"From reducing acquisition costs to increasing the number of viewing minutes per day, the subscriber experience is shaped end-to-end by performance across such metrics." -Shay David, Kaltura
Netflix, Hulu, and Amazon are closing numerous nine-figure deals with acclaimed show creators like Shonda Rhimes to secure the future of their original content funnels. The approach appears successful so far, but the battle isn’t just about content — it’s about keeping churn rates low and customer lifetime value (LTV) high, driven by listening to data.
The average over-the-top (OTT) video service churn rate has hovered around 18% for years. Keeping customers around equates to greater lifetime value and, ultimately, building long-term profitability. It’s a challenge faced by all Cloud TV providers. So, what are streaming giants doing to hold onto subscribers?
THE RIGHT KIND OF DATA
One of the biggest debates centers around the introduction of ads. Netflix relies on product placement, while Hulu and other services offer cheap or free ad-supported versions with commercial breaks. The choice comes down to the type of data that a company prioritizes — striking a delicate balance between financial metrics and user experience.
This trend is prevalent among other content-based platforms as well. Spotify’s free version relies heavily on ads to generate value from listeners, while the influx of advertising across Instagram is sending it down the same path as mother company Facebook (much to the chagrin of users).
Recent Cloud TV deployments like Vodafone TV and Beeline TV are quickly gaining momentum in the international markets they serve — leveraging data for both targeted viewing and to create a highly personalized experience for each and every user. Rather than a one-size-fits-all approach, these services are introducing flexible options to keep customers happy.
The question is whether or not platforms can increase customer lifetime value and decrease subscriber churn during such rapid convergence and scale of media. Advertising dollars can be a boon for OTT and Cloud TV platforms, but, most importantly, they need people who are willing to pay, and continue paying, for their service.
THE OPTIMAL EXPERIENCE
Most companies look at the same categories of business outcomes to drive strategy — acquisition, retention, engagement, and monetization. These are the data points behind the scenes of the Streaming Wars. The different strategies between each platform come down to how this information is collected, interpreted, and prioritized.
From reducing acquisition costs to increasing the number of viewing minutes per day, the subscriber experience is shaped end-to-end by performance across such metrics. How many seconds is the optimal length before the next episode auto-plays? Should recently-viewed content appear at the top after log-in? Streaming giants surely know the answers to these questions and much, much more.
The challenge is creating a unified big data infrastructure that allows services to track and easily interpret key performance indicators, and then take appropriate action in response to the learnings. Herein lies a leading edge for service providers.
Top platforms like Amazon and Netflix use predictive analytics and machine learning to outpace the competition. While a hot new series with A-list celebrities may drum up publicity, the real secret to success is less visible. Their most powerful weapons-of-mass-subscription are hidden inside algorithms.
Now, Beeline TV, Vodafone TV, and other major providers are seeing results from similar data-driven personalization — indicating that the entire telecom industry is inching closer to advanced data infrastructure. By continuing to optimize the user experience, telecommunications companies will likely unearth new opportunities for growth in the near future.
A BIG CHURN OFF
The landscape for streaming services is shifting. There will soon be more content, more data, and more options for customers to choose from. The fight to find and keep subscribers will only intensify.
In the end, staying relevant will mean staying vigilant. Consumer expectations for convenient, seamless access to entertaining (and personalized) content are getting higher and higher. The companies that provide the best solution at the right price point will win out.
To stop churn in its tracks, Cloud TV services will need to tune in to customer data more closely than ever. This approach has allowed a number of platforms to grow quickly thus far, but the Streaming Wars are far from over.
Kaltura is a leading video technology provider; it’s award-winning Cloud TV Platform helps major global media companies and mobile operators like Vodafone, Turner and Viacom, among others stand out in today’s crowded streaming space.
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