Video streaming service providers in the UK and US are being hit by subscriber churn as more users become selective about where they spend their subscription dollars. How can subscription businesses respond? Shashank Venkat finds out
According to a new survey by Juniper Research
, subscription video streaming services such as Amazon Prime and HBO Now are struggling to retain their subscribers in the UK and US. While Amazon Prime is tackling a modest churn rate of 2.9%, HBO Now is losing close to a fifth (19.2%) of its subscribers due to churn. The survey identified that customers are burdened with an increasing number of Subscription Video on Demand (SVOD) applications, resulting in what is known as subscription fatigue
Did you know that customers in the US are spending around $237 per month on subscription services alone? Since subscription billing
seamlessly blends in the background, the cumulative effect of these subscriptions is felt only in the monthly credit card statements. That’s when customers typically decide to cut down on the number of services they subscribe to.
However, we continue to believe that subscription fatigue is not necessarily a bad thing. It just means that customers have become more selective about spending their subscription dollars. In fact, the same Juniper Research survey has also revealed that Netflix has positive adoption rates in the UK and US (7.7% and 6.3% respectively). This goes to show that if you can consistently deliver a good service (or fresh content), you will continue to gain subscribers.
In fact, Netflix is a great role model for newer subscription businesses. Last month, we highlighted Netflix’s efforts towards growing its original content catalogue
in order to counter the threat from other SVOD services. Now there are reports that Netflix is going to bring a unique, interactive show format where viewers can choose their own storylines
. The continued focus on content goes to show that Netflix has not been distracted by its growth. Furthermore, Netflix has also built robust peripheral technologies such as a highly accurate recommendation engine based on data analytics, a super smooth subscription billing platform and other value-added features
which all combine to deliver a superior subscriber experience.
The study predicts that monthly subscription fees will continue to rise as companies like Netflix ramp up their content spend. This may result in users reducing or even switching their SVOD service providers. Apart from engaging customers, the study also recommends that OTT service providers team up with traditional platforms to amplify reach and build brand awareness. Netflix has already joined forces with Sky
in the UK, for example. OTT businesses can also look at partnering with telcos
to expand their reach, just the way Amazon Prime has partnered with Airtel in India.
Subscription fatigue is likely to become a bigger problem in the future as businesses in traditional industries like automobiles
explore subscription models for their customers. As this mode of access to services and products becomes more common, users are likely to pay much closer attention to their overall subscription expenditure, and businesses must keep improving and evolving their services to stay relevant.
Find out more by reading our six ways to combat subscription fatigue where we identity some key growth strategies for subscription businesses.