Driving Streaming Profitability: Key Insights from New D2C Research

Kirstin White | Thu Oct 17 2024 | Industry insights

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With the streaming industry focus shifting from rapid subscriber acquisition to long-term profitability,  retaining subscribers and reducing costs is an urgent priority. But with subscriber churn at an all-time high and competition growing fiercer, how can you ensure survival while controlling costs?

This critical topic was the focus of the first-ever Retention Zone Live event in Amsterdam, where industry leaders convened to share insights. In a standout presentation, Dan Simmons, Research Director at Omdia, pointed out a hard-hitting fact: While the industry claims to be data-driven, most platforms aren’t leveraging their data to its full potential. Dan also unveiled an exclusive research report on streaming monetization, churn reduction, and cutting-edge retention insights that can transform operational approaches in streaming. 

 

Introducing “Driving Streaming Profitability: Harnessing hybrid monetization and AI through subscriber management”

This new report, based on insights from 60 senior decision-makers across North America and Europe, uncovers the key challenges and solutions in today’s streaming landscape. Compiled by Omdia in partnership with Cleeng for the second year running, it brings together Omdia’s deep media research expertise with Cleeng’s specialized knowledge in subscriber management. This report provides precise answers to critical questions, such as:

  • What’s working in streaming in 2024, and where is the industry headed?
  • How do we navigate a complex ecosystem where pricing, advertising load, and other factors interact non-linearly?
  • What role do subscriber management systems (SMS) play in streaming success?
  • How can real-time data and AI-driven technology be integrated into streaming operations?

And much more. Ready to dive into the results? Click here to download the report.

 

Key takeaways: Subscriber Management, Hybrid Monetization, AI and beyond

  • Retention is the foundation of streaming success

While subscriber growth has long been the focus of the streaming industry, retention has emerged as the natural growth driver as the industry matures.

Average churn rates range from 11-14% per month, meaning many platforms turn over their entire subscriber base nearly twice a year. With 75% of survey respondents expecting churn to stay the same or increase, it’s clear that this issue isn’t going away. Many broadcasters, instead of investing in better content or experiences, are considering price cuts to retain customers—leading to a vicious cycle of lost revenue.

  • Price-cutting is no longer the answer

Many broadcasters rely on discounts, free trials, or premium features at reduced rates. However, price isn’t the leading cause of churn—it’s factors like content quality, engagement, and competitive marketing.

As Omdia’s Dan Simmons points out, “Using discounts to retain customers is a short-term fix—it won’t solve the core issues driving churn.” While reducing prices may slow churn temporarily, they erode revenue, making it harder to invest in content and customer experience—the real long-term solutions to churn.
Read more about pricing strategy here.

  • Hybrid monetization offers a smarter solution

Hybrid models are proving effective for expanding customer bases without sacrificing profitability. Rather than lowering subscription fees, platforms can use ad-supported models to maintain competitive pricing while boosting revenue. As a result, ad-supported subscriptions now make up 55% of the market, with predictions that 89% of streaming services will offer these tiers by 2026.

  • Yet, many broadcasters are unprepared for hybrid monetization

Balancing subscription and ad revenue is key to maximizing ARPU, and AI plays a vital role in this process by optimizing ad loads without disrupting the subscriber experience. However, almost half of video streaming services lack the tools needed for hybrid monetization success. Many rely on manual processes or can’t fully understand subscriber behavior, limiting their ability to capitalize on this growing trend.

  • Effective churn management strategies remain underutilized

While price cuts provide short-term relief, they don't address the root causes of churn. More impactful strategies—like personalization, churn prediction, and preemptive payment failure notifications—are often underused.

Personalization is key to engagement, from tailored content recommendations to adjusting ad loads based on viewer tolerance. AI-driven insights can balance revenue generation and retention by creating better user experiences.

Despite these advantages, many broadcasters still rely on reactive methods, like offering discounts after churn signs appear. Embracing proactive, data-driven solutions can significantly reduce churn and boost long-term profitability.

  • Legacy systems are holding broadcasters back

Many broadcasters are still using outdated, manual processes or costly, slow-to-evolve legacy systems that hinder innovation and growth. These limitations prevent platforms from fully leveraging their subscriber data and maximizing revenue potential.

By adopting a SaaS-based Subscriber Management System (SMS), broadcasters can offer flexible deals, integrate seamlessly with other platforms, and use AI-driven tools for actionable insights and automation.

According to a recent survey, 95% of respondents agree that an SMS plays a crucial role in achieving strategic priorities, especially as subscriptions remain the industry’s primary monetization model. Yet, only 13% of streamers have managed to consolidate data across their organization to reap the full benefits.

Unlock your full potential with the Subscriber Retention Management (SRM®) suite. Discover how here.

 

Want to know more about the streaming gaps and their actionable solutions? 

While these insights scratch the surface, the complete report takes a deeper dive into the possibilities and solutions for succeeding in streaming in 2024 and beyond. Click the link below to access the full research report.

 

Cleeng SRM Product

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