The Problem
OTT platforms face a paradox: subscriber acquisition costs keep rising while willingness-to-pay remains constrained. Most platforms default to competing on content spend—an arms race that erodes margins. The winners are those who master the science of monetization: pricing architecture, bundle design, and the behavioral levers that drive retention and expansion revenue.
Core Principles
Value-based pricing
Price based on perceived value to customer segments, not cost-plus or competitor-matching.
Tier architecture
Design tiers that create clear upgrade paths and capture different willingness-to-pay levels.
Bundling as strategy
Use bundles to increase perceived value, reduce churn, and create partnership opportunities.
Churn is a symptom
Focus on the upstream causes—onboarding, engagement, value realization—not just win-back.
Lifetime value thinking
Optimize for LTV, not just conversion rate. A lower-converting, higher-value segment may be more profitable.
Implementation Checklist
- Segment customers by value perception and willingness-to-pay
- Analyze price elasticity through controlled experiments
- Map the customer journey to identify churn risk moments
- Design tier features that create genuine upgrade motivation
- Build early warning systems for churn (engagement drops, support tickets)
- Create save offers with clear rules and measurement
- Test bundle configurations with partners
- Implement annual pricing with appropriate incentives
- Track cohort-level LTV, not just aggregate metrics
Common Pitfalls
Racing to the bottom
Competing primarily on price instead of differentiated value.
Feature stuffing
Adding features to higher tiers that customers don't actually value.
Ignoring involuntary churn
Payment failures can account for 20-40% of total churn—fix billing before engagement.
One-size-fits-all retention
Using the same save offers for all churning customers regardless of segment or reason.
Discounting addiction
Training customers to wait for promotions instead of paying full price.