Priyanka Desai
Listen to this articleA platform’s ability to retain and engage with its subscribers over a certain period helps find out how successful the OTT platform is at satisfying its existing customers. Not only that, it helps boost customer loyalty, ROI, and user acquisition.
According to the Research Director at Park Associates, “They [the audience] have much more time and opportunity to engage and interact with OTT services and are deciding to stick with services, including mid-sized and smaller ones, longer than normal. Consequently, we are seeing a lower overall churn rate for OTT services.”
It is no surprise how Netflix maintains a low churn rate and a higher customer retention rate. In terms of content, it offers a wide variety of original movies and shows which comes up to 15,000 titles globally. With this kind of content, Netflix also managed to receive 160 nominations at the 72nd annual Emmy Awards and 36 nominations at Oscars 2021.
In This Article
What is user retention?
User retention is a metric to measure the growth of the audience on the OTT platforms. It calculates the percentage of users that return to the OTT platform in subsequent periods.
The subscriber retention metric leads us to another key metric called customer lifetime value. Customer lifetime value is the total revenue you can expect from a single subscriber. The longer the subscriber stays with your OTT platform, the better their lifetime value becomes.
What is churn rate ?
Churn rate, also known as attrition rate, is the rate at which the customers stop providing more business to a platform over a certain period. In terms of OTT platforms, it is the number of viewers or subscribers that cancel or avoid renewing their subscriptions.
The churn rate for your platform can be calculated considering the following variables:
- Active Cancellations (A): Intentional cancellations initiated by customers themselves.
- Passive Cancellations (P): Cancellations arising as a result of non-renewals and credit card declines.
- Win-back Reactivations (W): Subscriptions gained from activations by previous subscribers.
- Total Subscribers (T): The total number of subscribers on your platform.List item
Once these variables are quantified, you can use the following formula:
OTT churn rate = 100 x [(A+P)-W]/T
Reasons for Churn
There are several reasons why a subscriber leaves your platform. Some of the reasons for customer churn for your OTT service are:
- Limited Content Library: You will have a variety of subscribers coming to your platform. Make your content library as diverse and inclusive as possible.
- Poor UX/UI: Reduced crashes and ease of navigating the mobile app help enhance the functionality of the app.
- Payment Failure: Often, the biggest reason behind involuntary churn is payment failure. Send out proactive reminders for updating payment information so the users are aware.
- Pricing Plans: Overpriced service or content is also a major reason that drives people away from your OTT app. Diversify your pricing plans to reduce the OTT churn rate.List item
Voluntary and Involuntary Churn
Involuntary churn is when a payment failure occurs or another barrier comes in between that stops the subscriber from being able to access your platform.
When a viewer initiates an exit from your platform it is called voluntary churn. It happens when subscribers are not satisfied with the offerings or do not receive enough value for what they paid.
To simplify it, voluntary churn indicates customer dissatisfaction, while involuntary churn points to payment issues.
Voluntary churn can be driven by seasonal sports, limited-run series, and live events, which drive sign-ups as well as post-event cancellations.
Here are several ways in which you can reduce voluntary and involuntary churn.
How can you add more value to your OTT platform to retain subscribers?
1. Monitor analytics
As an OTT provider, monitoring analytics is essential as it gives you all the necessary data to find out where you are going wrong in acquiring and retaining more users.
When measuring and monitoring analytics, you must pay close attention to the following aspects:
- Subscriber count: The number of subscribers you achieved in a particular time frame.
- Churn rate: The total number of users that have unsubscribed from your platform. em
- Average watch time: The average time spent by users watching a specific piece of content on your platform.
- Devices: This shows the connected devices used most for viewing your content. List item
- Countries: The location of your users helps you track their preferences and come up with more targeted marketing strategies.List item
Platforms like Netflix and Prime Video grasped the importance of community viewing for users early on. They introduced a watch party that helps users invite their friends and family to watch content with them. This immensely helped in improving the subscriber count as well as the average watch time, thereby improving customer retention.
Personalized experience and recommendations based on geographies like Top 10 movies in the United States or Most-Watched Show in the United States helped their target audience in a particular geography. An OTT provider can use this customer acquisition strategy to improve user engagement.
Ventuno’s Analytics helps you understand at a granular level how, what, and where your audience consumes your video.
The Unified View shows what content your viewers are enjoying the most. The report includes several other summaries like SVOD summary, Plan upgraded user report, AVOD summary, TVOD summary, OTT user reports, video-wise summary, encoding summary, and content partner report.
2. Add value to your library
Lack of quality content is one of the biggest churn motivators for OTT platforms.
Unable to find something worth watching is often the most cited reason behind leaving or unsubscribing an OTT service.
