According to Magid, not all churn is bad!

Leading Strategy and Consulting Firm Releases Findings From SubScape™, Latest Magid Product Offering Prescriptive Solutions For Acquisition and Retention In The Ongoing Streaming Wars 

Newly Identified Audience Segments Reveal Key Insights About Subscriber Motivations And Solutions For Engagement

New York – November 29, 2023 – At Magid, we announced yesterday key findings culled from SubScape ™, a next generation, analytics-driven tool introduced in 2023. SubScape provides media companies with nuanced, actionable insights about what drives or inhibits consumer engagement in streaming services – or the “why” of churn. 

Developed by our award-winning Subscriber Science practice, SubScape defines, collects, and calculates proprietary SVOD (as well as AVOD and FAST) metrics, offering clients the opportunity to predict outcomes, optimize stability and maximize profits in what continues to be a highly competitive entertainment ecosystem. 

In a joint statement,  Brent Magid, CEO, and Kate Morgan, chief product officer and head of the Global Media, Entertainment and Games practice, said: “The media industry is at an inflection point as savvy consumers are presented with an unending list of viewing options.” They added: “The battle for the acquisition and retention of churn-centric subscribers isn’t slowing down which is why leveraging SubScape’s granular, solution-based insights have been mission critical for our clients as they reimagine their streaming playbook for long term growth.”

According to SubScape:

• Between January and October 2023, the top 20 streaming services, on average, experienced a subscriber loss of 8%  and a gain of 8% per month, realizing an average net growth of zero in the U.S. 
• Although subscriber volatility across the landscape is high, with 40% on average saying they may cancel or are likely to cancel the individual paid service used by their home in the next year,** a closer look at SubScape data finds that not all churn is bad and that some attractive psychographic segments, predisposed to churn, provide a competitive advantage and guide streamers toward increased market share and profitability when managed strategically.

Hypers: A high churn, high income segment whose value lies in driving growth and word of mouth.  Of all the segments, Hypers score the highest on the following:

• 46% agree: “I have FOMO “fear of missing out” about certain shows” 
• 51% agree: ‘I like to post, like, share on social media about my favorite shows/actors”
• When asked about the individual paid services used by their home, 55% of Hypers say they may cancel or are likely to cancel that service in the next year. 

Loyalists: A high spending low churn segment.  Of all the segments, they are the most open to ads.

• 81% agree: “I’m fine watching some ads/commercials, if it saves me money”  

Digitarians: A high churn segment with equal interest in video on social platforms like YouTube and TikTok, they’re free promotion seekers who do not represent a high ROI on marketing dollars.

• Mostly likely segment (14%) to be in a free promotional period or borrow an account from another home

Pragmatics: A smaller segment (just 10% of the population) that is nonetheless a critical revenue-driver for certain services with libraries that map to its emotional needs. 

• 70% agree: “I avoid watching ads/commercials as much as possible” (Tied with Hypers for the top score)

Mainstreamers: A laggard segment, this low churn group is an important component of stability in a mature SVOD, but rarely strays beyond the top five services. Mainstreamers score as the lowest subscriber segment on the following questions:

• Only 24% agree: “I’m usually the first of my friends to try a new video service” 
• Only 25% agree: “I have FOMO “fear of missing out” about certain shows” 
• Only 24% agree: ‘I like to post, like, share on social media about my favorite shows/actors” (lowest subscribing segment)
• 77% intend to stick with a service for at least a year

Inerts:  The oldest of six segments, with a lower interest in video overall, Inerts present the lowest opportunity to drive revenue. 

 

Additionally, we find that: 

• Not all churn is equal. There is a difference between “bad” churn vs “strategic” churn with the latter  consistent with strong long-term growth. While perceived service weakness may play a role in churn, churn is often fueled by a segment’s inherent volatility and the attitudes/behaviors that subscribers, like Hypers, bring with them, such as a fear of missing out (aka FOMO).  Services that consistently deliver culturally relevant content will attract these transient FOMOs.
• Some high-churn segments show value in other ways. With new content driving interest, a service’s vibrancy and health is in part measured by its appeal to some high-churn viewers. And one of these high-churn segments, Hypers, carry the most number of services at any given time and are also the best word-of-mouth drivers in a streamer’s customer base.
• AVOD is a significant time competitor to SVOD. When all video streaming is included, the top five SVODs still dominate Magid’s Primacy metrics, but free streaming services like TUBI, compete with SVODs mid-tier services.
• Income and Churn don’t always go hand in hand. Although it might seem counter-intuitive, having  less disposable household income isn’t always predictive of churn propensity. Hypers, the highest income SubScape segment, also has a high proclivity to churn. 
• We’re looking at the wrong metrics. Traditionally, average subscriber tenure and churn rates was an indicator of business health. But research suggests the more accurate metric is the number of total subscribed months (whether or not they’re contiguous), which recognizes that some subscribers who leave quickly also come back quickly.  
• Big budget series don’t necessarily drive big subscriber numbers. Big tent-pole series, expensive to produce and promote, don’t necessarily bolster subscriber engagement. By integrating SubScape’s findings with Magid’s established, proprietary EmotionalDNA® (eDNA) tool,  shows or movies, (regardless of production costs) that can attract or retain a segment of viewers can be precisely identified.  Knowing which SubScape segment to target, and how to motivate them, drives higher ROI  through program development, marketing and promotion that better meets viewers desires at a lower cost. For example, the list below (in no particular order) features content that effectively attracts Hypers including sports, kids,  scripted and unscripted shows. (***SubScape Segments Implemented in EmotionalDNA platform, in November 2023).

FiFA World Cup	Fox Sports
The Flash	The CW
Euphoria	HBO
The Walking Dead: Dead City	AMC
The First 48: Killer Confessions	A&E
Loki	Disney+
Ginny and Georgia	Netflix
The Kardashians	Hulu
Gordon Ramsay’s Food Stars	Fox
Ted Lasso	Apple TV+

Other key Magid metrics together with relative performance on product attributes Magid measures, guide streamers’ investment decisions.

(SubScape findings- Jan-October 2023. league apps are excluded)

**(“4+” intent to cancel, out of 10. Jan-October 2023.)

SubScape Methodology

Monthly tracker of paid and free streaming services’ flow of consumers, usage, product attributes and overall vitality. 2,000 Persons 13-75 surveyed monthly, weighted to U.S. census proportions by age, gender, income, race and ethnicity. Survey fielded in English. Delivered to clients via API, interactive dashboard, and through consulting engagement.

 

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About Magid
Magid is a strategy and consulting firm that helps companies make better decisions and put them into practice. For more than six decades, our courageous thinking has helped hundreds of brands worldwide become an essential part of peoples’ lives – making and sustaining category leaders. With a human-centered approach grounded in psychological and social principles, we leverage years of experience, perspective and foresight to help clients win.

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