) providers to maintain profitability. This thesis examines strategies for them to effectively communicate future price hikes to improve acceptance of the price increase. It also investigates whether adding new content categories (reality shows and live sports matches) and introducing a novel loyalty programme can increase subscribers’ willingness-to-pay (“WTP”). This is crucial as WTP must keep pace with price increase to enhance acceptance of each price adjustment.
Methodology: We used a scenario-based experimental design to identify effective communication strategies that are more likely to increase acceptance level of price hikes and to assess whether introducing new content categories and a novel loyalty programme would increase WTP. We analysed the results using N-way ANOVA test in R programming.
Findings: There are three key findings from the research. Firstly, to minimize cancellations, price hike communicated in absolute terms rather than percentages is favoured, accompanied by a clear explanation for the necessity of the hike. Secondly, while reality shows and live sports matches do not necessarily increase WTP, there is more interest among standard plan subscribers. Original exclusive reality shows outperform licensed reality shows, while licensed live sports matches are preferred over original reality sports matches. Lastly, there is notable interest in loyalty programmes, particularly for standard plan subscribers. Among the proposed benefits, the ability to vote in production decisions is most favoured, followed by early access to original content, with bonus exclusive content ranking least effective in increasing WTP.
Practical implications: Accordingly, there are three main implications: (1) SVoD providers should communicate price increases in absolute terms rather than percentages, accompanied by a clear explanation for the necessity of the hike, eliminating the need for subscribers to speculate about the reasons behind it. (2) Considering the notable disparity between standard and premium subscribers, SVoD providers might contemplate tailoring distinct content mixes to each plan to better align with the preferences of each group. Currently, the difference between plans primarily lies in the number of simultaneous logins and viewing quality, but different content offerings could offer further justification for the price disparity. This strategic shift could potentially incentivize more subscribers to opt for premium plans, as the value proposition of the price difference becomes more apparent than that of the status quo. (3) Subscribers currently exhibit low loyalty to SVoD platforms, often switching or cancelling their subscriptions impulsively. It may be opportune for SVoD services to explore initiatives aimed at fostering subscriber loyalty. Introducing loyalty benefits, as suggested in this thesis, for subscribers who maintain their subscription for an extended period (e.g., one year) could incentivize a shift away from the habit of frequent cancellation and re-subscription. This approach is novel, and any SVoD platform that adopts it first may gain a significant first-mover advantage.
Originality/value: This thesis addresses existing research gaps by focusing on specific content types and introduces the novel concept of a loyalty programme, which is not yet adopted in the SVoD industry, and proposes an effective communication strategy for conveying inevitable future price hikes. Furthermore, this research provides insights for SVoD players, indicating that investing in reality shows and live sports matches may not be worthwhile, allowing them to allocate resources to other content types that better draw consumer interest.
Keywords: Streaming video on demand, content, willingness to pay, price hike, loyalty programmes, communication
Paper type: Master’s Thesis | |
