Let’s talk about churn

Churn may not be the sexiest topic but it is a known industry issue – and one of the things Wall Street worries about for the streaming industry.

For one, it drives up subscriber acquisition costs because providers need to keep doling out money to market to and try to win back customers that leave.

Retention strategies were a major topic at the StreamTV Show, with providers trying to make platforms as sticky as possible. But Claritas and Magid, two vendors that have teamed up, had a particularly interesting take, suggesting not all churn is equal and that some cohorts of those who churn are even valuable.

“Churn is the cholesterol of streaming. It’s not all the same,” Mike Bloxham, EVP of Global Media and Entertainment at Magid, told StreamTV Insider.

The partners believe the key to successful acquisition and retention is all about targeting audiences based on variables that play into how and why those subscribers stay or leave, engage, and recommend content to others.

The two have a combined offering they call Subscape Subscriber Segments, which lets clients run campaigns to target subsets of the streaming population identified and segmented based on their value to the business. One aspect is predicated on the notion (supported by the company’s research) that some groups within the population have a predisposition to churn, which reflects in other types of media and may not have to do with the service itself. The vendors pull signals from multiple data sources to inform the five active subscriber segments it identified.

Hyper churners

For example, the cohort dubbed “Hypers” are pegged to be high churners but also high value. They tend to binge, churn, but then come back. These so-called Hyper churners spend more money on entertainment than other groups and are tastemakers of sorts. They chase content from service to service but are also vocal promoters of TV shows and films they like to others in their networks, helping to generate so-called buzz.

“They’re voracious consumers of video, and the fact that they churn is a part of that behavior,” Bloxham said. “What they’re effectively doing is curating their experience more consciously and more often than other people.”

The goal for streamers there is to get Hypers to spend a few more months with a service a year “where they’re paying full freight and they’re using your service, because that represents millions of dollars.”

For this group its more about knowing what content will pull them back rather than offering discounts on price.

Per the companies’ data, Hypers represent around 11-12% of the total population but over the past 12 months through the end of April they represented 31% of account openings and 21% of account closings in the SVOD space.

Digitarians

Another subset, called Digitarians, are considered high churn, low value. Statistically, this group is more likely to be using someone else’s password or on a free trial and in general subscribe less because TV is not as core to the group, which tends to spend more time on social like YouTube, Instagram or TikTok as TV isn’t “central to their media diet.”

For this cohort, the advice is different – basically don’t waste money trying to win them back because they don’t do much for the business.

While churn is a somewhat inevitable aspect of streaming that’s built into the model of easy signup, easy out and a rotating content slate – the aim is to elongate the time subscribers stick with a platform.

Magid’s early research into churn which prompted the later research and resulting segments consistently found around 40% of people surveyed reported an intent to stick with a subscription for about six months or less. They believe streamers can more efficiently manage churn by identifying audiences based on factors pulled from various data sources related to why they churn and then relentlessly targeting messaging that resonates with those subsets.

And streamers can increase the mix of high-value churners through Claritas’ involvement in syndicating those audiences (where the partnership comes into play through its research that segments and classifies on a household-level) to find more subscribers similar to the high-value ones they already have.

Claritas’ Ron Cohen, SVP of Practice leadership, noted syndicated audiences are now available, where one could find an audience of Hypers. Both the Hypers and the Digitarians segments consists of millions of households and some segments consist of tens of millions, according to Cohen.

“The thing about churn is you can’t try and completely eradicate it,” Bloxham said. “You have to embrace it and you have to manage it and you say, ‘how much value can we extract from people who churn?’”

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