Freemium

To
Premium

Abhinav Anurag
PGP39228,
IIM Lucknow
Problem Formulation

Disney+ Hotstar is a subscription OTT platform having 2 primary categories of customers:

Paid subscribers: Customers who pay a subscription charge or fee determined by the company and get the full range of content
in return.
Freemium users: Customers who do not pay any charge and hence have access to only a limited range of content.

The requirements in the problem statement can be understood as follows:

Current picture: Objectives:

Free streaming of World

Cup and Asia Cup

270 Mn 350 Mn
30 Mn 30 Mn

User base, especially

freemium will grow Freemium Freemium Freemium
during the events. Engagement Retention Conversion

Freemium Paid User interactions, % of users who stay # of users

Freemium Paid
session lengths, after cricket events. converting to Paid
frequency of visits subscription
Current customer base Projected customer base in short & long
term.
Key Success Metrics
User Engagement User Retention
Metric Significance Metric Significance
Amount of time spent by users Churn Rate % of users lost over a period
Average watch time on watching content. Revenue generated by a customer
Customer Lifetime Value over his/her lifetime
# of times users come to the
Session frequency platform # no of times users come back to the
Reactivation Rate platform
Content consumption Variety of content being watched
User satisfaction Reviews and ratings from users.
# of times features such as pause
&
Feature interactions resume, polls, comments are
used

% of users who left the platform

Bounce Rate after visiting Conversion to Paid subscription
Revenue growth Increase in ad revenue Metric Significance
Conversion rate # of users subscribing
No. of online posts mentioning
Experience sharing the feature Average amount of time it took for a
Time to Conversion freemium user to subscribe to paid
# of users who converted to paid
Churn Rate for Converted Users subscriptions but cancelled later
User Cohorts
Based on the context given in the problem i.e. where the major freemium user influx would arrive from, users can be segmented on
the basis of their enthusiasm for the free sport offerings. These will be:
Objective
Cohort Pain Points
to Target

Already on Hotstar Both the categories of enthusiasts want to

Retention, Conversion
go beyond just watching and want a
differentiated experience. Examples:
community interactions and fan clubs.
Switched from other Engagement
platforms due to the free
Sports Fans offerings.

General freemium users want new content Retention, Conversion

Already on Hotstar
and new features.

Non-enthusiasts or trial New general users want to know about the Awareness, Engagement
users coming to the range of offerings e.g. movies, shows along
platform. with sports.
General Entertainment May want premium content but not willing to
Viewers

In addition, one common pain point for all freemium users is the price of subscription and the effectiveness of spending (ie they do
not want to pay beforehand for content they may or may not watch). The above highlighted cohorts are taken into consideration for
potential features.
Proposed Features
Impact
Feature Description
Short Term Long Term
Communities and Group • Group/Community profiles based on teams/ geographies etc. • Immediate • Encourage users to
Profiles • The communities can be a platform for comments, polls etc. engagement during stay on the platform
• Suitable for sports enthusiasts live events. beyond major events

Reward Systems • Reward systems with points for match views, polls, • Increased • Inclination to use
comments etc. (sports viewers) engagement as users them for discounts on
• Rewards for length and variety of content eg different aim to accumulate subscription, increase
movie/show genres etc. (general viewers) rewards in conversion
• Rewards can be titles such as F1 Speedster, Tennis Tycoon,
Comedy Buff etc. or points which can be accumulated to get
discounts on paid subscription

Pay-Per-Usage • Pay only for the amount of content consumed • Immediate flexibility • Customers who use
for users who prefer this may see the value
this payment method in subscribing and
convert to paid
subscribers

Rent/Download • Allow renting/downloading of content for a one time • Immediate revenue • Due to price nudging,
Content payment without subscription. from users who conversion to smaller
• Suitable for trial users and others who are not willing to pay prefer one-time paid subscriptions will
to subscribe. payments for specific increase
content
Prioritization

RICE Score = (Reach x Impact x Confidence)/(Effort)

Feature Reach Impact Confidence Effort RICE

(Out of 10) (Out of 5) (Out of 100%) (Out of 5) Score

Communities and
Group Profiles 8 4 90 3 9.6

Reward Systems
9 4 80 4 7.2

Pay-Per-Usage 7 3 80 4 4.2

Rent/Download
Content 6 3 70 3 4.2
Assumptions:

• The Communities and Groups feature is supposed to engage a high percentage of sports enthusiasts and
also have high impact in terms of engagement and retention.

• Similarly the Reward Systems feature is expected to have a high reach but the effort associated will also be
high because since the feature needs to be developed from scratch.

• Pay-per-Usage is not expected to have high reach or impact since users may not choose this option early on.
The effort is high due to the requirement of complex billing and transaction systems.

• Rent/Download is also a feature that will impact only the customers who are not loyal OTT viewers and hence
engagement might be low. But it may act as an alternative revenue source in return for very little
development effort.

• Other: There are no significant time / budget constraints involved.

RoadMap for the features

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7

Requirements Gathering
• Reward System: What and how
to reward?
• Communities: Group Profiles,
user limit, interaction features

Development
• Algorithms for tracking user interactions, calculating rewards,
UI/UX for titles and points scoring
• Databases for community content, interactions etc.

Testing
• Unit Testing, A/B Testing, Integration testing with
other features.
• Beta Testing & Feedback collection

Launch
• Promotions
• Customer
Support