The D2C video streaming industry is maturing swiftly. Amidst rising competition and economic uncertainty, most broadcasters have started experimenting with multi-monetization models. However, data reveals that the industry still depends on SVOD as a primary form of monetization.
In other words, subscriptions are still the key profit drivers for broadcasters in 2023.
Therefore, managing subscriber churn and ensuring it is within optimal levels is critical to ensuring bottom-line stability.
What’s the problem with churn? Short answer - It reduces your ARPU.
The correlation between Churn and ARPU
High churn rates directly impact revenue generation and profitability. It’s straightforward to understand that acquiring new customers is expensive and time-consuming.
Churn reduces the customer lifetime value by lowering the average revenue per user (ARPU). So, whether voluntary or involuntary, churning leads to a leaky revenue bucket. Moreover, it necessitates investing more resources and efforts to maintain the same revenue levels.
What’s going on with subscription churn - A closer look at industry data
According to a primary survey by Cleeng x Omdia run across video service providers in five highly-developed streaming markets,
- The median monthly churn for streaming services stands at 18%.
- The modal monthly churn rate is between 21% and 25%.
Takeaway: SVOD churn rates are currently high and growing. Most video service providers are battling across the higher end of churn that prevails in the industry.
- Most industry players expect churn to increase in 2023, compared to a meager 7% who expect churn to decrease.
Takeaway: Market expectation is that this high-churn situation isn’t reverting. Instead, it is likely to become more concerning.
Some reasons leading to high SVOD include:
- The proliferation of streaming apps and content choices for consumers
- The popularity of monthly billing cycles compared to an annual lock-in among customers
- Economic uncertainties compel consumers to curtail expenses
- Consumers are more actively managing subscriptions with the changing subscription card network rules
So, how are broadcasters planning to increase ARPU amidst the high churn?
Broadcaster priorities for reducing churn & increasing ARPU include:
- Improving the quality of experience offered on the platform
- Enhancing overall customer satisfaction and raising loyalty
- Raising operational efficiencies to maximize the earnings per user
This is possible by interventions such as:
- Optimizing payment processes
- Increasing personalized marketing
- Collecting feedback from those who cancel subscriptions
- Early intervention using churn prediction
Executing all of these has one aspect in common - an effective Subscriber Management System to balance strategies for churn reduction and APRU growth.
Read More: How to pick the right Subscriber Management System
Are you struggling with these Subscriber Management System drawbacks?
Currently, most OTT players use antiquated subscriber management systems, obstructing achievable growth trajectories. The five most common limitations in legacy subscriber management systems include:
- Lack of agility: Given the competition, responding quickly to market trends and competitors is essential. Slow speed translates into missed opportunities, reduced customer retention, and diminished competitive advantage, ultimately limiting overall growth.
In that sense, antiquated subscriber management systems that fail to provide timely updates are fuelling dissatisfaction and derailing profitability goals. - Data security concerns: Subscriber management systems must properly handle sensitive customer data, including personal information, payment details, and usage history.
If the system is compromised or lacks robust security measures, it can cost customer loyalty. Outdated data security and compliance features are another widespread drawback in many subscriber management systems. - Data analytics capabilities: Manually interpreting data is time-consuming and complicated and gets in the way of making quick, informed decisions. Moreover, clunky data dashboards lead to errors, ultimately hindering growth through inefficient operations and decision-making.
As a result, broadcasters who lack intuitive subscriber analytics insights fail at personalizing experiences to enhance loyalty. This limitation makes it difficult to manage subscribers efficiently in the fast-changing environment. - High fixed and recurring costs: Using and maintaining up-to-date subscriber management systems involves several costs. These range across software licenses, hardware infrastructure, and integration with existing systems. In addition, there are ongoing expenses like system maintenance, upgrades, and technical support.
Paying for these can get challenging, especially for small or medium-sized video service providers with limited resources. This limitation prevents many broadcasters from investing in desirable systems. - Scalability support: Handling the increased subscriber volumes can be challenging if the subscriber management system lacks scalability, especially during growth. This may lead to performance issues and missed growth opportunities if there’s an inability to grow the customer base effectively.
How to overcome these VOD platform problems?
Cleeng offers a comprehensive subscriber management suite that overcomes all these limitations of legacy subscriber management systems. With a multi-tenant SaaS platform, broadcasters can cost-effectively access the latest subscriber management technology. There’s a transparent fee, depending on usage. The technology stack is advanced and minutely takes care of the different touchpoints in the subscriber journey:
- Customer Identity
- Payments & Billing
- Entitlements & Apps
- Analytics & Insights
Set up is easy, flexible, and quick, with ROI up to 9000%. If your platform is growing, you can be assured about scaling up support, as Cleeng can handle up to 48 million transactions daily.
Want to grow your SVOD business?
