How much money should I expect to make? This is the most critical question for content owners to ask themselves as they launch their subscription video business. You must have the ability to estimate your revenue earning potential in order to make the best decisions for your brand and content.

We created and shared this subscription revenue forecast spreadsheet to help content owners as they plan the launch of their SVOD service, or just to explore how much money it would be possible to make. Many of our customers continue to use this tool as they build their business to forecast revenue beyond the first year running their service.

We realize that this spreadsheet can seem intimidating, especially if you aren’t used to working with financial models. Don’t worry! We’re going to walk through how to use the model, from the assumptions you’ll need to consider, to what it means for your business. You’ll find that it’s very easy to use.

Before we dig into things, it’s important to preface that like any other financial model - this will only be as accurate as the numbers you put in. If you input overly optimistic numbers, you’ll get an inflated and unrealistic result out. Is it possible for you to add 10,000 subscribers in the first month? Anything is possible, but is that really realistic?

Do some research, use what data you have and always keep your assumptions on the conservative side. In order for this tool to be valuable, you must build a realistic case with attainable assumptions.

Intergalactic Sports is a fictional company that we’ll use to work through an example with the model. To make it as realistic as possible, the assumptions that we’ll use are based on industry benchmarks and informed by our experience with our customers.

We’ll start by inputting your basic revenue assumptions into our model, these include:

Starting month - When are you going to launch?

Hours of new content - How many hours of content are you going to be uploading per month?

Subscription Price - How much are you charging for your subscription? Will you offer both monthly and annual subscriptions? Or monthly only?

In this model, Intergalactic Sports is launching next month and they plan to upload around 35 hours of new content to Zype every month. They’ll be offering both a monthly and annual subscription.

Next, you’ll input any fixed and variable costs into the model.

Here, Intergalactic Sports is using the Zype platform to power their SVOD service, they pay $1000/month for the network plan, which ends up being a fixed cost of $12,000/year for their software license. Their other costs we inputted include:

Zype charges a $0.95 transaction fee for each subscriber. The other platform cost is a $3.00 per hour to transcode new content, which is a one-time fee that applies only to NEW content that is uploaded.

These are standard fees charged by payment processor providers like Braintree or Stripe. This includes a fixed fee per transaction and a variable percentage of each transaction.

The last inputs into the model will be related to subscribers and churn, these will be what ultimately drives your revenue and determines how quickly you'll be profitable.

Starting with your subscribers, you’ll input how many new monthly and annual subscribers you anticipate to bring on over the next year. You’ll see we stayed on the conservative-side of subscribers for Intergalactic Sports, slowly ramping up from 25 new monthly subscribers to 200 near the end of the twelve-month period.

Lastly, but most importantly, you’ll input the percentage of subscribers you expect to cancel month to month, over the course of 12 months.

We based Intergalactic Sport’s churn on industry benchmarks - an average of 15-20% churn rate per month. For context, companies like Netflix and Hulu have 8-15% monthly churn rates. Churn plays a critical role in a subscription business, read more about the strategies and metrics that are involved in this model, here.

 What does the Model Mean for Your Business? 

Now everything is inputted, your spreadsheet starts to get interesting. The model uses a cohort-based approach, which is useful for providing insight into how subscriber churn is affecting revenue because it tracks the behavior of each cohort of subscribers over time.

There are three main sections of the spreadsheet that calculate your total number of subscribers, subscription revenue, and costs.

First, we’ll dig into your cohort subscriber counts. This section accounts for those subscriber signing up and those churning out.

You’ll notice that overtime each month’s group of subscribers declines as customers cancel their subscriptions. That’s churn in action. You’ll also notice that eventually the original cohort of customers that signed up normalizes. Your churn rate goes down over time for each cohort because you’re left with your fans who are most loyal and willing to pay to stay subscribed. Any subscribers who are going to churn will most likely cancel within the first few months.

The key section of the spreadsheet is ultimately the summary and break-even analysis. This simplifies all the sections from your revenue, costs and subscribers into one simple summary. Here you’ll find one of the most important insights from the model - how long it will take you to break even and be' in the green' with your current inputs.

With the assumptions we inputted, it will take Intergalactic Sports six months to break even. That’s with pretty conservative assumptions for subscriber growth. If you increase the number of subscribers each month, you’ll break even sooner. This is why attaining subscribers AND retaining subscribers is so essential to an SVOD businesses’ revenue and growth.

We hope you find this guide and the model useful! Have any questions? Get in touch with Cal at cal@zype.com - he's our residential data nerd and customer-success expert at Zype.

