Lessons in Launching a Specialist VOD Service

Most new D2C services are necessarily specialist propositions, so what’s the product, launch and monetisation strategy for these offerings?

“It’s just not rational that all of us in the content business sold our content to a distributor and have allowed that distributor to gain so much [market] share and offer it without our brands” said Discovery CEO David Zaslav in an article on Re/Code last year. He was referring to the rising concern that companies like Netflix have built their success off the back of traditional television companies programming, pulling viewers away from their own channels. Put simply, they have helped to create a Frankenstein’s monster; one that now has over 75 million subscribers.

The response? Some content owners are beginning to pull their video back from aggregators and launch their own specialist OTT propositions. In the last few weeks, for example, we’ve seen Comcast release a subscription-based Yoga channel, a new TV/movie service from Viacom land in India and Blue Skye Entertainment announce the arrival of a 4K nature OTT platform.

It’s not just the established broadcasters either. Thanks to widespread broadband availability and a plethora of viewing devices, there has been an influx to market of hyper-specific independent niche VOD services targeted at very particular demographics. And they’re making some serious noise. MUBI, for example, was recently valued at $125 million.

So what’s the strategy – with regards to product, monetisation and marketing – for launching a specialist offering? I spoke to three companies with first-hand experience in this area to find out. Tweet me with comments @consultVodkr

#1. Identify Your Market

The first step in developing a niche VOD service (somewhat obviously) is to identify who you’re aiming it at. The most successful players are the ones who have a particular audience in mind, with a specific set of viewing preferences. Typically, these viewers are being under-served by the bigger players – their interests are maybe too specialised to warrant serious content investment that could be better spent on mass-appeal TV programming.

For Mahesh Ramachandra, Head of Product and Operations at Hopster, there was a clear gap in the market when the kid-friendly service launched in 2014.

“We observed that mass market OTT services did not really address the needs of pre-schoolers and their families in terms of either content selection, curation or UX. We also observed that young kids have an incredible relationship with touch screen devices, and we felt that VOD services aimed at them needed to take this type of interaction into account.”


He also believes that simply knowing who your audience is, isn’t enough – there has to be evidence that they are willing to spend on media and other goods that appeal directly to them. In the case of Hopster, there is a clear value exchange for parents who want to serve their kids relevant and appropriate content ad-free ( a big concern for some) which is then supplemented by curriculum-approved games. Combining these three elements under one easy-to-manage monthly subscription makes for an attractive proposition. Ramachandra put it up like this:

“The foundation of any niche VOD service is that although the audience size may be small, they are willing to pay significant amounts to feed their interest.”

#2. DIY or Working with a Provider?

So you’ve identified your audience, secured the relevant content and come up with a snazzy new name for your new OTT service – all that’s left to do is build the platform and put it to market. But how do you go about doing this? Should you build it in-house or work with a third-party provider(s), such as a Brightcove or Ooyala or Massive Interactive? Efe Cakarel, CEO of MUBI, believes in the former approach. He told me that:

“We believe that you’re going to ultimately provide a better experience for the audience if you’re building from scratch. For us, we’re here for the long haul and not interested in taking shortcuts. So while it might be tempting to outsource it, it’s contrary to our business philosophy – we’re all about attention to detail and believe in doing things properly.”

Ramachandra, however, takes an opposite stance:

“For speed of deployment, quality of video delivery, stability of service, and global scale, it is far better for the niche VOD service provider to use an ‘off the shelf’ OVP. The key parts of this service include asset transcoding, variable bit-rate streaming, CDN agreements and DRM – it can be prohibitively expensive and overly complex for a new niche VOD service to put this all together. There is more flexibility with supporting services such as content management systems, payments and user authentication, but in general, new providers should use off-the-shelf systems until they understand their user requirements and attendant technical implications fully.”

What they both agree on however is the need to keep an MVP (Minimum Viable Product) simple in terms of functionality. Focus should be placed on launching quickly with as small a feature set as possible, but ensuring that those features are really well polished. Once launched, companies can determine the functionality their audience really wants through a mixture of research, experimentation and analytics.

Cakarel sums it up well when he says:

“Simple done perfectly is always better than rushing something out the door or presuming the features and complication that the audience might want.”

#3. Personalisation is All About That Human Touch

Personalisation has been a hot topic in the industry for years, but only in the last 12 months has the technology been available to make it a reality. Think of Rovi (now TiVo), for example, who are driving innovation in more personalised entertainment discovery experiences for consumers or ThinkAnalytics, who recently partnered with Belgian operator Voo to offer tailored TV recommendations.

In the case of specialist VOD however, again the consensus is to start simple. Whilst aspirations of building a recommendation system that can rival Netflix’s are admirable, an initial MVP should be limited to human curation. Here’s Ramachandra:

“Personalisation is crucial for any service, especially for niche audiences, and this should be the first thing on your list. If it’s necessary, simple personalisation is possible and can be effective – for example, highlighting what your viewer has not watched, or doing basic category matching.”


MUBI is a great example of human curation utilised at its best. The streaming service has a team of in-house film experts who introduce a new title to its growing audience every day. This personal touch, one could argue, is key to its success – users know they are being suggested content by other like-minded film aficionados rather than a machine, which adds an element of trust.

VOD Pro: Is a niche VOD service better served employing algorithmic content recommendation, human curation or a combination of the two?

Cakarel: Of course I am going to say human curation! But I don’t think that’s a concept that is exclusive to niche content. In truth we are social beings and no matter how sophisticated an algorithm might be it will never have that emotion, passion or fire that a person, friend or curator will have.

