Over the past year we’ve spent a lot of time talking about how users can benefit from the Theta Network in the form of token rewards, and improved video quality/latency in developing countries. But for Theta to be successful it’s also critical that video platforms adopt the protocol, so platforms need to see clear value from integration as well. One critical way Theta can do this is by helping platforms generate incremental revenue and expand their market share.
This is something we learned as part of our ongoing discussions with many video platforms, including our partners like MBN and CJ Hello. We initially thought the key benefit for video platforms that adopt Theta would be reducing CDN/bandwidth expenses by offloading video delivery to the Theta mesh network. That’s still very much true, but over and over we heard that what these platforms really wanted to do was grow their revenues and market share. Reducing your CDN costs by 40–60% is great any way you cut it, but it doesn’t directly grow your monthly average users (MAUs) or your top-line revenue.
So how does adopting Theta achieve that? Some ways are obvious; adopting Theta and its user reward system is a strong way to differentiate your product. If I’m a user choosing between two identical platforms, except one rewards me with tokens for simply watching and sharing video, that’s an easy choice. And we know from our experience comparing the Theta-powered SLIVER.tvchannel to regular SLIVER.tv channels, that when users are rewarded they are much more engaged and have longer session times. But what’s less obvious is how adopting Theta can actually help video platforms grow their top-line revenues. One way is because of different users’ willingness to pay.
Willingness to pay (WTP) is defined as each person’s maximum price they are willing to pay for a given product or service. Different people can have completely different WTPs for the same product based on their needs and preferences. A person living in Iceland might have a WTP of $200 for a heavy down jacket, but your WTP for that same jacket might be $0 if you live in Mexico.
The same principle applies when it comes to video platforms and premium content. As an example, let’s say MBN wants to offer their premium news content for a monthly subscription fee of $12/month. Alice has a WTP of $12 for the content, while Bob has a WTP of only $6 for this content because he already reads the newspaper every morning. In a traditional business model, Alice would subscribe and Bob wouldn’t, so MBN’s total revenue is $12.
But what if the Theta Network is integrated into MBN’s content delivery infrastructure? Now let’s assume that Bob has a great bandwidth connection and is happy to share the free MBN videos he already watches. As Bob relays videos to other users he earns tokens, which have real monetary value. MBN can then offer an option for Bob to use those tokens to take a discount on that $12 premium subscription. If Bob has earned $6 in tokens, the net cost is now $6, which is equal to Bob’s WTP. The net result is that MBN has now earned $18 in revenue, while Bob gets the premium subscription for only $6, a price he thinks is fair. The only cost is Bob’s bandwidth contribution, which was in excess of what he was using anyway. By segmenting for each users’ WTP, both Bob and the video platform are now better off than in the existing system, so it’s a win-win!
Growing revenue is just one of the ways video platforms can grow faster by joining the Theta Network. In an upcoming blog we’ll share insights on how token rewards increase user engagement, session times, and more!