Premium-Tier Subscription Business Case Analysis for a Video Streaming Service Provider

Altman Solon is the largest global TMT consulting firm with expertise in media consulting. Our work enabled the client to launch with confidence, backed by clear insights into customer demand, pricing, and long-term growth potential.

Challenge

A global online video streaming service provider wanted to understand the impact of launching a premium-tier subscription offering and the combination of features that would unlock high subscriber growth while keeping costs low. With the launch of the premium-tier offering a few months away, the client needed strategic recommendations in a short timeframe to ensure its success. Altman Solon’s expertise in the media and entertainment industry allowed us to efficiently employ a data-driven approach to help the client assess the options.

Solution

Altman Solon provided the client with a quantified overview of the business impact of launching their new tier. We produced a flexible model with scenario-testing capabilities to analyze the effect of different feature combinations on financial outcomes. Key components of the approach included:

1. Market research and tier testing: We workshopped collaboratively with client leadership to outline potential premium features within the current product roadmap. Then, we developed and fielded a survey to understand key buyer preferences across customer segments and quantify adoption rates. Utilizing a choice-based conjoint market research technique, we asked respondents to choose their preferred subscription tier, gathering insights into the importance of each tier attribute, such as pricing, feature inclusion, and payment frequency.
2. Financial modeling and impact assessment: Using survey insights, we built a proprietary financial model to project overall return on investment for the client. The model reflected the effect of higher pricing on customer purchasing, costs incurred by the inclusion of extra features, and projections of long-term revenue growth. Our model revealed areas where changes to tier pricing and inclusion of certain features would improve the uptake and profitability of the premium tier subscription.

Results

We aimed to clarify the challenge for the client with great attention to detail. Using our model driven by customer feedback, the client can make a strategic decision for their premium product launch and ensure successful revenue and subscriber growth.

Future applications

With a trusted consulting partner to help navigate the process, our clients can easily identify the best path forward and align seamlessly with customer needs. A competitive product strategy requires speed and precision in weighing different scenarios and product features against one another. This project demonstrates Altman Solon’s ability to deliver on both, providing tailored support that can incorporate multiple moving parts.