Streaming Analytics to retain OTT users

The OTT continues, offsetting the worldwide gradual decline of traditional linear TV over the last few years. This shift has been accelerated by the global pandemic and the consequent halt in new content production and the rise of new DTC streaming services. American media companies expect about 25 million U.S. households to cancel their pay-TV subscriptions over the next five years, over and above the 25 million homes that have already cut the cord since 2012. This has created a tectonic shift in the media industry, apparent from the likes of Disney, NBCUniversal, WarnerMedia and ViacomCBS already announcing major reorganizations. 

Why is it crucial to take advantage of Streaming Analytics to retain OTT users?

These constant changes in the video industry make it supremely important to develop strategies and action plans to ensure success. One of the greatest challenges that OTT companies face is user retention. With more and more content on offer, users are becoming less and less loyal to any single service. What is the best way to retain your users and simultaneously increase the number of new subscribers? And what can you do to reduce user churn, and increase their CLTV?

Subscription models all tend to have the same objectives: to grow the number of paying customers, increase customer lifetime with the platform and thereby raise monthly revenues from subscription payments. The capturing of new customers is important to raising those monthly revenues, but for an OTT to be both profitable and scalable, it must also be able to retain existing customers and avoid churn.

In fact, attracting new customers is as much as 7 times more expensive for a platform than retaining one regular customer. This clearly makes churn avoidance a priority. When customers use a platform frequently, the risk of abandonment is considerably lower, and can also lead to an increase in the number of occasional viewers. Interpret’s Video Churn Today: Trends, Changes and Outlook 2021 report says that SVOD subscribers grew by 14% in the second half of 2020. During that same period, the cancelation rate grew from 15% to 20%, and close to 20% of subscribers were said to have switched services specifically to view exclusive content, with 13% saying they cancelled a service after viewing a chosen series of video content.

Let’s take as an example Netflix, the market leader and a brand you’re surely all familiar with. Netflix is the video streaming platform that is most habitually used by its subscribers, with an average churn of 10% to 20%. 

The major video platforms spend millions in an effort to reduce subscriber rotation. 

The following chart shows an increase in average monthly churn for Premium SVOD services (excluding Netflix & Hulu) — from 5.3% to 7.0% in the last two years.

 

Weighted Average Churn Rate
Weighted Average Churn Rate. Source: https://medium.com/antennaanalytics/antenna-q1-2021-growth-report-6af970a33975

Hulu’s churn doubled over that same period. While a variety of factors are likely impacting their churn — including aggressive promotional pricing offers, their Live TV MVPD product, and participation in the Disney bundle — certainly competition has also played a role.

Netflix, on the other hand, saw churn increase only 0.1% from Q1 2019 to 2021. Furthermore, Netflix leads the industry in ‘Resubscribe Rate’, meaning that when they do lose a customer, they are more likely than their competitors to win that customer back.

It’s not enough to analyze the data on what makes certain users more likely to cancel a service. Companies in the online video industry must be able to introduce user activation, reactivation and engagement campaigns that get their users to continue consuming content on their platforms.

User churn is either involuntary or voluntary. Involuntary churn is when, for example, a user experiences problems with the payment process, like when their credit card has expired and as a result they don’t have access to the platform. Involuntary churn accounts for up to 40% of all OTT churn but can be avoided through the implementation of preventive measures. Voluntary churn (the other 60%), on the other hand, includes users that purposefully cancel a service because they aren’t satisfied with the content, value or functioning of the platform, or they simply aren’t hooked strongly enough, and it is to these viewers that companies must direct engagement and activation campaigns aimed specifically at those that have not consumed content in the last few days and as a way to keep them from leaving the platform. 

By defining the right business KPIs –the ones that shed light on the performance of a platform– you can gather important data on the increase in number of customers, on which users are at risk of abandoning the service in the near future, why they would do so and how this can be immediately addressed. Then, through an exhaustive analysis of consumption habits, you can build individual profiles and specific clusters to generate personalized recommendations and marketing campaigns and get those users to increase their consumption on the platform and reduce the risk of abandonment in the following months. 

Continuous data analysis empowers you to identify potential problems that need attention, see when subscribers are at risk of leaving the service and know which actions can prevent this from happening.

The greater the volume of data, the better the analysis and more effective the predictions that will help you understand when and why certain users are more likely to cancel a service. Machine learning algorithms are used provide specific information on consumption habits, tastes and the characteristics and variables of potential churners, and from this information you can build and launch personalized marketing campaigns aimed at different subscriber clusters, using the most appropriate tools in each case.

In this manner, individual customer experience of the platform can be unique and tailored to their tastes, increasing their lifetime with the OTT. Done right, personalized marketing is an excellent way to largely increase customer satisfaction and enjoyment of the platform and nurture their sense of identification with the platform.

So, for all of these reasons, it’s important to focus on subscriber retention, because that is where you’ll find the real payoff. When you invest only in acquiring new customers and ignore how to keep the ones you already have, then you are not offering a quality service or enjoyable experience and all of the effort put into attracting those new customers won’t prosper.