How Streaming Video Services Can Retain Long-Term Subscribers

Streaming video services need to combine great content, data insights, and membership privileges to maintain long-term subscriptions.

FREMONT, CA: Although the transition to streaming video services may appear unavoidable, the media and entertainment industry is undergoing significant changes in areas other than distribution and engagement. Launching a streaming video service is only the first step toward engaging, acquiring, and retaining audiences—as well as generating revenue to support all of this. Aside from great content, focusing on providing extra benefits to keep customers may be critical. With privileges and personalization, providers may deliver more value and create more loyalty if they treat their subscribers more like valued members of a club. This transition will be difficult for media and entertainment companies to navigate.

Subscribers typically cancel their services because they can access content on other free services. This could be due to cost sensitivities in some cases. It's also possible that more people are becoming aware of free ad-supported services. Finding a balance between ad load and content may be critical to retention as more providers seek to grow ad revenues from young streaming services. If ad loads are reasonable, consumers are more likely to watch ads in exchange for entertainment.

How can subscribers be retained?

Content and cost: It's a simple formula that conceals a befuddling complexity.  Content creation is costly, especially for premium stories and talent in a highly competitive market dominated by apex acquirers' massive spending. The hit formula is evolving and fragmenting into countless niches, putting pressure on content development. Meanwhile, audiences increasingly value ubiquitous online content, social streaming, and video games. Streaming subscriptions are relatively cheap, but customer acquisition is costly, and streaming services have yet to generate the advertising revenues that have boosted pay TV.

Pairing tiered pricing models and access to exclusives have the potential to broaden audiences while making them feel more like members rather than subscribers. Providers may be able to demonstrate more value and drive retention if they can better understand their audiences and tailor options to segments. They could use the cost lever to attract and retain more subscribers who want to get the most bang for their buck, and they could use exclusives to keep members who want a VIP experience. Streaming providers, like retailers, could adopt stronger customer relationship management, allowing them to focus more on retaining their high-value customers and potentially lowering acquisition costs.

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Membership tiers could include discounts and exclusives among their properties for providers with other assets across the media and entertainment landscape or the ability to assemble a cross-industry asset through careful M&A. Such brands could provide lifestyle services that go beyond their streaming video services, extending existing franchises and brand loyalty. Consumers may be unwilling to commit to long-term pay TV contracts, but providers could experiment with alternative retention methods, such as rewards programs that elevate lower-tier subscribers into premium content and experiences.

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