© Parks Associates www.parksassociates.com OTT Churn and Retention: Increasing Lifetime Subscriber Value September 6 11:00 AM CT Sponsored by
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OTT Churn and Retention: Increasing Lifetime Subscriber Value
September 611:00 AM CT
Sponsored by
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Speakers
Hunter SappingtonResearch AnalystParks Associates
David BrowneSr. Director of Product ManagementComcast Technology Solutions
Barry NolanCMOSwrve
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Introductions Parks Associates Research The State of Churn in Today’s OTT Video Market Strategies to Increase Subscriber Retention
Swrve: Increasing Lifetime Subscriber ValueComcast: Churn - Understanding Consumer MotivationsInteractive Expert Panel DiscussionAudience Q & AClosing
Agenda
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OTT Churn and Retention:The State of Churn in Today’s OTT Video Market
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OTT Penetration is Starting to Plateau
0%10%20%30%40%50%60%70%80%90%
100%
Q1/2013(N=10,000, ±0.98%)
Q1/2014(N=10,000, ±0.98%)
Q2/2015(n=5,029, ±1.38%)
Q3/2016(n=9,967, ±0.98%)
Q1/2017(n=5,158, ±1.36%)
Q1/2018(n=5,011, ±1.38%)
Overall OTT Service Subscription Penetration (2013 - 2018)Among U.S. BB HHs Surveyed
"DM6005. To which of the following video services does your household subscribe (do not include services that you are using on a trial basis)?"Source: Multiple Surveys: American Broadband Households and Their Technologies | © 2018 Parks Associates
% S
ubsc
ribin
gto
At L
east
One
OTT
Se
rvic
e
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“Service Stacking” is the Norm
0%
20%
40%
60%
80%
Q1/2014 (N=10,000, ±0.98%)
Q2/2015 (n=5,029, ±1.38%)
Q3/2016 (n=4,973, ±1.39%)
Q3/2017(n=5,009,±1.38%)
4 or moreservices3 services
2 services
1 service
Number of OTT Service Subscriptions (2014 - 2017)Among U.S. BB HHs Surveyed
% S
ubsc
ribin
g to
Spe
cifie
d N
umbe
r of O
TT S
ervi
ces
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Massive Competition in Online Services
68 85 109156
192 21418
25
55
4330 5
1 1 8 7 8 4
-50
0
50
100
150
200
250
2013 2014 2015 2016 2017 2018
Closed New Existing
United States OTT Video Services, 2013-2018Parks Associates OTT Video Market Tracker
Source: OTT Video Market Tracker 2014-2018 | © 2018 Parks Associates
# of
OTT
Vid
eo S
ervi
ces
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Churn has Remained Stable Overall
0%
5%
10%
15%
20%
25%
30%
0%
5%
10%
15%
20%
25%
30%
35%
Q2/2015 Q3/2016 Q1/2017 Q1/2018
OTT Churn and Cancellation Rates (2015 - 2018)Among OTT Subscribers or U.S. BB HHs
"Q6020/6026/DM6030. Which of the following services did you previously subscribe to but you cancelled the service over the past 12 months?" | Source: Multiple Surveys: American Broadband Households and Their Technologies | © 2018 Parks Associates
Chu
rnR
ate
% C
ance
lling
1+ O
TT S
ervi
ce
Cancellation Rate
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Churn is High for Most OTT Services
0% 20% 40% 60% 80% 100%
NetflixAmazon Prime Video
HuluOther subscription, online video service
Sports OTT video servicesCBS All Access
STARZYouTube TV
YouTube RedDIRECTV Now
Hulu with Live TVSling TV
HBO NOWPlayStation Vue
Showtime
Subscribers Canceling OTT Service as % of Current Subscriber Base (Q1/18)Among Current Subscribers of Specified OTT Services
"DM6030. Which of the following services did your household cancel over the last 12 months?" | Asked of a Subgroup of 5,011 U.S. BB HHsSource: American Broadband Households and Their Technologies Q1 2018 | N = 10,015, ±0.98% | © 2018 Parks Associates
% of Subscribers Canceling OTT Service as % of Current Subscriber Base
*
