Streaming Gift Cards: A New Era is Upon Us
By Tim Pechmann, Co-Founder and COO, and Kelly Solko, Senior Global Print Buyer
In the past several years, streaming companies have made content traditionally reserved for cable, like television shows and movies, more accessible through a multitude of devices and at a lower monthly cost than standard cable. These changes have created opportunities for many new industries – including the gift card industry. Once primarily a vehicle for gift giving, streaming gift cards are now seen as a ‘must have’ payment vehicle for most streaming brands. The appeal of gift cards to the streaming consumer is a leading growth vehicle for the gift card space, currently estimated at an overall 3% CAGR (Mercator 2019), and providing new and exciting benefits to retailers and consumers alike.
Benefits to 3rd Party Retailers
The streaming content boom has allowed retailers to add an exciting new category to the already successful gift card malls.
Streaming represents newness and growth in the existing gift card category. Unlike some gift cards, streaming gift cards continue to evolve and be relevant thanks to constant new content, making them the perfect gift again and again. In addition, gift cards for streaming content serve as a valuable payment method to the unbanked/underbanked. This creates recurring trips to stores as consumers establish purchase patterns to pay for their favorite streaming service.
Additionally, streaming gift cards provide a relevant opportunity to cross-merchandise outside of the gift card mall. Several product categories have a natural connection to gift cards for streaming services. The electronics category is a perfect example of this. Retailers that sell products like smart televisions, which link streaming devices and other hardware (RokuTV, Apple TV, FireStick) can create cross merchandising solutions, resulting in unique offerings, higher average ring and increased margins.
Finally, some retailers are selling licensed products featuring original content branding and streaming gift cards within the same display. Shown in the photo on the right, Target and Netflix partner to curate a Stranger Things product assortment. Consumers can purchase iconic items as seen on their favorite show and a Netflix gift card, further enhancing the link between the physical and digital worlds.
Benefits to Streaming Brands
Streaming brands are continually seeking ways to build brand awareness connect with viewers. With nearly 4 out of 5 gift cards still sold in a physical location (TDS Research 2019), offering a gift card for a streaming subscription service has become a must-have for many brands and provides value in several key areas.
Brand Awareness: Most digital brands lack a physical presence and, in most cases, would not be able to participate in the benefits of traditional retail channel marketing. With tens of millions of dollars
dedicated each year to prompting the category at retail, the gift card offers a tremendous marketing vehicle for streaming brands. On its own, the gift card represents a physical marketing vehicle, prominently positioned in most major retailers, to help create brand awareness. In addition, retailers offer signing and other marketing vehicles that can showcase new content and 91% of consumers are aware of gift card displays (Blackhawk Network Research 2018).
Customer Acquisition: Along with the increased awareness comes the ability to drive new customer acquisition via the gift card. Offering a gift card allows consumers flexibility to use a gift card instead of monthly reoccurring billing. 50% have received a card for a brand that they have not tried before (InComm Prepaid Trends 2018) and 85% indicate they are likely to repeat with a brand if they were given a gift card.
Incremental Revenue: Physical gift cards allow online brands to participate more fully in the gift giving purchase behavior found in physical retailers. In addition, B2B (Loyalty, Rewards, etc.) can be a perfect opportunity for consumers to try a new streaming service without a new financial commitment.
Benefits to Consumers
Not surprisingly, many of the same benefits realized by retailers and streaming companies are the same benefits consumers love. Exposure to great new streaming services, a great new gifting option and access to a convenient payment method are all reasons consumers are flocking to streaming gift cards. With an estimated 25% (55M) of the population unbanked or underbanked (FDIC 2019), and with an estimated 69% of consumers having purchased a gift card for self-use and growing (Blackhawk 2018), gift cards are increasingly viewed as a key self use payment method for online brands.
51% of purchasers who bought a gift card for themselves did so to shop online (Blackhawk 2018). Most streaming gift cards do not require a credit card to redeem, making them a desired gift for both new AND existing users. In addition, streaming gift cards appeal to all consumer segments, making them a valued product across all regions and socioeconomic levels.
Lastly, many retailers are pairing gift card offerings with their existing consumer loyalty programs, creating an exciting new enhancement to their loyalty programs. Retail chains like Giant Eagle and Kwik Trip offer consumers fuel perks for purchasing gift cards. Many retailers have featured streaming gift cards with their loyalty programs, which benefit the consumer’s wallet on a weekly and monthly basis.
It is clear that the marriage of online streaming services and traditional retailers via gift cards is perfect match!
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Kelly Solko is the Senior Global Print Buyer at Topps Digital Services. Leads sourcing, global print production and marketing for Topps Digital Services. Kelly has been in the gift card space for 10+ years with experience in both 1st party and 3rd party programs.
Tim Pechmann is the Co-Founder and COO of Topps Digital Services. Focused on corporate development, client success and leading TDS global distribution teams. Tim leverages 20+ years of retail and gift card experience to help clients develop global prepaid strategies that drive brand awareness, customer acquisition and revenue.