Streamers’ fight against churn goes beyond content
Opinion
Streaming brands appear to be fighting churn with TV deals, but research suggests they must also focus on deeper loyalty and customer engagement.
The content-sharing deals between Disney+ and ITVX in the UK and Netflix and TF1+ in France are first steps in exposing each partner to new audiences and providing new content and better value to existing customers.
However, they should only be the start of a journey of improving engagement and loyalty, because streaming’s problems go deeper than simply providing more content.
That was the takeout of Hall & Partners’ recent research. We found that 30% of US and 28% of UK consumers are more likely to cancel a subscription in the next six months than in the past.
And it’s only half the story. We also found consumers in both markets are twice as likely to cancel a subscription in the next six months as they are to open a new one.
Deloitte summed up the situation well recently. The average user has four paid-for subscriptions that are going to cost 13% more this year than last. Many of these will have been started on free or low-cost offers before moving to a higher price. It leaves viewers feeling frustrated and more likely to cut ties with a service than before.
Our research found that one in three (35%) US and nearly one in four (24%) UK consumers who have streaming subscriptions want to see more transparency on pricing and renewal terms. More than a quarter want brands to make it easier to cancel their subscription.
ITVX and Disney+ content-sharing deal to bring strong co-promotion opportunities
Deliver on value, not just cost
In a competitive, cost-conscious market, streaming platforms know that content and value are critical for acquiring and retaining customers. However, their challenges lay deeper than cost and content alone.
A huge finding from our research is that 49% of US and 42% of UK viewers want to see their long-term loyalty rewarded. They also want to be able to share accounts with friends and family, and reduce exposure to ads.
So streaming brands would do well to consider whether long-term loyalty could be rewarded through providing a route to what consumers are calling for: complimentary upgrades to family-sharing and ad-free accounts.
Beyond loyalty, streaming platforms are clearly already working on providing better value through partnerships. However, they need to think beyond content and offer deeper, better-value packages. Bundling services would be a good move, as Apple already does with its Apple One plans and Amazon links its Prime shopping and TV services.
Reduced churn can counterbalance discounting and make SVOD bundling work
They should also consider partnerships with other leisure and entertainment brands. This is important because our research found that 32% of US and 26% of UK consumers say they don’t have the time to get their money’s worth from a subscription.
Streamers are not just competing with one another for attention; they are up against hobbies and leisure pursuits. They need to find a way to provide better value and engagement both on and off screen.
If they need inspiration, look no further than Sky VIP. It offers lounge access at major gig venues, free cinema tickets, competitions and shopping discounts, among other offers. This is exactly the type of extra services streamers need to explore to forge a deeper bond with consumers.
They need to think beyond TV shows and tap into other aspects of consumers’ leisure activities.
More personalisation
That is not to say there is not work to be done on content but, rather, shows are not the final word.
Indeed, an important area where consumers want to see improvements is personalised recommendations — nearly a fifth say this would make their subscription more worthwhile. Streamers know helping users figure out what they should watch next is hugely important.
Netflix relies heavily on AI, revealing the technology is behind 80% of its personalised recommendations. It’s vital to get it right as soon as possible because its own research shows that it has just 60-90 seconds before a consumer loses interest and navigates away from the platform.
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It’s a challenge for all brands. Those that thrive will perfect AI algorithms to offer the most personalised recommendations, even when family members are sharing the same log-in credentials.
However, winning the streaming wars goes beyond content and personalised recommendations. It also goes beyond cost.
To prosper amid a likely upcoming cull, streaming companies need to deepen engagement with customers by rewarding them for long-term custom and delighting them with extras. The recently announced partnerships are commendable, but they are only the first steps in a far longer journey.
Farid Jeeawody is partner at Hall & Partners