#4. Deciding on a Commercial Model

The ultimate goal for any OTT service is to make money, whether you’re a Netflix or a Spuul (which serves Bollywood content). Picking a business model that suits your content / audience is, therefore, vital.

The most obvious choice is a monthly subscription fee. Tried and tested, SVOD has been widely adopted by providers from all over the world and global OTT subscriber numbers are expected to grow by 260% in 2019 to more than 332.2 million. From a consumer’s perspective the model is easy to understand, simple to manage and usually comes in at under the price of two pints of beer. Cakarel is a firm believer in subscriptions:

“I think membership is a key part of what we do – human-ness and community lend themselves to subscription very well.”

Both he and Ramachandra also recognise the value of transactional purchases – where customers can buy or rent titles individually – for content that is unique or exclusive. Filmdoo, a TVOD service that specialises in international content, agrees. Here’s Co-Founder Weerada Sucharitkul:

“The key is understanding what the users or target users of the VOD service value.  All models have their advantages and disadvantages.  A TVOD model gives users more flexibility without monthly tie in.  On the other hand, SVOD may appear to be a better value to the customer, but when one looks at movies, the catalogue may not be as attractive to end users who want to see newer and more diverse films.”

Whilst Ramachandra thinks that there is value in using advertisements as “a secondary revenue stream for free content, for viewers who do not take on a subscription” I’m sceptical that a specialised offering can generate the number of eyeballs needed to make significant profits from ads alone. Also consider the growing discontent from consumers towards commercials and the subsequent rise of ad-blockers. There was a great quote in a Guardian piece on ads last week which said “if your business model is totally reliant on something your readers and viewers abhor, then it might be time to think about the sagacity of dismantling it.”

Experimenting with non-traditional commercial models is also an option. DramaFever, an Asian-language OTT service, allows users to earn points for watching advertisements which can then be used to watch programming without advertising. Closer to home, NOW TV leverages the popularity of its sport content by offering day passes. Trialling different methods for how users can pay for a service acts as a tool for differentiation and can stimulate uptake especially in an environment where willingness to pay for content is low.

#5. Nurturing Your Audience and Marketing

For a niche VOD service to succeed, it has to know its audience intimately and come up with inventive ways to promote engagement and reduce churn. One could argue that smaller platforms hold an advantage over the bigger players – they are in a position to foster a much more personal relationship with their viewers and to respond quickly to shifting viewing trends as they occur.

Of course there are some distinct difficulties as well. The potential size of an audience is much harder to define, meaning that it is vital, as Ramachandra puts it, “to dig deep into the needs and desires of your customers to improve revenue streams and discover news ones”. So what are some of the ways that you can do this?

  • Be an expert in your product – Cakarel attributes MUBI’s success to the “passion” with which his team approaches cinema, giving the content the “care and attention [it] deserves” through their marketing activities;
  • Working with partners – with fewer resources than larger companies, niche VOD services can look to partnerships that can help them gain larger international exposure and audience reach. Filmdoo has first-hand experience with this: when the service launched in May 2015 at Cannes Film Festival it ran a major film poster art competition which was supported by companies such as Adobe, NVIDIA and Picturehouse;
  • Social media – initiating and facilitating conversations about your specialist subject on social media is vital in keeping an audience aware of and engrossed with your service;
  • Advertising –Mass marketing is rarely going to be effective in terms of ROI” says Ramachandra. “Directly targeting your audience with laser-focused advertising is key. If your audience is geographically or language focused, also don’t forget the power of local grassroots activities and marketing”;
  • Offering a free trial – an easy way to incentivise users to try out your service is to offer a small free content selection which is backed up with full free trial;
  • Additional content – “To incentivise audiences to try out the platform, we do have short films available to watch for free on our platform” says Sucharitkul. “Through the short film page, users will be recommended other feature films which have a related theme.  This is a gradual incentivisation approach to get the users to try out the platform step by step until they become a paying user.”

#6. Going Global

When you think about specialist VOD services, the word “small” inevitably comes to mind. With limited resources (compared to the likes of Netflix and Amazon Prime Instant Video) can a niche provider hope to grow its service beyond its domestic borders? Absolutely, according to our three contributors. Cakarel started off by saying this:

“It’s about shedding this common notion of niche. Niche is not exclusionary or small – it’s a perspective, a sentiment. In fact, ‘niche’ is from the Latin ‘nidus’ meaning ‘nest’.”

He went on to say that the advantage of being a niche provider is that you are able to connect people from all over the world who share a common interest that transcends international borders. When MUBI globally released Paul Anderson’s documentary JUNUN in October 2015, the company had members watching “from Tokyo to Angola simultaneously“.


This is a powerful thing. Both MUBI and Filmdoo share a strong sense of community, a gathering of individuals who are passionate about the content that is on offer. Sucharitkul also says that running a smaller operation offers a greater deal of flexibility, providing an opportunity to quickly adapt to changing global trends and respond to customer needs.

There are, of course, challenges. The fragmentation of programming rights, for one. Limited resources to use on marketing and content acquisitions, another. Ramachandra offers the following advice:

“Since the success of a niche VOD service depends on understanding its core audience very well, this implies the necessity for deep localisation as the service goes global. Needless to say, this is difficult for a new company, and it’s better to focus in on a couple of key markets before expanding too quickly.”

#7. Final Thoughts

Success for niche VOD propositions will ultimately be defined by the richness of the content library on offer, how effectively the functionality of the player enriches the overall experience, the success of marketing activities and encouraging audience engagement. Clearly there is an opportunity to capitalise on passionate segments of the market which are currently being underserved by the mass-market aggregators – it’s just about identifying where best to place your investment.

Tweet me your thoughts @consultVodkr.


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