The Real Challenge in the Broadcasting Industry Is How to Retain Subscribers

End in the first half of 2024 Viewing Status reportSamba TV shared data highlighting which TV shows will be watched by viewers who only watch a single show across major subscription video on demand (SVOD) platforms. I love this data point because it touches on a critical, often misunderstood element of programming strategy: acquisition and retention.

Anyone familiar with the broadcast industry knows that maintaining a balance between audience acquisition and retention is the key to long-term success. However, despite this understanding, many platforms have difficulty carrying out this effectively. Combining data sources introduces an imbalance that occurs when platforms prioritize acquisition over retention. Here we explore how and why the industry is heading in the wrong direction.

One-time viewing

According to Samba TV, in the US in the first half of 2024, certain programs will be watched predominantly by viewers who only watch a single program on the platform. These “one-off” shows include: Fool Me Once (Netflix), Masters of the Air (Apple TV+), reaching (Amazon Prime Video), True Detective (Max), Percy Jackson and the Olympians (Disney+), shogun (Hulu) and HALO (Paramount+).

Data from Parrot Analytics, where I work as a Senior Entertainment Industry Strategist, expands understanding of the performance of these programs by showing the percentage of viewers who watch these programs and then engage with other content on the same platform. In other words if I watched Stranger Things Open Netflix (NFLX)Netflix would then be happy to see me continue watching other shows on the platform. All of the above titles ranked low in terms of year-to-date consumption trend in their respective catalogs: Fool Me Once (23.9 percent), Masters of the Air (9 percent), reaching (16.4 percent), True Detective (18.2 percent), Percy Jackson (9.4 percent), shogun (22.8 percent), HALO (10.5 percent).

One-time shows primarily serve as a purchase driver. They encourage new subscriber signups, which is crucial for any streaming service. But watching just one series before canceling the subscription represents a losing battle for the industry. To generate return on investment, streaming services need subscribers. Can stay on the hook for up to 15 months accordingly Deloitte. This is becoming increasingly difficult to achieve in an age of TikTok endless scrolling and narrowing attention spans. This is where the current programming strategy creates long-term problems.

False focus on buying at all costs

Most streaming platforms divide subscribers into high-risk and low-risk categories based on their monthly viewing hours. High-risk subscribers are those who watch fewer hours per month, while low-risk subscribers are those who consume significantly more content. If a viewer watches more than 18 to 20 hours a month, they are much less likely to cancel. However, it seems that those who watch fewer hours are more likely to lose.

Many platforms prioritize the acquisition and retention of high-risk subscribers; This requires directing significant resources to broad appeal, high-budget programming designed to attract new subscribers and re-engage infrequent viewers. This strategy may work in the early stages of growth, but as platforms reach market saturation, it becomes less sustainable, especially in regions like the US where Netflix has more or less peaked. This is one of the many reasons Netflix reinvigorates deal-making during Apple And Amazon they are reportedly seeking similar cost-cutting initiatives.

In the good old days of the pay-TV model, cable networks hoped to develop a handful of breakout shows, complete with cheaper mid-range fare. In these days of the painful streaming boom, it always takes a consistent wave of hits to support the business model. But without a strong content library that increases retention, churn remains a persistent problem that threatens the financial stability of these platforms.

Retaining subscribers is increasingly important but difficult

Premium monthly SVOD churn has changed in the US from 3.9 percent to 6.0 percent Since 2022, per Antenna. As of June, the industry average was below 5 percent. That’s ahead of major SVODs like Hulu (5.2 percent), Max (6.3 percent), Peacock (6.4 percent), Apple TV+ (7 percent) and Paramount+ (7 percent), Netflix (2 percent) and It means Disney+ (4.2) has some work to do. percent) is more comfortable (for now).

Higher churn rates generally indicate higher customer acquisition costs. In other words, as existing subscribers cancel, publishers must spend more to attract new ones. It’s something that publishing executives have been stuck on like a headache-inducing hamster wheel in recent years. As a result, improving retention increases subscriber lifetime value and often reduces relative acquisition cost.

But due to rising production costs, shrinking audiences and declining advertising sales, linear TV is making less of the broad-network scripted programming that helps build audiences. majority of long-tailed interaction in the stream. Even big-budget original releases can struggle to keep audiences in one digital ecosystem for long periods of time.

Among the 10 most watched programs by viewers last week Fool Me OnceNetflix had only two available in the US, according to Parrot Analytics consumption simulation data. For other one-and-done titles, there’s nothing better: Masters of the Air (3/10), reaching (1/10), True Detective (3/10), Percy Jackson (3/10 if you count one title on Hulu), shogun (2/10 if you count a title on Disney+), HALO (2/10). Big hit shows are great, but they can be cost-inefficient if they constantly leak viewers to rival platforms. (Of course, when looking at just one week’s consumption trend, release date plays a role, and many of these games have been available for months).

Retention content, by contrast, encourages subscribers to stay within a platform’s ecosystem. Here are some of the titles with the highest retention rates so far in 2024, according to Parrot Analytics:

• On Netflix: World Captains (47 percent of viewers who watched this series watched another movie available on Netflix US)
• Maximum: Real Estate Brothers: Buying and Selling (45.7 percent)
• Hulu: Dance Moms (40.4 percent)
• Amazon: Thanad (25.6 percent)
• Disney+: Marvel’s Defenders (23.1 percent)
• Peacock: Winter House (22.4 percent)
• Paramount+: FBI: International (22.2 percent).

Frequent interaction not only increases retention but also encourages habitual viewing behavior. Netflix, for example, benefits from being the default stream in both perception and usage metrics. Frequent engagement is also valuable to advertisers who are looking for assurance that viewers are spending long periods of time in an app and being exposed to their ads. (Of course, they want to take part in these groundbreaking purchasing drivers, too).

What should we do

Programming strategy on depending on the situation basis; What works for Netflix may not work for Apple TV+ and vice versa. But the need for balance remains universal. During the first heated race of the streaming wars, rival platforms fought fast and furiously for the flashiest original and licensed games, often at huge cost. Now that these streaming wars have cooled down to some extent and the industry is maturing; the focus is shifting towards optimizing content libraries to build the most sustainable path to profitability.

Streaming services will always need blockbuster hits. Stranger Things or shogun To onboard new users. But do not underestimate a person’s talent Suit or Family man to keep them there and help companies manage costs, reduce subscriber churn, and increase the lifetime value of their subscribers.