How to Use the Revenue Forecast Model for Subscription Video Businesses

At Zype, we are often presented with opportunities to serve customers with *ahem* controversial content. Right wing, left wing, video with naked people in it, environmental, religious, pro-gun, anti-gun, sexy, iconoclastic, radical— you name it.   As a video distribution service, this is expected. After all, video is the most engaging medium we have and these are the most engaging topics to the audiences that care about them.

Recently, the discussion of censorship and "demonetization" has become top of mind in the video community.  Major consumer platforms and aggregators, like YouTube, have been caught in a tough position—serving their brand customers, while also serving publishers who have content that is controversial .

It isn't easy to build content policies in this marketplace and we are often challenged by our team, our customers, and consumers on the relationship between Zype and the content that our customers ultimately distribute on our platform. For this reason, it is important that we are transparent about how we think about the content our customers distribute on our platform - and what limits and guidelines we have.

We are a software company that serves the video content owner, who hopefully serves their audience well in part by using our software.

We are courageous enough to believe in the First Amendment of the United States Constitution - rights that in today's context demand that software companies shouldn't be in the business of deciding who gets to say what in the marketplace.

We are thoughtful about our duty to protect our customers and their data, as well as the general community we live in, in good faith.  If there are illegal activities connected with our service, we'll do everything we can to comply and support legal authorities.

In addition, we have a software as a service business model - which means we charge for software values - unlike alternatives that are either "free" or "revenue share" based.  This means that there is a market-forcing function that self-regulates content that our software distributes.  If one of our customers is doing something perfectly legal, but enormously objectionable to everyone, they won't be a customer for long as they'll be paying for a service that doesn't product revenue for them.

Therefore, we will strive to apply the following principles when faced with decisions about content:

We will focus on scalable software. This means our teams, who have their own biases and concerns around controversial content, aren't made to watch, manage, provide labor-intensive services for, or otherwise intermingle with any of our customer's content - controversial or otherwise.  We'll always respect our team.

We will put video content owners first. Video aggregators who license content for ad or transactional revenue share (e.g. YouTube, Facebook) ultimately have brand advertisers as their customer. There is nothing wrong with this, but they also have a strong economic motive to apply censorship to further the brand goals of their customers (and not the distribution goals of video publishers).

We will operate within the law. If there are illegal activities connected with our service, we will always cooperate with the legal authorities. Likewise, we'll protect our customers and their data in the absence of any valid legal challenges.

These principles are rooted in our core values and help to guide day-to-day operations at Zype.  Our core values also help inform our decisions about the types of customers we do business with and ultimately what content is distributed on our platform.

As video creation evolves and content distribution is democratized, we believe these principles will serve us well and help the broader ecosystem have a viable choice that puts content owners and their audience first.

Do Censorship and Demonetization Matter When Picking a Video Distribution Service?

In our opinion, direct response branding for content owners is straightforward: Wherever an OTT video brand exists, it needs to drive fans to act— Tune-in. Subscribe. Transact. Sign-up. Rent.

The great news is the real estate required is already owned and controlled by your video business. Direct response messaging informs your target audience about new programming, tune-in times, special offers, previews, and event information. It should also always include a strong call to action (CTA) that will incentivize your fans to take action.

All too often content owners don’t take advantage of the valuable real estate on their website, social channel, and emails. It’s your space, use it wisely. To get started, here are the top 10 direct response branding opportunities that every video business should be employing:

The first images a viewer sees on your homepage must reflect your brand’s dynamism. Don’t be afraid to change up the homepage on your website or apps, it will help to keep your brand fresh and engaging. The headers and sliders on your homepage are high visibility opportunities to communicate with your target audiences, make them work to your advantage.

Editorial content is a prime space to include direct response messaging. Whether the editorial takes the form of news, a blog, podcast or a production vlog, insert a direct response message directly into the body of text, or into the voice-overs of the audio or video content. Check out how Zype’s client, NightFlight utilizes their website as an editorial engine to drive viewers to their premium subscription content.

Put your unused advertising inventory to good use— run “house ads” with direct response calls-to-action. The same goes for unused video ad slots. If you’re advertising online, repurpose campaigns on your own site. If you’re not advertising online, create branded call-to-action ads for your site.

The page real estate around your video player, ad slots embedded in your video, and talent-read ‘intros’ and ‘outros’ are all EXCELLENT direct response branding opportunities to incentivize your viewers to act.

5. Leverage Videos on Third-Party Platforms

Videos that aren’t paywalled are prime opportunities to include voiceover with a call-to-action for special pay-per-view events or subscription offers. This works great for promotional videos streamed on YouTube and Facebook. Video end cards are often overlooked and they are one of the best direct response opportunities. The most effective end cards include: strong branding, tune-in info, social media links, CTAs to subscribe and an attractive subscription offer.

