SVOD companies are at a crossroads.
KPMG reports that as many as 26% of consumers have canceled their media subscriptions in 2023.
ParksAssociates, on the other hand, is reporting a 47% subscriber churn rate in 2023.
Different sources, same conclusion: high subscriber churn levels are becoming an ongoing concern for OTT broadcasters.
Furthermore, according to a Whip Report, this year’s analysis indicates that satisfaction among the top streaming platforms is gradually declining.
What’s driving this high subscriber churn and dissatisfaction, though?
- The economic situation is becoming rather complex. Inflation is skyrocketing, and GDP growth has plummeted. It is likely to slow down further to 2.5 percent in 2024. Such circumstances are driving customers to turn price-sensitive toward discretionary expense.
- Subscription fatigue among users is rising. In other words, they’re tired of paying for so many subscriptions. As a result, the average number of streaming services paid for by US consumers is decreasing.
- Growing competition and various streaming choices for every genre are getting customers spoiled for choice. This is resulting in stiff competition for existing OTT platforms.
- According to a survey by Bitcentral’s ViewNexa, almost 46 percent of viewers do not believe they are getting good value from primary streaming services, with 19 percent saying they could do better.
With these circumstances, delivering the best value has become crucial to attracting and nurturing loyal customers for any OTT streaming platform. Given this, broadcasters must step up to prove adequate value to stay in the game. But what’s “value” according to customers?
What value are OTT subscribers looking for?
When it comes to streaming platforms, OTT viewers are looking for:
This includes content that resonates with their interests and preferences.
To ensure this, broadcasters need to balance original and library content while also ensuring localized content availability.
This includes relevant content on the OTT platform that is replenished regularly.
There’s a phenomenon called burning through the content, where individuals binge-watch and consume much of the platform’s content. In such situations, users see less value in sticking around if the library is not updated with fresh content soon enough. As a result, they tend to unsubscribe and move to other platforms to meet their entertainment needs.
Statistically speaking, this is a growing phenomenon in the streaming space. Alongside consumers reconsidering their video consumption spending habits, there’s a growth in video consumption durations.
According to research, OTT streamers have upped consumption time from 4.4 hours a day in Q4 2022 to 4.7 hours, possibly translating into an increased need for fresh content.
Regularly adding relevant and fresh content to the content library isn’t enough to shine in the competitive streaming war.
Offering excellent customer experience is another aspect that matters to viewers significantly today. This includes every interaction, from sign-up and onboarding to the option of creating custom playlists and so on.
Elevating it is possible by reducing friction across different touchpoints. It’s also vital to cater to every customer’s need to feel special by providing personalized viewing experiences.
Quality customer service
Customer service is another precious aspect of a purchasing decision.
Suboptimal customer service before purchase makes customers reconsider buying a subscription. If the after-sales support fails to help adequately or resolve queries quickly, the service annoys customers. This also causes causes churn. In addition, churn led by poor customer service also leaves subscribers with a sour aftertaste. This impacts future re-acquisition of those customers and also causes lousy word-of-mouth publicity.
Flexibility and fair pricing
Finally, flexibility and fair pricing are highly valuable aspects for consumers. With limited spending budgets amidst complex economic scenarios, they’re all seeking to optimize the value of every dollar they spend.
In essence, value for customers translates into excellent content, service, and pricing. With that, if there’s high engagement, satisfaction rises and reduces the churn risk.
But how do you measure satisfaction?
Subscriber satisfaction is a complex variable to measure and is more sensitive than just looking at subscriber counts. That’s because many people stay with a service for a time, even if they are less than happy before they cancel. Others cancel one subscription while acquiring another.
Switchers are experimenting with different platform mixes within the home, moving spend to some of the newer and less penetrated services while maintaining a core base of services.
So, the fact remains - as a broadcaster, it’s complicated and nearly impossible to keep track of or do anything about ascertaining satisfaction without having access to accurate, comprehensive, and granular information. In effect, measuring satisfaction is about identifying the signs of disengagement at the right time.
How to identify subscriber disengagement & reverse it
As much as we like to solve problems, our human brains aren’t equipped to deal with hundreds of thousands, if not millions, of data sources and make sense of them accurately. In OTT platforms with multiple subscribers, the amount of subscriber activity data to make sense of can be enormous. This can make identifying exact disengagement clusters and their causes next to impossible.
This is where machine learning comes into play.
Modern technology can quickly collate vast amounts of information and use that data to predict and prevent subscriber churn. It offers the easiest way to account for the interplay of different forces operating in streaming and unlock valuable insights.
Meet ChurnIQ - The Specialized OTT churn prediction tool
Churn IQ relies on billions of payment, subscription, and customer behavior data points from OTT streaming platforms to analyze and predict churn risk.
Research has shown its ability to predict churn with 92% accuracy.
Some numbers displayed on the ChurnIQ dashboard include your monthly recurring revenue, total number of subscribers, customer lifetime value, and customer churn rate.
Using ChurnIQ as a broadcaster can put you ahead in churn prevention. The tool lets you anticipate risks by highlighting churn patterns on your platform. It also helps you easily segment the customers into different groups. With that, it gives you specialized customer retention analytics and AI-detected subscriber insights.
Here’s a snapshot of the kind of information you can get from the tool:
User segments based on their churn risk
The foremost step to reducing churn rates is knowing exactly where you stand. ChurnIQ’s subscription churn risk dashboard illustrates the immediacy of the churn problem among your existing customer base.
This information makes it an excellent starting point to assess how severe your churn risk is and where you need to focus.
For example, the graph above shows that 85% of the at-risk subscribers display “Very High” risk patterns. This clarity makes it apparent that you must start immediately addressing your at-risk subscribers with the highest intensity.
Reasons why subscribers are likely to churn
Next, after identifying who is considering leaving your platform, it’s also essential to know the why. This can help you intervene with the right strategy to turn the tides in your favor.
ChurnIQ’s data lake is equipped with the potential to answer the likely cause of churn based on platform usage patterns. The algorithm analyzes the subscriber data activity and detects potential churn causes. This prediction comes from comparing past behavioral patterns to current ones. The tool also notices streaming and pricing plan issues that might be causing dissatisfaction and lead to churn. If you access this information at the right time, you can hit the target effectively.
Then, all you need is to run targeted campaigns.
With an overview of all essential subscriber data in the dashboard, you can form segments and run targeted campaigns for each.
For example, if users are not interacting with your content lately, you can run email campaigns with viewing suggestions for that group. You could give a free monthly extension coupon for those nearing expiration but not interacting with the content much. This tactic could motivate them to start interacting again. For those whose payment information has expired, you could run dunning campaigns to reverse the possibility of involuntary churn.
In short, ChurnIQ enables you to be proactive instead of reactive when maximizing subscriber value and defeating churn.
Put a pin on what’s broken and fix it
Providing customer value is a core agenda for broadcasters looking at OTT platform growth in today's complex economic scenario. This remains the only foolproof way to ensure user satisfaction and mitigate churn risk.
Satisfaction can be a complex metric to measure in absolute terms. However, tracking and analyzing subscriber data gives a good indication of the same. It can be leveraged to optimize the value perception felt by users. That being said, being proactive instead of reactive saves both time and money. Being proactive is possible by using advanced churn management systems.
ChurnIQ is a unique AI-based tool that helps you identify who is considering leaving your OTT platform and why this could happen. You can use this information to devise strategies and implement them from the dashboard to deliver value and retain subscribers.
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