OTT: Reduce churn by engaging viewers the Netflix way

Posted On November 10th 2020

With the rise of the digital era, the content industry has changed so much that users are moving more and more towards ‘Over-The-Top’ (OTT) platforms and seriously amplifying the cord-cutting phenomena.

OTT enablers such as high-speed connectivity, penetration of smartphones/connected devices, flexible subscription cost etc. have also increased the customer churn rates among competitive OTT service providers in the market. With such easy access to services and options, customers can switch to another service or cancel their current subscription at any moment they feel unhappy about the service. On all practical grounds, customers churn rate has been one of the key challenges impacting OTT-business revenues.

To anticipate and reduce churn, service providers have to think of better solutions to keep their customers engaged in the long run (and short as well!). Service providers strive to provide a great content library and streaming experience to their end-users. However, beyond the catalogue collection and seamless delivery, customer engagement has been one of the key challenges in reducing churn and retaining viewers.

Customer engagement through personalized content discovery experience has grown leaps and bounds in recent years. Initiatives with a high degree of personalization are incorporated in every possible channel and customer touch point. These include content catalogues, recommendations, push notifications, and email communications being delivered as a personalized asset for each customer. Market leaders such as Netflix, Prime video and HULU have mastered the art of delivering personalized experiences, which has directly resulted in increased content consumption and decreased subscriber churn.

On the other hand, Netflix promoted the ‘binge-watch’ concept to release an entire series at a single time. This makes customers pay more attention to continuing the service. Also, Netflix’s survey revealed that more than 61% of customers binge-watch regularly. According to a Moffett Nathanson study, the most popular reasons for customers to choose Netflix subscription is “not being interrupted by ads”, “can choose what to watch” and “can binge-watch”.

As per Nielson’s Report, 84% of customers claimed for the cost, which is one of the important aspects of video streaming services. Other factors that are important included ease of use, that was supported by 81%, while 79% of customers believed in variety/availability of content which indicates the importance of getting the basics right. Out of all these factors, 71% of customers believe in accessing the desired content, and 38% of customers support menu recommendations. All these attributes are mainly focused on customer engagement prospects.

A key step towards understanding and proactively responding to churn is segmenting the customer base. In terms of prioritizing the churn, Netflix always keeps the proactive customers constantly engaged with content to extend the number of subscription months per user.

While the market is heavily concentrated among the market leaders, small players face challenges to acquire great business benefits. Still, opportunities do exist for them in the market by focusing on offering personalized recommendations. These include unique content offering, approaches to pricing and improved customer engagement to reduce churn. By doing so, small players can also secure their spot in the market next to Netflix, Prime Video and HULU.