Video page descriptions are incredibly important on your O&O site’s video player and on third-party video platforms. In addition to driving organic traffic, video descriptions should include subscription CTAs and share information regarding OTT apps, special offers, and events. Don’t redirect your users to your homepage, send them to a subscription or transaction sign-up page to reduce any friction with the purchase process.

Just like your homepage headers, the headers on your various social media accounts are also prime real estate to promote your brand, new programming, tune-in, subscription offers, previews, and event information. Bonus Tip: your YouTube header can link to your other social accounts and your subscription sign-up page.

Social media account descriptions are great places to promote subscription or transaction CTAs, tune-in info, unique selling propositions (USPs), new programming and events. Descriptions on YouTube and Facebook have plenty of space for longer, more detailed account descriptions. Just remember to keep your CTAs at the top of your descriptions and routinely update them over time.  Twitter and Instagram have shorter account descriptions, but they can still be freshened up with campaign-specific information and links.

9. Actively Communicate with Fans on Social Media

For social media channels, the combination of customized account descriptions & headers (see #7) coupled with appropriately cadenced CTA posts drive fans to act. This is especially important for social media outposts like Twitter and Instagram with limited account descriptions.

10. Actively Communicate with Fans through Email

Hopefully, you’ve built a healthy opt-in email database for communicating news and information to your uber fans - fans who want to hear from you and have given you permission to email them. Email marketing is the most efficient and effective method for communicating with your fans. It’s also a great place to make upsells and exclusive offers.

11. BONUS - A/B Test Custom Landing Pages

Have you considered custom landing pages for individual campaigns or shows? Consider it and A/B test them with services like instapage. Landing pages customized by interest, programs, and offers significantly increase subscription and transaction conversion rates.

Is Your Video Business Taking Advantage of These Direct Response Branding Opportunities?

As the weather begins to cool, Zype is heating up with some fresh new updates. We’ve made several improvements to our platform and APIs that we’re pretty excited about. Let us know what you think!

Zype’s versatile and flexible nature is what makes customers excited about the platform. To help customers that are new to Zype, we have built an onboarding tutorial to guide them while they publish their first video to their own website.

Why it’s useful: This tutorial helps new customers learn how to use the platform, while quickly gaining value by engaging with their audience without a technical resource. It’s also useful for existing customers bringing on new team members that will be working directly with the Zype platform.

How to use it: New customers logging in for the first time will automatically begin the tutorial.

Existing customers will have access through the new trophy icon found at the top of the page.

To read more about the new Zype onboarding tutorial, visit our Help Center.

Zype now helps you make more money from ads by allowing you to dynamically match ad campaigns to videos in your library. We’ve added new custom attribute metadata fields and ad macros to allow you to automatically surface key value pair metadata to your ad servers, allowing you to optimize ad fills and match ad campaigns to your videos. Read more about this great new feature in this blog post.

Zype has added a new Summary table to our Analytics to give customers a holistic view of their content performance.

How to use it: In all of the analytics modules you’ll find the summary table under the graph. Under the Summary table you’ll see the total of whichever analytics report you are viewing. You can update the date range to refresh the summary table.

We’re always looking for ways to improve our API functionality and have recently updated our API to allow for uploading and updating subtitles through our API. Zype has always allowed for this functionality through the admin dashboard, but this API update is useful for those customers that work with our APIs directly. Check out our updated API documentation on subtitles here

In the same vein as updating our Subtitles API, Zype has also made strives to improve our Entitlements API. Customers have always been able to manage and add entitlements to videos and playlists through our admin dashboard, and are now able to do so through making API calls. Read more about this new update on our developer portal.

Reach out to me at csmith@zype.com if you have comments or questions!

What’s New at Zype This Week: Onboarding, Ad Campaign Matching, Analytics Updates

Here at Zype, we’re dedicated to making it easier for our customers to run successful video businesses. Now, we’ve made it easier for content owners to make more money through ads by automatically matching ad campaigns to specific videos in their library using custom attribute metadata fields.

Matching the right ad creatives for videos has always been challenging for content owners —especially if you run multiple ad campaigns simultaneously, have a diverse video library with different advertising requirements, or have sponsors who want to only be associated with specific content in your library.

For example, if you have a sponsored ad campaign focused on the sport of tennis, you only want to show tennis ads on videos whose content is also related to tennis.

Zype helps solve this challenge by making it easy to configure key value pair metadata on individual videos. You can add keys and values to videos that are mapped to creative campaigns set up in ad servers like Google DFP. Using the example above, you would add the key “sports” with a matching value of “tennis” as custom attributes on tennis-related videos in your library.

