Philo has long been associated with delivering premium television programming at attractive price points — but it found itself in a precarious situation a few years ago when it experienced an unusual amount of new customer sign-ups that caused its billing platform to crash.
The situation happened around November 2021, when Paramount Network — one of the 80-plus cable networks available on Philo — debuted the fourth season of “Yellowstone.”
At the time, the show ranked as the top non-news, non-sports program on cable TV, yet none of the subscription on-demand streaming services offered a way for fans to watch new episodes on a weekly basis.
That meant the only way to catch new airings of the show was to sign up for cable, satellite or a streaming cable-like service. Philo was the cheapest option, so it was a no-brainer that most fans of the show would sign up for the contract-free service.
Philo had experienced new sign-up surges from Yellowstone before. But Season 4 was different. It was the first new season to debut during the two-year coronavirus health pandemic, and many had been exposed to the show via Peacock, where the back catalog of the first three seasons were made available long after their initial run on Paramount Network.
That meant, by the time Season 4 was ready, the show had developed a sizable audience of fans who were itching to know how the storyline would progress. That should have been good news for Philo, but its billing provider couldn’t handle all the new customers who wanted to sign up for the service, and the platform went offline for an extended period of time.
Executives quickly realized the problem wasn’t going to fix itself, and the solution was to switch billing providers. They eventually settled on Stripe, the payment processing service founded by John and Patrick Collison in 2010.
Stripe has a deep history of helping online service providers facilitate payment-based transactions — some of its larger clients include Microsoft, Uber, AirBNB and Toyota. It also works with small, independent retailers and publishers, allowing those who operate through X (Twitter), Substack, Patreon and Etsy to accept payments from their customers, readers and followers.
The fact that Stripe had established itself as a player in the financial transactions space proved attractive to Philo. “We needed a billing partner for whom we were a small- to medium-sized fish,” Laura Dechant, the Philo’s Head of Business Operations, said in a quote facilitated by Stripe. “We did not want to be a guinea pig testing the limits of a provider’s system.”
The switch gave Philo much-needed stability — it reprised its role as the cheapest way to watch new episodes of Yellowstone during the show’s most-recent season, which took longer than two years to air because of production and scheduling issues.
When Philo experiences a surge in sign-ups, Stripe responds right away, increasing the amount of resources dedicated to the streaming service and working to ensure its teams were in close contact with their counterparts at Philo to ensure everything was running smoothly.
“Not only is Stripe reliable, they also have the receipts,” said Dechant. “On the rare occasions when something goes wrong on Stripe’s side, they immediately let us know and are quick to respond, so we don’t waste time trying to pinpoint the source of a problem.
The partnership between Stripe and Philo also allowed the streamer to do something rarely heard of in the industry: In addition to accepting major debit and credit cards, the streamer also allows customers to pay for service with prepaid debit cards and certain peer-to-peer financial apps.
The streamer’s position as one of the most-affordable ways to watch live TV programming has attracted income-sensitive subscribers over the years. Some prefer to deal only in cash; others are unable to open a bank account because of their prior financial history. (Around 80 percent of banks use a credit reporting agency, like ChexSystems, to evaluate a potential business relationship with a customer when they try to open an account. Those reports often include financial blemishes, like accounts that are overdrawn and past due to the point that banks simply charge them off.)
Around 60 percent of Americans who lack a bank account deal exclusively in cash, according to a report from the Federal Deposit Insurance Corporation, the government-backed organization that insures consumer deposit accounts. The rest choose to use prepaid debit cards — like those Vanilla Visa Gift cards sold at grocery stores — or peer-to-peer financial apps like Cash App and Venmo for their banking needs.
But those prepaid debit cards and peer-to-peer financial apps carry some inherent risk for retailers and service providers. Fraudsters are known to use prepaid cards as a way to steal money from unsuspecting consumers; others sell prepaid card numbers on the so-called “dark web” for pennies on the dollar. Cash apps can facilitate online-based scams, and are occasionally linked to other types of crimes, such as drug and sex trafficking.
Still, many use prepaid cards for legitimate purposes. Some Americans receive their Social Security benefits on prepaid debit cards, and use those cards to pay their bills, especially if they don’t have a bank account. In California and other states, prepaid cards are also seen as a quicker way to get financial assistance to individuals who are unemployed.
So, Philo decided to accept them, figuring that doing so would serve its underbanked subscribers over the long-term. But the trade-off was Philo, like other service providers, faced the risk of having certain recurring transactions rejected when prepaid balances ran low, which would have resulted in higher involuntary churn.
Stripe worked with Philo to find other ways to serve underbanked customers. Data collected by Philo showed one in five subscribers wanted to pay for their service using Cash App. So, two years, ago, the streamer integrated Stripe’s Optimized Checkout Suite into its billing platform, which allowed it to began accepting Cash App payments.
The integration of the Optimized Checkout Suite also gave Philo the ability to accept other payment forms, too — “we also turned on Apple Pay and Google Wallet in addition to other payment options,” Dechant said.
Philo also integrated other Stripe products, including “Smart Retries,” which attempts to retry a payment throughout the day based on identified optimal times, and “Adaptive Acceptance,” a tool that uses artificial intelligence to retry flagged and declined payments.
To lower its fraud risk, Philo also integrated “Radar for Fraud Teams,” a customizable solution that helps prevent unauthorized financial transactions on its platform.
The result? When the final episodes of “Yellowstone” started airing last November, Philo’s was able to accommodate a record number of subscribers with over 99.9 percent uptime.
“For the first time ever, we had a flawless Yellowstone execution from a billing perspective,” said Dechant. “We felt like we really nailed it thanks to Stripe.”
Stripe’s various products also helped Philo improve its card authorization rate by 4.4 percent, the company said. And its decision to accept Cash App as an alternative form of payment boosted the rate at which free trial users convert to paying customers by 8.5 percent in two months.
Today, Philo has grown to more than 1.3 million subscribers, and serves around 3.4 million streamers with a mixture of premium pay TV networks and free, ad-supported content channels.
“As we have worked with Stripe over the years, what’s been most impressive is their ability to scale to meet our needs,” Deschant affirmed. “We can’t always predict when something will go viral, so we appreciate having a partner that can adapt quickly to shifting circumstances.”
To view the full Stripe case study on Philo, click or tap here.