* Small sample size
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Primary vs. Complementary Services
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1/2014(N=10,000,
±0.98%)
Q2/2015 (n=5,029,±1.38%)
Q3/2016 (n=9,967,±0.98%)
Q1/2017(n=5,158,±1.36%)
Neither service
Pay-TV servicesubscriptiononly
Subscribers toboth pay-TV &OTT service
OTTsubscriptiononly
Concurrence of Pay-TV and OTT Service Subscriptions (2014-2017)
Among U.S. BB HHs Surveyed
"DT1035. Which of the following best describes your home’s TV service? DM6005, To which of the following video services does your household subscribe ?" Source: Multiple Surveys: American Broadband Households and Their Technologies | © 2017 Parks Associates
% o
f Bro
adba
nd H
ouse
hold
s
Primary Services
Complementary Services
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• Price Increases• Competitive Offerings• Negative Experiences• Lack of New Content• Changes to a Service
Triggers for Churn
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Quality and Content are Key
0% 5% 10% 15% 20% 25% 30% 35%
Other reason
I am dissatisfied with the interface
The quality of video streaming is poor
The content is not current
I watched all of the interesting content that was available
Another service is more interesting to me
I plan to only subscribe for a short time
The library is too small
The season for this sport is over
The subscription is not worth what I am paying
I plan to cancel in order to save money
Reasons for Planning to Cancel an OTT Service (Q4/15)Among U.S. Respondents Planning to Cancel an OTT Service, n = 706, ±3.69%
"DM6040. Which of the following describe the reason that you plan to cancel [Service to be Cancelled]?"| Source: American Broadband Households and Their Technologies Q4 2015 | N=10,000, ±0.98% | © 2016 Parks Associates
% Citing Factor as Reason for Planning to Cancel
Price/Value
Competitive Offering
Content
User Experience/Changes
Content
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Strategies to Increase Retention
• Community Building
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Strategies to Increase Retention
• Community Building• Retention Incentives
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Strategies to Increase Retention
• Community Building• Retention Incentives• Data-Driven Insights
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Strategies to Increase Retention
• Community Building• Retention Incentives• Data-Driven Insights• Content Additions
© Parks Associates www.parksassociates.com
Strategies to Increase Retention
• Community Building• Retention Incentives• Data-Driven Insights• Content Additions• UX Enhancements
© Parks Associates www.parksassociates.com
Swrve: Increasing Lifetime Subscriber Value
Barry NolanCMOSwrve
Know and personally interact with OTT usersacross TVs, Boxes, Web, Tablets, Smartphones
The Churn Equation
1% reduction in churn
=
5% increase in user Life Time Value
Among U.S. Respondents Planning to Cancel an OTT Servicen = 706 ± 3.69%
Price/Value
Content
Competitive Offering
User Experience/Changes
Reasons for Planning to Cancel an OTT Service Q4/ 15
% Citing Factor as Reason for Planning to Cancel
Price1
The subscription is not worth what I am paying
Case Study: Churn is killing us. Reduce the price.
Monthly Subscription magazine> 30% annual churn of subscribersCustomer Acquisition Cost (CAC) > Life Time Value (LTV)
23
Solution: Reduce the price
Price decrease had zero impact on churn
So they reduced the price again.
Churn
This price decrease had no impact on churn either.
Using Swrve they triggered an in-app survey the instant someone unsubscribes.
Only 3% said it was price
Triggered in-app message
It was a storage bug. One code fix, fixed $2.5m in churn.