Even a robust library is not helpful when content discovery is difficult. If you fail to provide targeted recommendations or personal recommendations to users and guide them in the right direction, a good content library is of no use.
Netflix knows exactly how to keep its churn rate low and retain more subscribers, thanks to its recommendation algorithm. In addition to personalized recommendations, the recommendation engine also sends out email recommendations and reminders to its users.
To be able to apply a strategy like Netflix’s, you need to first record and understand the analytics related to the content of your platform.
A platform like Ventuno can help you do that with content reports that cover aspects like video views, video-wise summary, content partner, download reports, and movie reports.
3. Understand user journey
Understanding the user behavior will help you clearly define the relationship your customer has with your platform and how it evolves over some time.
Attention: This is where the user becomes aware of your presence in the OTT market.
Eg. Capture the user’s attention through digital advertising, print media, or social media marketing.
Capture: Your presence has captured the user’s attention and the user is now evaluating the value you will provide to them.
Eg. Make it easy for your users to reach out to your platform for more information. Make information easily available to them.
User Engagement: Here the user subscribes to your platform and pays money in exchange for your content services.
Eg. Help your audience reach your content in as few steps as possible.
Retention: This is where you try to retain your existing subscriber.
Eg. Maximizing the retention on your streaming platform is all about providing better content, great service, and exceptional support.
Retention is often the most difficult stage for businesses, but if you apply the right marketing strategy, you will be able to retain your users for a long time.
For this, you will have to capture actionable insights and study them religiously to understand your users better. Check their preferences, the kind of content they usually prefer to watch, the periods between which they use the app, ask for feedback, make sure content discovery is easy for them
4. Encourage advocacy
Customer advocacy is a crucial element to boost customer satisfaction on streaming platforms as well as OTT TV apps. You can turn your customers into advocates by offering a smooth user experience, easy content discovery, a variety of content to choose from, and top-tier customer support.
Any OTT provider that works towards making the overall experience better for its customers will stand out from its competitors by successfully reducing customer churn and improving user behavior.
Netflix’s secret towards customer advocacy is that the platform adapts itself to the individual subscriber’s taste.
Let’s take a look at what Netflix is doing differently when it comes to focusing on its customers:
Former VP of Product at Netflix, Gibson Biddle, explains the different ways Netflix looks at customer service and experience.
Netflix is not simply focused on its customers, it is obsessed with them and it is not limited to data, algorithms, and personalization anymore.
5. Encourage referrals
Did you know, companies with referrals have a 71% higher conversion rate. In addition, they report a 69% faster close time on sales.
When you encourage existing users to invite referrals through discounts, coupons, a free month, or goodies, it helps convert quickly.
The chances are that the referred subscribers are more loyal users as they enjoy your service based on recommendations from their close associates.
MUBI, a curator and streaming service for films from across the world, uses a great referral strategy that provides one month of free usage for the existing subscribers as well as their referrals.
Do not miss out on monitoring and collecting data on all the actions throughout the referral program. You can track from the very moment OTT subscriber signs up to the last minute of the referral turning into a paid user.
6. Targeted discount coupons
Running promotional offers through targeted discount coupons is another way of reducing your subscriber churn rate.
You can start by offering special discounts to users based on their previous interactions with your streaming platform.
- Discount coupons can drive customers to your business and introduce new customers to your OTT platform.
- For providers, targeted coupons can help introduce new product lines and encourage subscribers to try a more profitable new service.
- Coupons can also help attract existing customers to come back to your streaming platform.
7. Bundling offers
Bundling content and offering as a single package helps you gauge a price-sensitive market. For instance, India is a price-sensitive market and 79% of the people prefer bundled packages.
Bundling helps you sell more content to users. It also works out well for your users because they get access to a larger library of content at a bundled price.
Let’s look at how Disney+ reduced churn.
As per Deloitte, Disney Plus has the second-lowest churn rate among other streaming services.
Disney CFO Christine McCarthy noted in February that Disney+ is bulking up its film and TV library to reduce subscriber churn. He quoted,
“we put more content into the service and our subscriber base becomes more tenured, we expect to see our user churn rates continue to decline.”
Disney CFO Christine McCarthy
Disney+ already has content from major production houses and channels like FX, 20th Century Studios, ABC, and Searchlight Pictures. This means a variety of content has made its way to Disney+ in addition to the original Disney movies and shows.
Disney+ recently introduced a new channel Star to create more content for adult and mature audiences.
Partnering with the new channel Star, Disney+ increased its monthly costs from $6.99 to $7.99 in the United States and it still has a lower user churn rate than most OTT platforms.
The reason behind this is the addition of new channels to present more content for mature audiences.
Even though WandaVision and The Falcon and the Winter Soldier have drawn considerable numbers for the platform, there was a lack of content for a wider audience.
