The quest to become the next Netflix is far from easy, as a number of standalone over-the-top (OTT) providers are finding out.

Without case studies, rolling out services in this relatively new industry has been largely based on trial and error, sometimes encouraging misdirected approaches more suited to traditional TV.

“Everybody’s been used to the pay-TV model and bundled packages, so the first temptation is to do the same when you go into the OTT space,” said Subin Subaiah (pictured, left), co-founder and CEO of Indian content specialist Spuul.

“Then you discover that that’s not how it works,” he added.

“We went through an iteration of pricing options to customers. People just got blown away by the complication of it. The moment we simplified it – we said there’s free and there’s a subscription model, there’s nothing in between – it’s become so easy for customers.”

After launching in 2010, Spuul had acquired 3.6 million users by December 2013. The company’s basic offering works as a freemium ad-supported model, although persuading people to upgrade to a pay version, which includes premium content, is a challenge.

Subaiah is seeing a higher conversion rate within the Indian diaspora, at about 7-10%, versus 1-1.5% inside India, where piracy is rife.

At the same time, the popularity of free content within India also makes a non-paid model possible, Subaiah added, provided there is enough for people to watch.

“CPMs are going up, and unfortunately, we don’t have enough inventory for advertisers to fill,” he said. “The demand for space on our content is huge. That is a very encouraging sign if you’re trying to purse an ad-supported free model.”

Try before you buy

Consumers in emerging markets need to sample plenty of free content before they will think about paying, concurred Nickhil Jakatdar, founder and CEO of mobile video aggregator Vuclip.

The company attracts more than 120 million viewers worldwide each month, mostly from growth markets.

“If it’s a pure paid site, they don’t even go there,” Jakatdar noted. “It has to be free. If you give them enough, we can find their consumption patterns, then upsell them in a very targeted manner.”

Partnering telcos can also make operational matters easier by letting them manage the billing process, which also simplifies the payment process for consumers.

“When it comes to emerging markets, most people don’t have a data plan,” Jakatdar said. “One of the things we have done is work with the carriers and integrate with the carrier billing.”

Vuclip’s strategy plays to the prepaid model prevalent in developing markets. Partner telcos can exempt some Vuclip content from subscriber data plans, allowing people to sample videos without worrying about how much mobile data they are using.

Those who wish to watch more can purchase more data, or upgrade to a paid service.

“Soon, you take them up the value chain where you tell them: ‘Do you want to watch 20 videos for 15 cents?’ and so on,” Jakatdar said. “Eventually in six months, they become regular data users.”

Consumer electronics giant Samsung is also looking to partner with OTT providers, pre-installing services to encourage brand loyalty and repeat purchases of Samsung products, explained Nicholas Wodtke (pictured, right), VP of Samsung Electronics’ media solution center for Southeast Asia and Oceania.

“How do we participate in that value chain?” Wodtke asked. “The single most important factor when we look at a service is, how do we make sure that when you purchase that next device, it’s a Samsung?

"That means, that whether it’s Spuul, working with partners like Netflix or whether it’s a music service, we have to be thinking a lot more about how we work with partners to create a privileged situation for Samsung users.”

The company is also developing exclusive content through teams in Singapore and around the region, although Wodtke sees Samsung adding most value as a filter, curating an increasingly cluttered environment.

“We spend a huge amount of time thinking about how do we create curated environments,” he said.

“When you unwrap your Samsung phone or TV, we want to say ‘Hey customer/user, I’m going to help your experience. I’m going to segment and provide a curated experience.’”

Relationships and revenue

Standalone OTT also presents an opportunity for content owners, although they must weigh the impact on current distribution relationships and revenues.

Wrestling rights holder and promoter WWE (World Wrestling Entertainment), which has 30 years of archived content, opted to launch an OTT service called WWE Network, combining a linear channel with on-demand services.

The service, launched in February this year, charges US$9.99 a month for new and library content, as well as access to WWE’s 12 annual pay-per-view events, including Wrestlemania.

WWE’s audience has started to skew younger, while mobile and second-screen access was starting to rise, prompting WWE down this path explained Gerrit Meier, EVP and head of international for WWE.

“We’re really looking at it for the long term, because that is the way to go for us,” he said. “The last number that we publicized, we reached 700,000 subscribers. That was shortly after Wrestlemania, about 40-42 days after launch.”

Such a move is enhancing WWE’s established relationships with cable networks, Meier added, although that’s a reflection of how WWE sustains interest in its content and the relationship it has with fans.

“There’s a story that develops over all these hours every week as an ongoing soap, that really drives the popularity of WWE around the world,” Meier said.

“We maintain that storyline. That really speaks to the core of our broadcast relationships and license relationships all over the world."