SANTA MONICA, CA — Streaming TV is now well past its first innings, that golden year when it seemed like subscriber growth would never end.
In the new era of competition and price inflation, many customers are giving up on SVOD or moving between providers, plunging operators into an age you might call the Churn Wars.
Sam Garfield, Industry Strategy, Media & Entertainment, Adobe, shares fascinating insights on how operators can reduce churn in this video interview with Beet.TV contributor Rob Williams.
“The Number One Issue of the Streaming World”
Adobe’s Garfield says that over half of streaming service customers cancel their initial subscription.
Garfield notes: “When the services came out, everybody was focused on subscriber growth at all costs, and that’s really changed over the last year. Profitability is taking center stage.”
He acknowledges that strategies like raising prices, reducing content spend, and introducing ad tiers have been employed, but the issue of churn remains paramount.
Deep Dive Into Churn
A recent study conducted in partnership with Antenna, a leading subscription-economy research firm, revealed that over the last two years, “53% of subscribers have canceled their initial subscription.” Garfield believes that to understand the reasons behind this high churn rate, a deeper investigation into customer behavior is required.
One significant factor identified by Adobe is ‘serial churn’—the phenomenon of subscribers hopping from one service to another. Garfield advises against investing marketing dollars in these customers, saying, “That’s not an efficient spend.” Instead, he suggests focusing marketing efforts on winning back customers or moving them into different service tiers.
Garfield identifies a $9 billion opportunity in the segment between serial churners and loyal subscribers. He explains, “One is win-back – people who leave your service, 35% of them come back within 12 months.” The other group consists of ‘plan managers’, customers who switch between various service tiers and bundles.
Bundling and Beyond
Recent moves by Warner Bros. Discovery to include news and sports in its Max bundle indicate the direction some in the industry are taking – bundling.
“Bundled subscribers have a 50% less chance of churning out,” says Garfield, pointing to the potential of bundling services such as ESPN, Hulu, and Disney Plus.
But Garfield believes that the next six months to a year will see media companies doubling down on data strategies and personalization at scale, a technology Adobe refers to as ‘journey orchestration.’ He describes it as: “Building out the muscle – people, process and technology – around becoming a lot more sophisticated in how they look at a subscriber journey and really making sure that they’re talking to that subscriber across the entire journey.”
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