Churn has long been a dirty word in the subscription business, especially when it comes to streaming because it is easier to cancel a streaming subscription than to cut the cord with cable, as anyone who has been on the phone with Comcast can attest.
But new research from the consulting firm Magid contends that just like there is good cholesterol and bad cholesterol, there is bad churn and strategic churn and strategic churn is consistent with the long-term heath and growth for streaming services.
Magid’s Subscription Science practice also found that certain subscribers who are likely to drop a service and move on to a competing service are still worth appealing to because they contribute to the vitality and success of a streaming service, while other high-churn customers are not.
According to SubScape, an analytics tool introduced by Magid this year, one segment of consumers, dubbed “Hypers” will not only return and pay for a service when it has new attractive programming, but will talk about the shows they like with friends and on social media, creating buzz.
These Hypers tend to subscribe to a high number of services. They also have high incomes, which also makes them valuable.
The other group consists largely of freeloaders who borrow passwords and drop services after signing up for free trial periods. They also tend to spend time on digital and social media, such as YouTube, TikTok and Snapchat.
According to Magid, in the first ten months of 2023, the top 20 streaming services in the U.S. had subscribers losses–or churn–of 8% and a gain of 8% a month, which averages out to net growth of zero.
In that environment, streamers are fighting for share and fighting over subscribers and the key is reaching out to the right group of subscribers.
“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,” said Brent Magid, CEO of Magid and Kate Morgan, the company’s chief product officer and head of its global media, entertainment and games practice.
Magid found that streaming services that simply look at churn rates may be following the wrong metric. Instead, the better metric is total subscribed months. Getting high-churn subscribers to come back a few months sooner and stay a few months longer can generate millions of dollars in revenue.
Services that consistently deliver culturally relevant content will attract these transient, FOMO-driven consumers, Magid said.
Some programs are particularly good at attracting the right high-churn subscribers–and it’s not always the big budget series that do the trick.
Shows Magid found that attract Hypers include the World Cup, The Flash, Euphoria, The Walking Dead: Dead City, The First 48: Killer Confessions, Loki, Ginny and Georgia, the Kardashians, Gordon Ramsay’s Food Stars and Ted Lasso.
