Streaming Service "Hoppers" and OTT Churn
Elizabeth Parks
Market Research and Marketing Communications Expert | Thought Leadership | Networking / Brand Visibility for Tech and IoT Markets - Consumer, Small Business, Multifamily
The “no-contract model” for OTT services makes it is as easy for consumers to cancel as it is to subscribe. Parks Associates data shows that Netflix dominates the market with an average subscription length of 48 months, but subscription lengths for other video services fall off sharply outside of the top three: Netflix, Amazon Prime Video, and Hulu.?
The OTT marketplace is more crowded with the launch of high-profile new services from major studios and conglomerates such as Disney+, HBO Max, and Peacock, and this has made building subscriber loyalty and retention both more difficult and more invaluable.
Video service providers must also contend with subscribers who are especially challenging to retain. Parks Associates research has found that one-quarter of OTT video subscribers are “hoppers” who generally stay with their services for less time, switch services more frequently, have more subscriptions, and cancel more services over a 12-month period compared to other subscribers.
Service hoppers are the most demanding subscribers and disproportionately contribute to churn, making them an important retention challenge for today’s video services.
Retention and churn
Retaining subscribers and minimizing subscriber churn are of crucial importance for streaming video services. Parks Associates research shows that OTT services inherently face a higher level of subscriber churn than traditional pay-TV services. According to Parks Associates data, the OTT subscriber churn rate in the US as of 2021 is 44%.
Content is a primary factor in churn. For services to retain users beyond their initial interaction, regular, relevant, and engaging content is a necessity.
The rise in consumers’ OTT service stacking is indicative of their willingness to intentionally seek out and subscribe to services that provide the content they desire. Stacking is thus also a reflection of consumer willingness to churn away from a service, if there is a lack of personally relevant content.
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Video services have options available to entice their users. Parks Associates research found that when presented with a list of standard retention options, 21% of users referenced the ability to pause a subscription and 21% also cited the availability of a lower priced tier. Given the variety of methods available, and with no single one dominant, the correct selection of retention options to offer an individual subscriber is of high importance in driving successful retention efforts.?
With no logistical barrier to consumer churn, services must forge an emotional connection to their subscribers, which is done through a positive combination of content and user experience that drive perceived value.
Video services are seeking ways to optimize the performance of their businesses in as many dimensions as possible. Data, insights, and actions enabled by the application of artificial intelligence (AI) and machine learning (ML) can maximize their abilities to compete and thrive in the current high-pressure streaming video landscape.
AI and ML are an increasingly important part of the decision-making toolkit of media and entertainment companies seeking to acquire, engage, and retain customers — particularly retention-challenging service hoppers.
This research is an excerpt from a research paper, AI-enabled Data: Key to Video Service Optimization, written in partnership with SymphonyMedia AI. Download the full paper at: https://www.parksassociates.com/whitepapers/ai-wp2021
We welcome feedback and comments about our research. Thank you for reading!
? Parks Associates
Project Management | Information Technology & Telecommunications Consultant
2 年Good insights, thanks for sharing!
Media Consultant and Educator | Niche FAST, AVOD, SVOD, DOOH
2 年Elizabeth Parks excellent insights and illustrates the power of single-genre niche OTT services: strong emotional connection with audiences through targeted content and an authentic community experience means less churn
Product Innovation, Strategy and Business Development Executive
2 年Elizabeth Parks, thanks for putting this out, it's very interesting. One area that you didn't touch on that has an impact on stream abandonment and ultimately churn is Quality of Experience. When a service have high stall/buffering rates and frequent video quality degradation users abandon streams. When the issue is persistent, users churn off the service entirely.
Global Media Executive | Content Monetization & Distribution | Business Development | International Expansion | Ex-Paramount Global
2 年Very interesting. I am surprised how short the average life is for a Disney+ sub (and how long it is for others). Some of these services are still in the their early days and others are bundled with year-long contracts with various telco's / MVPDs. I think another way of "curbing the churn" is creating more value / diversifying the consumer offering. Amazon Prime is a perfect example as the on-demand piece is only a part of the overall value proposition for Amazon Prime members. Similarly, Netflix is expanding into gaming. Disney+ offers packages for its 3 services. A pure content play will always be subject to churn (especially with how easy it is to hop from one service to the other). Content may still be king, but I think the overall value proposition is the palace.
fantastic analysis as usual, Elizabeth Parks. Know too that there are tools in the market to help DTC service operators and content licensee understand some of the 'why' in audience churn. While it may not completely mitigate the behavior, it does help to understand the audience and content more effectively.