In a digital landscape where attention spans are shrinking, distractions are constant, and competition is fierce, startups don’t have it easy. To survive, let alone succeed, businesses must find compelling ways to capture user interest within seconds.
Yet online entertainment platforms are thriving. From Netflix to Spotify to Twitch, today’s top platforms have seemingly cracked the code on how to keep users engaged, entertained, and coming back for more. The big question is: what exactly are they doing right, and what can startups learn from their playbooks?
Core Business Model Lessons
It’s not about what entertainment companies offer consumers; the key to success is often in the core business model’s design:
Subscription-Based Revenue Models
The gold standard for subscription-based success is Netflix. The company revolutionised entertainment with its subscription-based approach, completely novel when launched, and now the go-to strategy for online entertainment (see: Hulu, Amazon Prime, Apple TV, even YouTube, etc.).
Subscription models have the advantage of providing predictable revenue streams and higher customer lifetime value. Instead of a one-and-done, subscriptions keep the money coming in.
Startups should consider recurring revenue models even in traditional transactional industries, even if it’s contrary to the traditional setup. What you’ll have to do is give added value, a real reason why consumers should stick around for the long haul.
Companies outside of entertainment have copied this model. Like Dermatica or Skin+Me, for instance, where subscribers get skin products every month. Consumers don’t just get the skin care range, but also receive expert consultations from qualified dermatologists, an extra that you don’t get at your local Boots.
Free-to-Play (But with Premium Monetisation!)
From Netflix, our next stop is Epic Games. You may not know the company, but you’ll undoubtedly know the game: Fortnite. The company allows users to access the game at no cost, but still generates revenues through in-game purchases and microtransactions.
The strategy is simple: build a massive user base through free-to-play, with the bulk of the income coming from a smaller, engaged group. Startups can do something similar by offering basic free services, showing off the utility of their products, and then charging for the premium features.
This strategy works in a range of industries, being particularly effective in the iGaming space. At SkyCity Online Casino, for example, users can play in a demo mode, without initial costs, playing with virtual credits, only to switch to a real money game later on.
Acquisition and Retention
Companies like Netflix, Steam understand that it’s not just about that initial sale; retention is key to long-term success. These are their primary strategies that startups can learn from:
Data-Driven Personalization
You know why it’s easy to stay on TikTok and YouTube for hours without even noticing? It’s because of the data they have on you; they know you better than you know yourself.
Sounds scary, but it does mean that you’re served with content that’s right up your alley. Companies are now leveraging AI and machine learning to fine-tune personalisation even further, with real-time recommendations now the norm.
Startups won’t have the cash to get to this level of personalisation (yet!), but it does highlight the importance of investing in data analytics to understand and predict customer behaviour. It not only matters behind the curtain, but 71% of consumers expect it.
Community Building and User-Generated Content
Successful platforms build communities, not just a product/service for cash exchange. User-generated content is a great way of building your community and leveraging the power of existing customers.
It has loads of advantages, including the building of trust and credibility for brands. Platforms like Twitch build their entire ecosystems around creator communities; without this, the company wouldn’t work.
Now, we’re not saying a startup should be entirely community-driven, but community should be a key component of growth. Organic marketing and strong user participation are far more effective than paying for expensive campaigns.
Authentic Storytelling and Brand Purpose
It’s cheesy to some, but authenticity and having a real story are both important in today’s seemingly faceless corporate world. Simon Sinek’s message of finding your Why was one of the key drivers of how you can build a movement, not just a company.
Entertainment companies don’t always do this in an in-your-face manner, but you’ll recognise the different personalities imbued in each company. Netflix prioritises originality in their productions, while Disney takes a family-first approach. Twitch is known for its mental health awareness, for example, by providing resources in collaboration with organisations like Take This to the gaming company.
But remember, consumers can distinguish between brands trying to be authentic against those truly invested in their own story. Don’t think you need to invent something grandiose and over-the-top; stick to your own startup journey.
Entertainment companies don’t just succeed because of the quality of their films, series, or games. Ultimately, they understand business principles: genuine value for users, building a sustainable competitive advantage, and putting the customer experience at the forefront.
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What Startups Can Learn From Today’s Leading Online Entertainment Platforms