Using Zype’s robust ad macro service, you can dynamically surface this key value pair metadata to your ad server when each ad request is generated. Your ad server recognizes the key value pair metadata of “Sports” and “Tennis” as mapped to your specific tennis campaign and subsequently returns the matching creative during the ad fill for only videos with these custom attributes.

In order to use custom attribute metadata for ad campaign matching, you must do the following:

Have a paid Zype account capable of ad monetization

Have a valid, working ad tag enabled in Zype

Create ad campaigns in your ad server with distinct ad creatives

Configure your ad server to listen for key value pair metadata within ad requests to match ad campaigns to ad requests

It’s easy to get started mapping new custom metadata attributes of key value pairs to videos. Simply go to your video library, click into the settings of any video, and you’ll see the new “Custom attributes” metadata fields. You can add as many custom attributes per video as you’d like.

To send custom attribute metadata as part of your ad request, visit Zype’s ad tag manager and select an existing ad tag, or create a new ad tag that you’d like to have dynamic key value pairs generated for. If you scroll to the bottom of the ad tag page, you’ll see the new [custom_attributes] macro that explains how the data is sent back to your ad server.

Simply add that macro to your ad tag URL, prepended by your ad server’s key value pair parameter label. For example, Google DFP uses “cust_params=” as their key value pair parameter label.

Hit “Save Settings” and you should be all set! Now every time you generate an ad request to your ad server for this ad tag, Zype will send any custom attributes metadata you’ve added to videos as part of the ad request. As long as your ad server has been set up to return ad creatives mapped to that key value pair metadata, you’ll be matching ad campaigns to your videos and maximizing your ad revenue!

Have comments or questions? Would love to hear your feedback, shoot me a note at csmith@zype.com.

Zype’s Newest Feature: Dynamic Ad Campaign Matching

If traditional cable networks and media companies were once skeptical of OTT, they are quickly converting to true believers. Some of the biggest players in entertainment are breaking away from licensing deals with OTT services like Netflix and Hulu, to launch their own stand-alone OTT services. They’ve realized the opportunity that any content owner sees in going OTT—the potential to generate more revenue and the control of having a direct relationship with their viewers.

Disney made headlines when they announced that they’re pulling their content from Netflix to start their own streaming service. AMC and FX have similar stand-alone services in the works and it's only a matter of time before more follow.

It’s pioneering streaming services, like Netflix and Hulu, that have shown traditional media that OTT is not only a viable option, it’s the best option. As Netflix continues to lose licensing deals and exclusive rights to content, they’ve shifted their focus to expanding their library of originals, and it’s only making their subscriptions stronger.

Netflix has proven that compelling original content is enough to attract and keep subscribers, but the question remains— is content enough to make a stand-alone streaming service successful?

Content may be the reason why people subscribe to a streaming service, but it is their control over that content that propels a video business to the next level. Having the infrastructure to support a direct-to-consumer business and have control over distribution is critical to the long-term success of any OTT service.

Disney has invested in technology to support their future streaming service, they realize infrastructure is key in securing total control over their content, revenue, and customers. HBO has also recently shifted to a direct-to-consumer model with HBO NOW, a subscription streaming service that is independent of any cable network. It’s all about the control, yet it is still something that many networks are missing when launching their over-the-top service.

FX and AMC are going OTT, but they’re continuing to rely on traditional partnerships with cable providers for billing and subscription services and requiring OTT users to sign-in with through their cable provider. This is a mutually beneficial arrangement for the network and cable provider for now, but excluding the rapidly growing segment of cord cutters could be detrimental in the long-run.

These networks aren’t just missing out on a growing audience market, but more significantly, they’re giving up control over distribution as they continue to share a huge chunk of their revenue with cable companies.

Control over distribution and content is critical for any video business launching an OTT service, regardless of their size. Zype is a video distribution platform that not only makes it easy to monetize and distribute content across devices but more importantly, empowers content owners with true ownership over their content and revenue.

Why Control is Key for Your Direct-to-Consumer Video Business

Zype Wins Third Stevie Award for Customer Service and Support

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Zype Acquires MAZ Systems to Extend Leading Video API and Infrastructure Platform with No-Code TV and Mobile App Publishing Framework

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How to Use the Revenue Forecast Model for Subscription Video Businesses

Do Censorship and Demonetization Matter When Picking a Video Distribution Service?

Is Your Video Business Taking Advantage of These Direct Response Branding Opportunities?

What’s New at Zype This Week: Onboarding, Ad Campaign Matching, Analytics Updates

Zype’s Newest Feature: Dynamic Ad Campaign Matching

Why Control is Key for Your Direct-to-Consumer Video Business

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