Everyday we see a new headline around video subscription churn. Last week, Rapid TV News led with “Only 20% of US streaming subscribers content to stay with providers”. Almost every industry event includes a panelist with a theory on post-pandemic consumer behavior leading to more churn. As the analytics provider for more than 2,000 video subscription video services, our insights into churn are a bit more complicated.
The good news; our monthly churn benchmark for the subscription video industry gradually fell from 10% at the beginning of 2021 to 8.6% in June. This benchmark has a 1.5% margin of error and a 4% standard deviation. To minimize volatility, our benchmarks only include video services that have at least 10,000 subscribers and more than 12 months of operation. Across our clients, this reduction in churn is translating into better lifetime values, more content investments, and increased spend on marketing acquisition.
We work with a diverse group of video services covering entertainment, news, sports, fitness and other categories. As you may expect, the theories on the monthly churn reduction have been just as diverse. Some believe consumers are settling into the video services they love. We should also acknowledge that Wicket Labs’ clients have access to detailed data for their customer cohorts and tend to proactively take actions to engage and retain their subscribers. The Wicket Scorecard may be part of the improving metrics.
The complicated part; even at 8.6% monthly churn, a video service will lose 66% of its subscriber base in 12 months. Every video service needs to actively invest in subscriber retention. Some best practices:
- Minimize Involuntary Churn – some customer cohorts like teenagers inherently have more billing issues. Beyond that, there are plenty of subscription management and payment processors that can keep your involuntary churn under 25% of all lost customers.
- Catch those Drifting Away – we find that Idle customers (no views in the last 4 weeks but active in the prior 8) have a lifetime value that is 30-50% lower than Engaged customers. Increase your outreach to this at-risk segment with weekly emails.
- Treat Inactives as a Win-back – there’s a common story; “We were really excited to announce our new show (or new app) to the entire customer base and then churn spiked.” Inactive customers have not watched a video in 3 months but they continue to pay. Reminding them of their under-utilized subscription leads to cancels. Instead, carve these users off from your regular communication and treat them like a win-back with a more nuanced message.
- Watch Out for False Starts – When we only look at the video views per title, there’s a risk we amplify the promotion for a video that isn’t holding the audience’s attention. Look a little deeper at how the audience is engaging with the show or class before including it in your subscriber outreach. Promoting a video that isn’t compelling wastes real estate.
Since churn is a fact of life for all video services, developing the Win-back skillset is also essential. For every Lost Customer based on involuntary churn, targeting those that were Engaged with the service is a natural campaign. For voluntary cancels, understanding the videos they watched and their favorite genres allows you to educate them about a new season, a show in the same genre, or a similar class.
Each retention tactic requires a harmonized dataset combining subscription and revenue events with video views and metadata. The story your data tells should be presented clearly where your key actions are evident and easy. If Wicket Labs can help you reduce churn for your video subscription service, we’d love to have a conversation.