SVOD services continue to have a larger influence on the way consumers view video entertainment with additional acceleration coming given two major media companies announced Q4 2019 launches.
Churn – a real pain in the SVOD
There are so many powerful reasons to create a direct relationship with the customer through an SVOD service—a one-to-one relationship, personalization, digital persuasion techniques, monetizing assets, and of course data. But there are big challenges to face as well, and perhaps the most formidable for SVOD services is customer churn.
Companies may believe their superior content, platform, and experience will “control” churn and make it a non-issue. Magid’s 2018 Video Entertainment Study conducted in August has yielded some eye-opening insights that challenge this assumption.
The dip-in mentality
A key finding from our study is that roughly 4 in 10 SVOD customers ages 17-41 subscribe with the intention of staying 6 months or less. That’s right—that is their mindset going in.
Further confirming this phenomenon was that overall, 36% of SVOD customers stated they subscribed to services to watch specific content, and of those customers, between one third and one half (varying by generation) reported they intended to cancel service as soon as they were done watching that content.
The same Video Entertainment Study found extremely high ratings for SVOD services so we know this is not simply a rebuke on SVOD services. Empowered by a robust digital landscape with so many viewing options and extraordinary content available, consumers are simply curating their own unique experiences—to the chagrin of SVODs. They want to pop in to see your highly acclaimed content and pop back out until your next buzz-worthy offering is released.
A third subscriber segment
A new kind of subscriber segment has emerged: dip-in subscribers. Traditionally, SVODs have been valued based on the number of subscribers they can acquire or maintain, forcing them to look at subscribers and non-subscribers as a binary option. These new content wanderers upend that approach by actively curating their own video entertainment experience, moving on and off of a range of services based on programming they want to see.
Understanding the difference between dip-in subscribers and subscribers who defect due to friction, platform deficiencies, value perceptions, and content issues is critical for long-term success. When you understand consumers from this more human-centered perspective, you also can begin to make different choices in how you structure your product. For example, you might adjust how you can proactively use recommendations and digital persuasion techniques or innovate with service “pauses” that drive future re-engagement instead of never-to-be-seen-again cancellations. You might even look at applying a strategy to sequentially release shows that appeal to the same audience (much like a linear equivalent to lead-in shows).
At the end of the day, no churn is good churn—but not all churn is created equal.