In the last year, despite being the market leader, Netflix saw an increase in its cancellation rate from 2.3% to 2.4% in the last two years, compared to the rest of the premium streaming market, which went from 5.3% to 7% during that same time. It is indeed a considerable amount when taking into consideration their massive customer base.
The average subscriber churn in OTT has stayed around 40% during the past year. It fluctuates a few points above and below in the US, one of the biggest OTT markets.
This figure threatens to increase with every new player entering the fray with hope in their eyes on a bootstrapped OTT service.
It is more important than ever to reduce OTT churn and incentivize revenue to reach positive ROI or increase the subscriber base.
This guide will help you tackle precisely that. The OTT landscape is growing at a tremendous speed. The right strategies would not only help you minimize churn but also help you outwit your competition and make your mark in this crowded market.
You are just 4 steps away from tackling OTT churn
PwC surveyed the OTT viewing patterns of 1,000 US consumers aged 18 to 59, with annual household incomes above $40,000. The top five answers to why people unsubscribed are as below.
As you can see, the common theme running across the top reasons is the quality and type of content. Today's consumer is demanding and doesn't want to settle for anything less than the best. The best way to keep these users engaged with the platform is to create content aligned to the user's requirements and preferences.
Netflix releases over 700 original titles every year with a slew of regional titles as well. In fact, between 2019 and 2020, Netflix increased its subscribers by 98 million (a 33% YoY growth) with the help of regional content. It produces content in at least six different localized languages to cover a wider audience embedding this strategy in customer acquisition and engagement.
When Netflix motivates us to binge watch in whichever language pleases us, Disney + releases content periodically to get people talking about it. Having seen their success with the weekly releases of Mandalorian and Wanda Vision, many other OTT streaming services such as Amazon and Voot are adopting this strategy.
Along with Parrot Analytics, Netflix Sweden surveyed to see the impact of the titles of shows on retention. They did this with the help of affinity scoring. These scores help understand how a product fits the needs of the customer. In OTT, a higher affinity score means more people would watch the show and stay hooked to it.
This, coupled with the most in-demand shows, provides a matrix of affinity-demand. The OTT platform can decide what shows need more promotion and what shows people are most likely to watch after they finish an on-demand on high-affinity show.
For example, if people watch Stranger Things, Netflix promotes them to watch higher affinity shows like Dark or Witcher. When you start promoting high-affinity shows, there is a chance of avoiding situations like HBO's mass churn after GoT.
But the affinity-demand matrix is not a one-stop solution. Neither is just quality content. You need to experiment with the other variables such as content types, plan durations, or billing periods with different cohorts of users across different revenue levers.
Rethink your value proposition, roll out new pricing strategies while giving your existing customers whatever you have promised them. Chargebee allows you to do all this and enables your billing infrastructure to launch, experiment, and iterate with all the viewer touchpoints according to their subscription lifecycle.
The low cost of exit in OTT services favors the user, and they can withdraw their subscription when they face even the slightest hindrance. So retention hinges on providing excellent customer experiences. There are two aspects to creating a good experience for your user.
The main idea behind user onboarding is to enable a frictionless experience, educate users on the problem, showcase your features, and drive users to take action. It should not only help them have an excellent first experience but also imprint an excellent lasting impression.
The question comes down to how simple your sign-up process can be and how easily someone can access your product.
For example, offering a free trial without payment information can reduce friction in users' sign-up experiences, and so do forms posing lesser questions. Data enrichment services like Clearbit enhancement adds rich meta-information without having to collect them at checkout explicitly. With Chargebee, you can also customize your checkout experience to match your customer wants and your needs.
The success of any activity you do can always be measured by viewing your customer progression rate and product adoption rates. Furthermore, you can also send feedback forms and tackle any complaint they raise as soon as you can.
At this stage, once again, experimentation at the pixel level would be fruitful. The best part is, you can extend your theme and personalized feel through Chargebee's hosted pages and maintain uniformity on your in-app checkout page. Not only that, but add brand essentials, customize for upsells, and add a little cat gif if that might aid your conversions. You can do all this with the help of Chargebee.
A survey by PWC showed that 50% of users would cancel an OTT service with an overwhelming amount of content or if it was challenging to discover the content. It is why it is essential to chart out a path and provide directions to your users once they onboard your service.
Hotstar uses push notifications and real-time notifications to lure users onto the platform. They run campaigns for every first-time user based on their geography, interests, and content consumption pattern on the app and provide tips on the go on how they can save data. While pushing constant notifications can be tricky, Hotstar claims that the click-through rates for these notifications are consistently over 4% and working in their favor.
Activate consulting states that, on average, US adults 18+ spend about 12.5 hours with media per day. Of this, they spend a maximum of five hours watching videos alone. Based on the location, age, and lifestyle, the number of screens a person comes across in a day varies, but this number has been increasing with the influx of content pouring in recent times.
Whether you're hooked onto the Crown or let the Ellen show run in the background to fill the white noise on a Friday night, it is a fact that we consume content on many platforms. Any OTT player that wants to be adopted by this diverse audience needs to cater to its needs by being available on all platforms.
And to provide a seamless experience, the platform must recognize which device is making a request and stream content accordingly. It means ensuring seamless integration between different devices and screen sizes.
Being present across multiple channels and building one whole experience instead of multiple fragmented journeys is essential. Chargebee helps you centralize your subscription data across channels into one single platform to develop your omnichannel presence.
With Chargebee's product catalog 2.0, you can enable your subscription business to become mobile-first as well. The mobile-first approach not only gets ready to launch a mobile-friendly billing system but also builds a secure and engaging solution.
The ease of carrying content wherever the user goes makes them more susceptible to using your service. Furthermore, checking which device the user uses most and least to view the content might give more details on the whys behind the customer behavior and help take proactive strategies against customer churn.
Churn is always viewed as the villain to any business. But have you ever thought about it this way?
Let's presume that every company at least has a yearly churn rate of 5%. Recovering even 1% of this churn will give you 1% more revenue to play around with than your competition doesn't have.
When you need a complete strategy change to tackle voluntary churn, you can tackle involuntary churn with an intelligent billing system. Most of the time, you can attribute involuntary churn to accidental payment failures. For example, the OTT provider can sometimes overlook a request to update card information, causing the payment to fail and leaving the customer with a bad experience who then cancels their subscription.
But again, no two payment failures are the same, and there is no one-step solution for recovering lost revenue. There needs to be a before and after plan that softens the impact of those failures and sets up contingency plans whichever way the situation pans out.
When payment becomes due, with Chargebee, you can set up customized pre-dunning emails, in-app notifications, ensure to flag a payment as recurring in your system, and even set up backup payment processors or gateways to insulate yourself from any server downtime.
You can set up different retry cycles for soft and hard declines when dealing with a failed payment. Chargebee can help you set up dunning personas to understand how to and how often to approach payment failures without getting blocked or losing the user and the revenue. You can also customize and automate dunning emails based on region, plan, or segments taking a targeted approach to revenue recovery.
Furthermore, with Chargebee's reporting capability, you can unify reports to consistently track the metrics that matter to your business. By aggregating billing and collections at the customer and account level, you can dig deeper into the source of revenue leakage.
Revenue recovery plays a crucial role in your business' success or failure. A sound billing automation system can take off any payment hassle when the rest of the team can focus on strategies to help expand the business or take it to a higher plane.
Speak to our experts today to understand more about plugging revenue leakage and charging into hyper-growth.