Price ≠ costPrice = perceived value
Price
If users are not using your product, they are not getting value from it
Increase engagement > Increase Retention
Among U.S. Respondents Planning to Cancel an OTT Servicen = 706 ± 3.69%
Price/Value
Content
Competitive Offering
User Experience/Changes
Reasons for Planning to Cancel an OTT Service Q4/ 15
% Citing Factor as Reason for Planning to Cancel
Price1
Content2
OTT engagement strategies
The Reach Gap - OTT/Media Streaming ConsumersViewers move between channels all the time, but TVs dominate
40%Signup by PCs
35%Signup by Mobile Apps
25%Signup by TVs
15%Viewing on a PC
15%Viewing on Mobile 70%
Viewing on TVs
Source: Netflix, Mar 7, 2018
PC Mobile Smart TVs
Even basic comms plan will increase engagement
Netflix push notification
Spotify in-app message
Netflix email
A/B test: comms impact on engagement
Often overlooked - most users don’t really care for what you say.
1% CTR
Micro-segmentation unlocks engagement
Segment-of-one
Purchased 4 Conor McGregor
PPV fights in the last 3 years,
and has just watched UFC229
McGregor trailer twice in the
last week.
Traditional Segments
Purchased PPV
engagement
10x
Up-sell campaign
Message-of-one - across all platforms
Nurture & Grow
Behavioral Segmentation
Nurture habits with new usersNew user, watched just one show, two days ago
+200% MAU
+20.5% in viewing time
+9.4% movies streamed
+5.5% videos downloaded
+15.4% favourites saved
`Re-engage & Retain
AI delivers new insightsWho is likely to churn?
Who is slipping away?Way easier to retain before they’ve unsubscribed
AI is best a predicting behaviors
Among U.S. Respondents Planning to Cancel an OTT Servicen = 706 ± 3.69%
Price/Value
Content
Competitive Offering
User Experience/Changes
Reasons for Planning to Cancel an OTT Service Q4/ 15
% Citing Factor as Reason for Planning to Cancel
Price1
Content2
UX3
I’m dissatisfied with the interface
Progress is the sum of all testsThree key Spotify tests that drove retention
Family Plan Discovery Playlists
Spotify churn = 5.5%.
+18% shows
watched
Test every element of your UX across platformsWhich UX increases engagement most?
Pricing paywall testWhat happens when we reduce the number of free articles per month from eight to four.
+27% conversion
ARPU Daily (Test = 8)ARPU Daily (Control = 8)
Dol
lar/U
ser
0.0493
0.0618
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Churn - Understanding Consumer Motivations
David BrowneSr. Director of Product ManagementComcast Technology Solutions
© Parks Associates www.parksassociates.com
Q&A
Hunter SappingtonResearch AnalystParks Associates
Barry NolanChief Marketing OfficerSwrve
David BrowneSr. Director of Product ManagementComcast Technology Solutions
Generally speaking, are services using consumer viewing data enough to prevent churn?
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Q&A
Hunter SappingtonResearch AnalystParks Associates
Barry NolanChief Marketing OfficerSwrve
David BrowneSr. Director of Product ManagementComcast Technology Solutions
How should OTT providers be investing in subscriber retention compared to acquisition?
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Q&A
Hunter SappingtonResearch AnalystParks Associates
Barry NolanChief Marketing OfficerSwrve
David BrowneSr. Director of Product ManagementComcast Technology Solutions
What are the key touchpoints in which OTT services are not adequately connecting with their consumers?
© Parks Associates www.parksassociates.com
Q&A
Hunter SappingtonResearch AnalystParks Associates
Barry NolanChief Marketing OfficerSwrve
David BrowneSr. Director of Product ManagementComcast Technology Solutions
How do you see trends in bundling and aggregation of OTT services affecting churn going forward?
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Q&A
Hunter SappingtonResearch AnalystParks Associates
Barry NolanChief Marketing OfficerSwrve
David BrowneSr. Director of Product ManagementComcast Technology Solutions
What can OTT services do to encourage consumers to subscribe for longer than a single month at a time?
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Audience Q&A
Hunter SappingtonResearch AnalystParks Associates
Barry NolanChief Marketing OfficerSwrve
David BrowneSr. Director of Product ManagementComcast Technology Solutions
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Future of Video: OTT, Pay TV, and Digital Media
#FutureVideo18 @video_future
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Hunter SappingtonResearch Analyst
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