How to Sell Video

What Conversion Rate Can I Expect for an SVOD Network?

by Forest Conner · October 5, 2016 · Comments

Whether you’re thinking about launching a new SVOD service, or you’ve already started, it’s helpful to have a reference for predicting conversion rate.

Remind me. What’s a conversion rate?

For your video business, it’s how many potential subscribers actually become customers. Conversion rate is the percentage of people who come to your website (or apps) and decide to purchase a video or subscribe. To calculate, divide the number of people who purchased by the number of people who visited your site over the same time period.

For example, if 1000 people visit your site in September and 20 of them subscribe, that is a conversion rate of 20/1000 = .02 or 2% for the month of September. Generally speaking, 2% is the internet-wide average conversion rate for e-commerce.

So how can i predict conversion rate for my subscription?

We get this question a lot from folks who are trying to work out their business plan. For example, if you already know how many people you can reach using your social platforms, then using an expected conversion rate gives a sense of how many could become subscribers. This is helpful for your marketing strategy — using a potential conversion rate to inform where you put resources. It’s also good to just get a sense of what’s “healthy” for a growing video service.

An SVOD network’s conversion rate depends on a number of factors, such as price, offering, and audience.

PRICE

Basic microeconomics gives you an idea of how price affects demand for a product or service. It generally follows a pattern that looks like this:

Don’t be alarmed, this is actually fairly intuitive! The higher the price, the lower the demand for a product or service, all other things held equal. So if you’re looking to get a ton of subscribers and make the barrier to entry low, price on the lower side. Or augment your pricing with lots of coupons, promotions, and discounts. If, on the other hand, you have a devoted and connected audience, you can afford to charge more since you are not starting from zero.

The best way to figure out the specific demand curve for your audience is to survey some potential users and see what they would be willing to pay for you service and plot out exactly what this curve looks like for you.

OFFERING

How robust is your product offering? This can mean simply having a lot of content, that you update often. Your conversion rate will be higher if you have a rich selection of videos, proving to potential customers that they’re investing in something great. And having an ever-growing selection will help engagement down the line: We’ve seen that once you have over 200 videos on your subscription service, each 10 additional videos correlates to customers watching an additional two hours of content.

A robust offering can also include apps. This allows your audience to watch your videos wherever and however they want, which keeps them happy!

Finally, if you focus on a niche audience with content that they can’t find anywhere else, your conversion rate will likely be higher than other services that offer videos that are more easily substituted.

AUDIENCE

One other huge factor that influences conversion rate is how your audience gets to you. If a viewer is coming to your website from a highly-engaged channel, they are way more likely to become a customer. So you can predict higher conversion rates from someone who you you've spoken to or has been on your mailing list, rather than someone who clicked on an advertisement.

As an example, let’s look at the conversion rates for one VHX seller: 10% conversion from emails, 1-2% from Facebook referral traffic, and 0.5-1% from ads.

In general, we see higher conversion rates from online video sources (Vimeo, YouTube) than we do from more text-based sources (Twitter, Facebook, Tumblr). Referrals from video sources tend to convert about twice as well as text-based social sources. So make sure a good deal of your outreach takes advantage of free online video sources! The VHX Dashboard makes it easy to see where your traffic comes from, alongside Google Analytics.

When measuring sources of potential traffic, don’t use high line metrics such as likes or subscribers on social media. Instead, track overall engagement as a better predictor of your actual audience size. That means things like email open rate; average views, likes, shares per post (Facebook or Twitter); or average video views (Vimeo or YouTube).

What’s a healthy SVOD conversion rate?

Great question! We’ve got a bunch of subscription video services using VHX, which means we can see the data on what successful sellers are doing. Overall, the average conversion rate is 3% for SVOD networks across VHX. Compare that to the 2% conversion rate standard for e-commerce, and you get a good picture of what to expect online. If you’re above or below that range, pay attention to your strategies and what moves the needle when you launch or make changes. If your conversion rates are significantly lower and you're bringing in loads of traffic, read up on how to reduce subscriber friction.

If you’re already using VHX to power your video network, you can track your conversion rate any time on your in-depth VHX Dashboard.

Have more questions about SVOD conversion rates? Comment away!