Interview Transcript

Your client is a prominent player in the entertainment industry who has developed an inclusive digital platform broadcasting every piece of entertainment including shows and music. Devise an effective pricing strategy for the firm.

 Okay, I would like to begin by knowing more about the company and their future offerings. For how long has the company been in the entertainment industry? 

The company has been in the entertainment industry for over 10 years, but they are now venturing to enter the digital content space and its objective is to penetrate the market. The client aims to provide an all-inclusive digital platform that has every piece of entertainment like shows and music. The objective of this product is to simplify the user’s experience while providing all types of content under one unified platform.

 How is this product different from other streaming and web-based services, i.e. its unique value proposition? 

The product provides OTT, audio streaming and news and sports broadcasting through a single platform, which makes the user experience simpler and easier. The product also helps the consumer by decreasing their expenditure on different services by clubbing them under a single multi-faceted platform.

 Yes, it will include all the non-exclusive content that is being offered by competitors. We are also working on plans to include some exclusive content and set up in house productions the same, Kindly include this while making considerations for the pricing.

Alright. How much profit does the client aim to earn through this? Is there any specific profit margin to be taken in consideration?

 The objective of the company is to penetrate the market and not earn profit in the short run. 

There are three potential revenue sources – subscriptions, advertisements and partnerships. Is there anything else that I have missed? 

No, we can move to the subscription pricing strategy now. 

Understanding the value propositions of our platform’s primary verticals – the OTT (Over-The-Top) service for video content and the music-cum-podcasts segment – it’s evident that these are the primary areas where consumers are likely to demonstrate willingness to pay. 

Which pricing option will you consider for estimating the price range?

To price the product effectively and ensure market penetration, we can use a combination of competitor-based strategy along with tier-based pricing. Since we are using competitor-based pricing, is there any data available related to the competitors? 

Here are the two exhibits for prominent players in OTT and music broadcasting.

Okay, is there any data on number of total subscribers?

 The total no. of paid OTT users are 49 million of which 40% are base plan subscribers and further divide of standard plan and premium plan is 50% and 10% respectively. Consider the same for music broadcasting. Please continue with your estimation.

Yes, sure. The exhibits illustrate major OTT competitors’ market shares and price plans in India. With 49 million paid users, we estimate users for each platform by multiplying market share with total paid subscribers. Additionally, we’ll calculate users per platform per pricing plan based on the above assumed percentages. Should I go ahead with this approach?

Yes, this seems fine.

 By considering the weighted averages across varied plans and OTT users, we derive the average charges per plan in India as charged by competitors: Rs. 90 for basic, Rs. 170 for standard, and Rs. 251 for premium services. This analysis indicates a price range for our OTT platform’s services between Rs. 90 and Rs. 250 in the Indian market. In the case of music & podcasts services, we calculated the price range by computing the weighted average of the three distinct plans across all paid users of major competitors in India. The average plans for music services are: Rs. 60 for student, Rs. 140 for individuals and Rs. 200 for family packs. Finally, we’ve taken the weighted averages of OTT and music services according to the plans provided assuming the preferences of Indian customers to pay a premium for these services being 80% and 20% respectively. The bundle price range comes out to be 85-240 for our product.

This looks great! Please move on to recommendations.

 I have derived 3 plans which will include the OTT and music services namely – essential access plan – wherein all the content is accessible but with advertisements, a premium plan with advertisements and access to platform exclusive plans and, VIP – all access plan with exclusive content access, prelaunch content access and no advertisement option.

 Thank you. We can conclude the case here.

Case Facts

• Pricing for an all-inclusive digital platform that has every piece of entertainment like shows and music.
• The product provides OTT, Audio streaming and news and sports broadcasting.
• The target consumer age will be 16-40 years.
• The product will include all the non-exclusive plus exclusive content that is being offered by competitors.
• Objective is earning profits according to industry standards.
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