Streaming Churn Triggers

According to Parks Associates consumer research, approximately one-third of households that have canceled at least one OTT service within the past year attribute the decision to a desire to reduce household expenses. The number of households that cite this reason is increasing, underscoring the pressure that consumers are experiencing to reevaluate their household budgets. About a quarter attribute the cancellation to finishing a show or difficulty finding interesting content to watch..

Recommendation engines for surfacing personalized content still have room for improvement. Continued development of content recommendations could help highlight the value of the service and reduce churn. Those who say they cut a service because of household expenses may not have cut a particular service if it was bundled with a service they value more.

Over the last three years the strategic direction of customer acquisition and “growth at all costs” transferred to a focus on profitability, which demands retaining viewers and demonstrating value to the customers. Summing it up:

• Linear TV continues to decline
• SVOD may be reaching saturation
• Consumers are engaging with FAST more frequently
• The number of subscriptions in the consumer’s home is being reduced
• Churn is an industry problem, created by the industry
• The next wave of solutions by streaming services is a bundle (great unbundle and rebundle!)

Since it reached its peak in 2015, traditional cable television has been on a downward trend. According to the Parks Associates research, the cable sector reached its highest point of revenue in 2015, with 105 billion dollars. Consumers now have more options to choose from in terms of how, when, and what they watch. New dynamics have emerged for service providers because of the ease with which services may be tried out, subscribed to, and terminated.

Bundling streaming services is a tactic that is very similar to the old pay TV bundle/cable model, which was designed to provide a discount for TV, internet, and phone. Today’s streaming environment means the bundle is multiple streaming services at a discounted rate. Time will tell if this strategy delivers the growth that services need to become profitable.

This is an excerpt from Parks Associates research library. Visit www.parksassociates.com for more info or contact me or any of our team today.