Author: [Naveen Wall](https://www.linkedin.com/in/naveen-wall/)**_Streaming platforms grew rapidly during the pandemic. As the world begins to reopen, should marketers now shift their focus to retention?_**-----------------------------------------------------------------------------------------------------------------------------------------------The streaming industry has been a huge beneficiary of accelerated digital adoption during the COVID-19 pandemic. It has led to astronomical growth across streaming and subscription organizations – with unheard of acquisition numbers, user adoption, and engagement across the first half of the year.While economic uncertainty remains a key focus for the wider economy, all eyes are now focused on churn for the streaming services that saw a membership boom in 2020. Marketers are now tasked with retaining current members while building a new customer base, a task that will prove uniquely challenging in 2021. Unemployment remains high while consumer spending is expected to dwindle in the short-term. On top of the broader economic uncertainty, streaming services face new competition, ambitious bundling tactics, and general subscription fatigue. While the forecast may appear negative, it’s not. SVOD continues to grow, though projections forecast a slowdown peaking in 2024. This places increased importance in 2021 on building loyalty and driving adoption for the longer term.#### **Streaming Churn Rates Aren’t Telling the Whole Story**The expected increase in churn rates are partly tied to acquisition tactics that drove the surge in subscriber growth in the first place. Some of that was organic, stemming from new needs borne out of spending more time at home. However, a large portion of new acquisition was driven by free trials and offers that attracted a broader audience base. Those free trials were an extremely effective acquisition tactic. Seven out of ten households subscribed to at least one OTT video service they trialed during the pandemic. While that created a tremendous pool of new subscribers, it also accounted for a six percent increase in YoY churn rates. Many users canceled SVOD services because, in their eyes, the cost was not worth the perceived value. The word value here is exceptionally important. Services that can demonstrate value will benefit from longer term retention.#### **Streaming Platforms Saw a Massive Growth in Competition**Of course, we’re also facing increased competition, leading to subscription stacking, the stacking of several services on top of one another. By 2024 it’s predicted that 46M consumers in the US will have broadband and no Pay TV. We’re referring to them as battleground TV households because every company will be fighting for their attention and a share of their wallet.The appetite to stack streaming services is growing as Pay-TV households decline. Currently, the average number of paid video streaming subscriptions owned per subscriber is 4.1. That’s predicted to grow to 5.7 by 2024 as Pay-TV households decline. That said, while there’s an increased appetite to stack more subscriptions, the risk of churn is very real as competition increases. 64% of consumers note that they would downgrade or cancel a service to pick up another. And subscription services are very easy to cancel in a matter of clicks, unlike pay TV, so consumers are truly empowered to switch between services if they no longer see the value.A survey of broadband customers found that 40% of households that canceled an OTT service in Q2 did so to cut expenses. People tended to retain services that clearly demonstrated their value, making costs more justifiable. Let’s reflect on this increased competition for a moment.Studios and platforms are restructuring to focus primarily on streaming services. Where once pioneers such as Netflix and Hulu existed in a relative vacuum, now television networks and new platforms are creating a crowded marketplace for cost-conscious consumers. Several are centralizing their media businesses into a single organization to drive efficiencies and learnings, allowing media conglomerates to direct budgets toward original content that attracts new audiences. #### **Consumers Are Searching for Budget Options**As discretionary spending continues to fall, free ad supported streaming services are benefiting. Paying subscribers are supplementing their video diet with free platforms, with 68% of consumers using free ad-supported services on top of their paid platforms.Consumers are also expanding their definition of “streaming platforms.” For example, organizations like Peloton or Apple Fitness+, which integrates with Apple Music have come along to fill the void of communal group fitness classes, competing for a share of consumer attention. Password sharing is also prevalent, with 53% of subscribers borrowing a friend or family member’s login credentials.#### **The Retention Challenges Ahead for Streaming Platforms**While SVOD will continue to grow, last year’s record setting pace is likely unsustainable. Year growth by 2024 is forecasted at just 6%–compared to 29% in 2020–organizations will need to strike a new balance between acquisition and retention to succeed post-pandemic. Decreased churn should be top of mind for streaming platforms. Not only because of increasing market saturation, but because retention is twice as powerful as acquisition. New customer acquisition is 6-7 times more expensive than retaining and upselling an existing customer. The importance of retention in our current climate is clear. Forrester predicts that in 2021 spend on loyalty and retention marketing will increase by 30%. If we, as marketers, have learned anything over the last few months, it is that establishing a strong but flexible foundation will allow your team to be quick and nimble as you implement tactics and plan for the future of your brand. To learn more about the challenges streaming services face going into 2021 and strategies to support retention, download Movable Ink’s [eBook Streaming Services: How to Stay Agile in an Unpredictable World](https://go.movableink.com/streaming-services-ebook-stay-agile-in-an-unpredictable-environment.html)._Naveen Wall has spent the majority of her career in Media & Technology focused on CRM. Most recently, Naveen drove high visibility subscriber engagement programs at SiriusXM. She partnered with Movable Ink to power sophisticated real-time personalization strategies to increase streaming behavior, and promote customer engagement and retention. Prior to SiriusXM, Naveen led the Global CRM team at Shutterstock where she worked cross-functionally to deliver lifecycle programs to nurture and accelerate the growth of their customer base.__Naveen has a long history with Movable Ink extending to the start of her career at e-Dialog (now Radial) where she managed production and deployment of email programs for British Airways and leveraged Movable Ink technology to drive innovation. She knew she wanted to join the organization she loved working with and found the perfect fit as Associate Director on the Strategy team focusing on Media & Technology._
Combating Churn: Why Streaming Services are Shifting their Priorities to Retention in 2021
