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OTT Churn Management Strategy: How to maintain a low churn rate like Netflix

Rakesh Ranjan Published on : 18 June 2019
low OTT churn rate like Netflix

Have you ever wondered why Netflix is still at the top, even after this rigorous competition in the video streaming industry?

How does a service like Netflix continues to engage its subscribers, especially when the others are falling apart?

Well, every big player in the OTT space is investing in original contents and user-experience, but what’s favoring Netflix is its low churn rate. Netflix is winning the streaming game with a relatively low churn rate of 11%, which is lower than any other subscription-based service.

The OTT players mostly focus on acquiring new users, but they often neglect the churn of existing users after the free trial is over. While Netflix, unlike other subscription companies, embraces churn reduction strategy and accordingly optimizes subscriber retention.


Netflix believes in creating a great product that customers are willing to pay for. The only way to win this streaming war is to make your subscribers keep watching so that they continue to keep paying without any interruptions.


Well, that’s how Netflix – the video streaming giant with more than 154 million subscribers, manages to minimize it’s user’s churn rate.

But what about you?

How do you go about identifying your churn rate?

And once you know it, how do you stabilize the churn?

Let’s discuss everything about Churn rate and understand its reduction strategy.

Don’t worry, reducing OTT churn rate ain’t that difficult.


Understanding the Definition of OTT Churn Rate

Churn rate in the OTT sector basically refers to the subscribers who have canceled their subscriptions. It doesn’t matter whether the subscriber knowingly canceled or the service automatically lapsed, in both the cases, the churn rate is effected.

For you, it’s very important to analyze the churn metrics of your streaming platform. You need to compare the month-over-month statistics of your user acquisition and subscriber-conversion ratio with the churn rate, to identify where you are actually lagging. Once you get to know, why your customers are dropping off, you can work straight to the point and easily restrict your churn growth.

But before that, let’s discuss the four important factors that trigger OTT Churn.


Reasons why OTT subscribers step out?

1. High subscription fee

Depending on what you offer (video/audio content), you must charge the subscription fee. You cannot charge $50 per month for an audio streaming subscription (Spotify, the audio streaming giant just costs $9.99 per month for its premium membership), unless your customers are willing to pay that amount. Many OTT platforms demand a high service fee after the free trial is over, which is the main reason why they experience a high churn rate.

If you are not clear about your subscription fees, do thorough market research. According to a survey, average OTT users have the capability and budget to register one to three subscriptions per month. So, analyze the fees of your competitors, understand what your audience is looking for and what’s the buzz around your content. Accordingly, stick to an affordable monetization model and compel your users to take action.

[Check out multiple monetization methods for streaming services]


2. Poor user-experience

Users not able to sign up, Payment gateway not working, video/audio player not starting, buffering or lags, content not easily discoverable, and other issues like these, are the potential indicators that your user experience is not up to the mark and subscribers are having a hard time accessing your app.

Remember, poor user-experience always leads to low engagements, which then forces the subscribers to end up their terms. It’s high time, you must rebuild your user-experience and allow users to enjoy your services flawlessly.

[Suggested integrations for better user-experience – Advanced Search Functionality, Simple Registration and Login, Recommendation Engine, Mobile & TV apps, HTML5 Online Video Player, and Multiple Payment Gateways]


3. Stagnant content library

If you are not updating your content library with a regular frequency, for sure, your subscribers will assume they have streamed all their favorite content and might lose interest in your bundles after a certain period. And this is where they pave their way out of the door and trigger potential churn.

Content is the foundation of your streaming business, and you need to keep this in mind all throughout. To engage your users, it’s essential to feature latest & exclusive content which are not offered on any other streaming platforms. You can either produce original content or license media rights from content creators/distributors.

[Explore Sanjh – The ultimate marketplace for licensing exclusive content securely]


4. Subscription declined/Payment method expired

This is an involuntary factor that contributes to OTT churn rate. Here, users are not aware of their subscription validity and often forget to renew the service. Mainly, when the payment method is not automated and the transaction session gets expired, the subscription is declined unintentionally and churn is recorded.

The easiest way to reduce involuntary churn is to keep a close eye on the subscription status of your audiences. You must notify the users when their payment is nearing expiration so that the subscription can be renewed without a lapse. If you want, you can also walk a step forward and automate the payment process whenever a new card is issued.

By resolving all these issues, you can easily maintain a low churn rate like Netflix. Changes stated above may seem small, but can impact a lot. Even churn reduction by 1% or 2% can have a huge impact on the revenue flow down the line. Don’t forget, every single subscriber adds value and contributes to the overall revenue. You just cannot afford to lose your subscribers, else it will be very hard for you to sustain the competition.

Hope, you are now clear about what is churn rate and how to limit your OTT churn to a reasonable extent.


Reducing Churn is all about Improving Engagements

The higher is the user-engagement on your streaming portal, the lower is the user’s churn rate.

By focusing little efforts on how to improve engagements, it’s possible to hold on the OTT churn growth.

Netflix Churn Rate Reducing Strategy

Below here are some pro-tips, shared by our experts that can help you in engaging your subscribers and lowering your churn rate effectively.


Understand your audience’s behavior

Until and unless, you understand the streaming behavior of your subscribers, it’s not easy to engage them. So, the first thing you need to set up is a dedicated subscriber’s management dashboard using deeper analytics and reporting.

The most successful OTT providers like Netflix have every information about their viewer’s demographics and behaviors. On the basis of such helpful insights, Netflix categorizes its audiences into different segments. Not only that, it also analyzes the performance of every single segment and accordingly triggers necessary actions.

Once you are set with the data, do a comparison of churn trend month-over-month and check whether the rate is reasonable or not. If the churn rate is steady for a long period – you are retaining most of your existing users, which is good, but if the churn is trending up, it means you have got a serious problem.


Communicate with your subscribers

Every time you add exclusive content, communicate with your audience and let them know about it. There are many subscribers, who never turn on their app and have even forget that they are on a subscription plan.

With the help of email marketing and push notifications, you can inform your subscribers about the new shows and allow them to take action instantly. Keep the messaging simple and straightforward; no spamming at all.


Recommend the best you got

The first 90 seconds, when a subscriber arrives on your platform, is very crucial. If you fail to convince that there is something worth streaming, there are high chances the subscriber will leave your portal instantly and will switch to other services available on the mobile phone.

Mainly, users face difficulties in choosing a title, when the content library is huge. In such scenarios, the best way to engage the user is to showcase personalized recommendations based on preferences, interests and viewing habits.

Don’t worry! You are not doing it manually. Just integrate a smart AI-driven recommendation engine into your platform and start recommending relevant content to your users.


Wrapping up

Although, it’s important to act upon customer acquisition models, at the same time, you cannot ignore churn management. You need to practice the churn management strategy from Day1, else you will be behind.

There is no hard & fast rule to manage the churn rate. Every OTT player has its own strategy and roadmap to reduce potential churn.

We recommend experimenting with new things through split testing and analyze the changes in Churn stats. Well, it’s simple – Test, Innovate, and Refine your algorithms and keep users watching to prevent churn.

Start building a successful streaming platform now

Written by: Rakesh Ranjan

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