VIP+ Webinar: Why some churn is actually good for streamers
Among the many thorny questions facing the streaming sector at this thorniest of moments: How to deal with rising subscriber churn at a moment when Wall Street is pressing for profitability from direct-to-consumer operations?
This was a central focus of the Variety Intelligence Platform webinar “Dare to Stream,” which gathered experts to dissect the streaming business ahead of the new incarnation of VIP+’s special report franchise of the same name, coming next month. (See last year’s edition for perspective and insights in advance.)
VIP+ correspondent Heidi Chung moderated a panel discussion between VIP+ media analyst Tyler Aquilina and consulting firm Magid’s EVP of Global Media & Entertainment Mike Bloxham and SVP of Data Science Tony Cardinale, who laid out an exclusive, data-driven strategy for streamers to optimize subscriber value.
At the core of this strategy, as Bloxham and Cardinale explained, is a more granular analysis of churn patterns to adequately understand audience dynamics in the current streaming landscape and optimize subscriber acquisition and retention costs going forward. Bloxham argued, for instance, that there is such a thing as “good churn,” and the nature of a subscriber’s value varies across behavioral categories identified within the U.S. population.
“Churn is inevitable. You’re not ever going to get rid of churn,” said Bloxham. “And we’ve learned that if you don’t have any churn, it’s a pretty good indication that you’re not culturally relevant, [because] nobody’s coming to check you out. Part of a highly engaged user is a propensity to churn in some cases.”
Magid’s presentation outlined five categories, or segments, of streaming subscriber, with distinct churn behaviors and motivations for each. One key segment is the highest-churn category, “hypers,” who are essentially the influencers of the streaming world, jumping between subscriptions to catch new, buzzy programming they then talk up to other segments.
“The hypers influence others to come and try out a service — some of those less churn-oriented segments,” Bloxham said. “They’re like swing voters. They’re a small but incredibly important group, and the better services manage their relationship with hypers, the more likely they are to succeed.”
Hypers are also more likely to resubscribe to services versus the lower-churn categories, who are harder to recapture once they do churn out. As such, some level of churn may be desirable, especially for smaller services, which need the attention of high-churn subscribers to drive buzz for their content.
“There is a normal amount of churn that’s dependent on your size and how niche you are,” Cardinale said, noting smaller services tend to have higher churn rates because they attract larger shares of hypers and other subscribers more likely to churn.
Therefore, he added, “comparing two different services’ churn rates in a vacuum is kind of an unsophisticated way of looking at this, when really it’s a function of two things: What are the kinds of consumers that I cater to at my size, and then after that, my product, my content, my usability, et cetera.”
It’s an apt point. Data shows the domestic SVOD market is still growing more volatile as consumers adjust to the crowded slate of available services, with users increasingly cycling through subscriptions as it suits their needs.
With net subscriber growth slowing as a result, it’s more important than ever for services to attract the right type of user and understand which subscribers can be retained as they strive not only to build scale but maximize revenue from their user bases and achieve profits.
For more from Magid and VIP+ on the state of the streaming landscape, view the original article and webinar video on Variety.