Due to the lack of a wider streaming catalog beyond family-friendly entertainment options, subscribers only paid for subscriptions during the release of particular content.
- An exclusive, free perk for non-tentpole films like Hamilton to their subscribers.
- Offering exclusive access to blockbusters for an added fee.
- Launching films simultaneously in theaters and on Disney Plus gives audiences a choice of platforms.
- Reducing the theatrical window for films that premiere exclusively in theaters.
Disney has achieved over 100 million subscribers using four tactics:
This empowers audiences by allowing them to see a film at their convenience, on a platform they want, and at a price that fits their budget.
8 Proven Steps to Reduce OTT Churn
1. Understand why subscribers are churning
The first step to reducing churn is to understand why subscribers are canceling in the first place. This can be done through surveys, interviews, and customer support data. Once you understand the reasons for churn, you can start to address them.
2. Create and set goals
Once you understand the reasons for churn, you can set goals for reducing it. For example, you might aim to reduce churn by 10% in the next quarter or reduce involuntary churn by 75% in the next year.
3. Address involuntary churn
Involuntary churn is when subscribers cancel their subscriptions because of things outside of your control, such as payment failures or technical problems. You can reduce involuntary churn by making it easy for subscribers to update their payment information and by resolving technical problems quickly.
4. Offer an unmatched user experience
A good user experience is essential for reducing churn. Your OTT platform should be easy to use and navigate, and it should offer a variety of features that subscribers value.
5. Produce and publish top-quality content
Content is the most important factor for subscribers when choosing an OTT platform. Make sure you are producing and publishing high-quality content that your subscribers will love.
6. Offer a variety of pricing plans
This will give subscribers more flexibility to choose a plan that fits their needs and budget.
7. Run win-back campaigns
Target churned subscribers with special offers and discounts to encourage them to come back.
8. Use data analytics to identify and target at-risk subscribers.
You can use data analytics to identify subscribers who are likely to churn, and then target them with special offers and interventions.
FAQ
OTT churn is the rate at which subscribers cancel their subscriptions to an OTT platform. It is a major concern for OTT platforms, as it can lead to lost revenue and damage to brand reputation.
There are two main types of OTT churn:
1. Voluntary churn: This is when subscribers cancel their subscriptions intentionally, such as because they are not satisfied with the content, price, or user experience.
2. Involuntary churn: This is when subscribers cancel their subscriptions unintentionally, such as because their payment information has expired or they are experiencing technical problems.
There are a number of factors that can contribute to OTT churn, including:
1. Lack of content: Subscribers may cancel if they are not satisfied with the quality or variety of content available on your platform.
2. Technical problems: Subscribers may cancel if they experience technical problems, such as buffering, streaming issues, or device compatibility problems.
3. Price: Subscribers may cancel if they feel that your service is too expensive, or if they find a better deal elsewhere.
4. Competition: Subscribers may cancel if they switch to a different OTT platform that offers a better user experience, more content, or a lower price.
5. Involuntary churn: This can happen due to payment failures, billing errors, or other factors outside of your control.
There are a number of things you can do to reduce OTT churn, including:
1. Offer high-quality content: This is the most important factor for subscribers when choosing an OTT platform. Make sure you are producing and publishing high-quality content that your subscribers will love.
2. Provide a great user experience: Your OTT platform should be easy to use and navigate, and it should offer a variety of features that subscribers value.
3. Offer competitive pricing: Make sure your pricing plans are competitive and affordable for your target audience.
4. Reduce involuntary churn: Make it easy for subscribers to update their payment information and resolve technical problems quickly.
5. Target at-risk subscribers: Use data analytics to identify subscribers who are likely to churn, and then target them with special offers and interventions.
1. Track and measure churn: The first step to managing churn is to track and measure it. You can do this using analytics tools to track metrics such as churn rate, watch time, and engagement.
2. Identify the root causes of churn: Once you have a good understanding of your churn rate, you can start to identify the root causes of churn. You can do this by analyzing customer feedback and data from analytics tools.
3. Develop and implement churn reduction strategies: Once you have identified the root causes of churn, you can develop and implement strategies to reduce it. These strategies may vary depending on the specific causes of churn in your case.
4. Monitor and improve your churn reduction strategies: It is important to monitor your churn reduction strategies over time and make adjustments as needed. You can use analytics tools to track the effectiveness of your strategies and identify areas for improvement.
Summing up
As more and more OTT streaming platforms become available, OTT providers can no longer ignore user retention and customer churn. Along with a rich content library and easy access, subscriber retention has the power to make or break your OTT business.
If you’re looking for the best OTT platform with proven experience in enabling clients to monetize their VOD platform, Ventuno is here to help. OTT apps, coupled with the right marketing strategies are the key to a successful OTT business.
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Anjana Devi
