As streaming platforms navigate a seismic shift – pivoting to profitability after a decade of all-out growth mode – they’re racing to develop their subscriber-retention muscles. But they also need to step back to ensure they’re flexing those muscles in the right way (specifically, getting a better and broader understanding of the full subscriber journey) to make sure they’re targeting retention spend where it counts.
Media companies won’t survive the competitive streaming world if they can’t resolve churn
As leading streaming platforms reach a growth plateau, tapping out the total addressable market for streaming viewers, they’re suddenly under intense pressure to get serious about sustainable revenue and profitability.
Headline-grabbing moves like the Netflix password-sharing crackdown are Band-Aids for a bigger problem: Many SVOD platforms are looking at monthly churn rates as high as 20%-30%. It’s a problem across the streaming world. A recent Antenna report shows over half of the gross adds (new accounts) from 2021-2022 cancelled by March 2023.
Streaming platforms know that resolving churn is critical to building a foundation to survive the so-called streaming wars.
Retention isn’t a binary issue
Leading platforms have come a long way since a few years ago, when many took a pretty simplistic view, targeting nonsubscribers to drive acquisitions while not doing nearly enough to engage and maintain subscribers. Most now use the data they collect on subscriber behaviors to recognize signals of churn risk (i.e., declining engagement) and trigger retention campaigns.
But the status quo still takes a binary view: Either a subscriber is a churn risk, worthy of retention spend, or they’re not.
Serial churners gum up conventional retention strategies
High churn in streaming gets framed as a loyalty problem, but it’s showing itself to be more of a feature of the industry than a bug. Subscribers naturally shift engagement patterns based on changing content, changing financial circumstances, etc. It’s not a matter of pure loyalty to one platform or another – subscriber behaviors are much more fluid and evolving.
More specifically, we’ve come to recognize a new category of “serial churners”: people who sign up and cancel streaming services in a timeframe of months, not years.
Serial churners continue to grow in number, jumping from 6% of all SVOD subscribers in 2020 to 22% in 2023 – with 1 in 3 new subscribers in Q1 2023 falling into this category.
But even this view misses important nuance. Digging deeper into subscriber behavior reveals a much more complex set of subscriber journey paths – well beyond serial churner vs. platform loyalist.
Do you know the three key churn personas?
Adobe and research firm Antenna recently dug into these complex behavior patterns. Their recent report identified three distinct personas with familiar behavior patterns we can all likely assign to people in our own lives:
- Win-backs: Antenna found that a full 35% of people who cancel a streaming service come back within 12 months.
- Switchers: The research showed 30% of those who cancel a subscription switch to a competing streaming service within two months.
- Plan managers: These are the roughly 6% of subscribers who don’t cancel but change their service plan (either upgrade or downgrade).
Retention strategies must be tailored to subscriber journeys
Together and across the entire streaming market, these three subsegments of consumers represent a $9 billion opportunity – the untapped middle-ground subscribers who fit neither the loyalist nor the serial churn profile.
To make the cut in this next phase of the streaming world, platforms need to embrace this richer, more nuanced and more holistic view of their subscribers. Moreover, they need to start using this deeper understanding to drive more tailored retention strategies:
- Understand where your retention efforts are going to have high vs. low incremental impact: Which subscribers are most likely to leave no matter what? And which former subscribers are most likely to come back on their own? Reallocate your retention spend where it matters most.
- Understand why they’re leaving – and what brings them back: Half of consumers switch to a new streaming service for specific content/programs, according to StreamTV Insider. Others may follow seasonal patterns. Anticipating the why and the what is critical to effective retention and reengagement.
- See what “sticky” subscribers look like: Recognize the behavior patterns that increase retention likelihood – then work to nudge subscribers in the right direction. For example, Antenna found 85% of subscribers who moved from standalone to bundled services remained subscribed after four months.
Advancing maturity means getting past the “build it” mentality
Retention is now a top priority for every streaming platform. But it’s impossible to understate the urgency of the challenge. The second era of the streaming wars won’t be won by those that execute modern behavior-based retention the best, but by those that do it the fastest.
The good news is that streaming platforms already have all the data they need to gain these deeper insights into subscriber behaviors and churn patterns. But many risk falling victim to the “build it” mentality they inherited from the tech world.
Streaming leaders are proud of their in-house data science teams; they’ve built competitive advantage on their proprietary algorithms. It’s natural to want to build these more advanced subscriber behavior models in house, too. But it’s a whole different ballgame to build an integrated customer data platform aimed at engagement and retention.
Streaming leaders would be wise to take a page from the playbook of highly mature consumer brands in other segments: Buckle down on your core business. No company can be an expert in all things. Proven platforms already exist for driving sophisticated, behavior-based engagement and retention. And those that choose the build-it route will be left behind by those that rapidly activate established solutions.
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