Why Are Churn Rates Growing in 2022?
OTT viewership has grown in recent years, but so has something else: churn. Churn rates across the industry are steadily increasing, according to a new study from Parks and Associates. In 2020, the average churn rate was 40%, but now the average is 45%.
This growth probably isn’t too shocking to those who’ve been following the industry for the past few years. As more streaming platforms have launched, most viewers have a limit to how many services they will pay for each month. And with popular content spread across so many OTTs, many viewers are simply subscribing to services to watch certain shows, and quickly canceling once the show is over.
In fact, according to Parks, the average streaming video viewer has one or two “foundational’” services they always keep—typically the giants like Netflix and Disney+—with a few additional services used for special content. These latter services are the ones causing the most churn, as viewers don’t hesitate to cancel their subscription after the content offered is no longer appealing.
Video providers are learning to accept that churn is now part of the OTT game, Parks says. Yet, churn reduction is a key piece to meeting revenue goals—and to surviving the streaming wars. We’re still in a pivotal time for the industry, and with as many services as there are now, it’s not a given that they’ll all be in business in a few years time. The ones that are able to thrive will understand churn is part of streaming, but they’ll still do everything in their power to keep it low. Part of this is ensuring there’s desirable content for viewers at any moment. However, it’s critical to understand that content alone isn’t what causes churn.
A 2021 survey found that most streaming viewers in the U.S. say the top important factors when deciding which OTTs to use are “ease of use” and “videos not re-buffering.” These factors were cited by viewers as more important than “having shows and movies I like.” Further, the study found that 4% of viewers will cancel a subscription due to re-buffering alone.
The survey also found that viewers are feeling more frustrated by issues like startup delays, re-buffering, and repetitive ads than in previous years. It’s likely this, and not content alone, is contributing to increasing churn rates. When a viewer is annoyed by seeing the same ad over and over or constantly waiting for their content to load, they know they can unsubscribe without consequence, as there’s a bevy of other entertaining platforms they can sign up to.
That’s why it’s important that OTTs don’t solely focus on the content aspect of churn reduction. To retain loyal subscribers, you need to offer them a flawless experience. Bingeable shows are a starting point, but those shows need to be seamless when watched on CTVs, mobile devices, and laptops—even when viewers don’t have great Wi-Fi.
Luckily, there’s technology that can perfect the experience for viewers. Penthera’s B2B products are all designed to eliminate delays and re-buffering and to enhance the ad experience for OTTs. To learn more, check out our product suite here or contact one of our experts to chat about how Penthera can help you reduce churn.
Source: Parks Associates