As streaming services seek to scale up and eventually become profitable, a key issue that they face is subscriber churn.
But new findings from media industry strategy and consulting firm Magid’s next generation analytics-driven tool SubScape say that not all churn is bad. Per Magid, some psychographic segments that are predisposed to churn can provide a competitive advantage that helps streamers increase market share and profitability when managed strategically.
According to a survey of 2,000 individuals ages 13 to 75 conducted by the firm, 40% of respondents, on average, said that they may cancel or are likely to cancel the individual paid service used by their home in the next year. Between January and October 2023, the top 20 streaming services, on average, experienced a subscriber loss of 8% and a gain of 8% per month, realizing an average net growth of zero in the United States.
The survey splits respondents into six categories: Hypers, Loyalists, Digitarians, Pragmatics, Mainstreamers and Inerts.
Hypers are defined as a high churn, high income segment, and their value lies in driving growth and word of mouth. Hypers scored the highest on having fear of missing out about certain shows (46%) and posting, liking or sharing on social media about their favorite shows and actors (51%). When asked about the individual paid services used by their home, 55% of Hypers said they may cancel or are likely to cancel that service in the next year.
Loyalists, a high spending, low churn segment, were found to be the most open to ads, with 81% saying they would be fine watching some ads or commercials if it saves them money.
Digitarians, a high churn segment with equal interest in video on YouTube and TikTok, are defined as “free promotion seekers who do not represent a high [return on investment] on marketing dollars.” They were found to be the most likely segment (14%) to be in a free promotional period or borrow an account from another home.
Pragmatics, which make up just 10% of the population, were found to be among the most likely to avoid watching ads or commercials as much as possible.
Mainstreamers, a low churn group that rarely strays beyond the top five services, scored as the lowest subscriber segment in terms of being the first to try a new video service (24%), having FOMO about certain shows (25%) and posting, liking and sharing on social media about their favorite shows or actors (24%). About 77% of respondents classified as Mainstreamers intend to stick with a streaming service for at least a year.
Inerts, the oldest of the six segments, had a lower interest in video overall, presenting the lowest opportunity to drive revenue.
While average subscriber tenure and churn rates have traditionally been an indicator of business health, Magid’s research suggests that a more accurate metric is the number of total subscribed months — regardless of whether or not they’re contiguous.
The findings also claim that big budget series don’t necessarily drive subscriber engagement. Examples of content that were able to attract Hypers included the FIFA World Cup, The CW’s “The Flash,” HBO’s “Euphoria,” AMC’s “The Walking Dead: Dead City,” A&E’s “The First 48: Killer Confessions,” Disney+’s “Loki,” Netflix’s “Ginny and Georgia,” Hulu’s “The Kardashians,” Fox’s “Gordon Ramsey’s Food Stars” and Apple TV+’s “Ted Lasso.”
“The media industry is at an inflection point as savvy consumers are presented with an unending list of viewing options,” Magid CEO Brent Magid and chief product officer Kate Morgan said in a statement. “The battle for the acquisition and retention of churn-centric subscribers isn’t slowing down which is why leveraging SubScape’s granular, solution-based insights have been mission critical for our clients as they reimagine their streaming playbook for long term growth.”
The post Not All Streaming Churn Is Bad, Magid’s New Analytics-Driven Tool SubScape Finds appeared first on TheWrap.
