Managing churn and return: Keeping SVOD audiences engaged and revenue flowing
Streaming video subscription services have become deeply ingrained in consumers' daily lives, often viewed as essential monthly expenses. According to Minna Technologies' latest report, Subscription Economy: Evolution Not Revolution, in partnership with FT Strategies and Savanta, the average US consumer subscribes to more than 8 services and spends over $1,400 annually. This significant spend, combined with economic uncertainty, has led to a rise in “churn and return” behavior - where subscribers frequently cancel and resubscribe based on major events like the Super Bowl, the Olympics or new must-watch shows to binge. While this approach helps consumers manage their finances, it also challenges the predictability of subscription revenue for OTT services.
Understanding churn and return behaviour
“Churn and return”, “binge and bail” or “serial churn” all refer to the cyclical behavior of subscribers who cancel and then resubscribe to services based on their needs. This behavior is increasingly common, with 31% of consumers admitting to being serial churners. Often driven by specific events, promotional offers, content discovery or personal finance management, this strategy allows consumers to optimize their spending, paying only when they truly need the service.
Consumers are closely managing their subscription expenses in today’s economy, with 53% tracking their spending and 37% admitting to spending more on subscriptions than last year. The average subscription spend of $1,416 per year, combined with 63% of consumers preferring to pay monthly rather than committing to an annual fee, has led to a desire for greater flexibility.
The role of banking apps in churn and return
As subscription spending increases, so does the interest in centralized subscription management, with 73% of US consumers expressing a desire for consolidated solutions. A key finding from Minna’s report is that 64% of subscribers trust banking apps more than subscription platforms or app stores for managing their subscriptions and data. However, this convenience can sometimes lead to unintended consequences for both consumers and merchants.
When subscribers use banking apps to churn and return, they might inadvertently initiate a payment stop instead of a cancellation.
What is a payment stop?
Regulations in the US and UK, overseen by the Financial Conduct Authority (FCA) and the Consumer Financial Protection Bureau (CFPB), allow consumers to request a payment stop (block) through their bank to stop all future transactions from a specific merchant. Blocks can last 13+ months and can be placed even if the consumer is under a binding contract, potentially leading to legal disputes. During this period, all payments to the merchant using the same card are halted, which also impacts secondary subscriptions and one-time purchases like movie rentals or sports day passes.
Given that 61% of consumers use the same card for all their subscriptions, a block on one service can inadvertently impact others, disrupting the resubscription process and causing additional revenue loss for merchants.
Addressing payment blocks and enhancing the subscriber experience
Payment blocks are a growing issue in the subscription economy. With 67% of businesses reporting up to a 20% churn and return rate recently, addressing this challenge is crucial. However, businesses can mitigate the impact by working with providers like Minna Technologies to implement simpler subscription management processes within banking apps, eliminating the need for blocks, while also removing existing ones. This can significantly reduce involuntary churn and make it easier for subscribers to churn and return.
From churn and return to pause and resume
Once payment issues are resolved, OTT services can focus on refining their approach to churn and return across all their channels, including banking apps. Implementing a “pause and resume” model, for example, could be a game-changer. Minna’s report reveals that 39% of subscribers would stay with a service if a pause option were available, yet only 50% of businesses currently offer this feature. By providing options like pausing or changing plans, providers can keep subscribers engaged even during inactive periods, rather than losing them entirely.
Constantly re-evaluating the value exchange
Re-evaluating the value exchange is essential in today’s subscription economy. One example is the rise of AVOD models, where consumers have shown a willingness to accept ads in exchange for lower fees. Another example, revealed by Minna’s data, shows that half of subscribers are open to sharing more data with banking apps for personalized offers. These shifts highlight the evolving expectations of consumers and the need for OTT services to adapt. By leveraging these changing dynamics, especially through rapidly growing channels, such as banking apps, OTT services can better reach, engage and retain their audiences by meeting them where they are with personalized, value-driven experiences.
Many OTT services are also diversifying their offerings or adding complementary products and services to keep users engaged and discourage churn and return behavior. For example, adding value-add services like games, live events, sports, merchandise, bundles or cashback offers can demonstrate value to existing subscribers while opening new revenue streams and reaching new audiences.
Turn the churn
As the subscription economy evolves, so does consumer behavior. The rise of churn and return highlights the need for flexible, user-friendly subscription management options. By addressing payment challenges, offering features like pause and change plan, and leveraging retention offers, OTT services can reduce churn and keep subscribers engaged for the long term. The goal is to provide a seamless, convenient experience that fits consumers' lifestyles and preferred channels.
Whether "churn and return" is a passing trend or here to stay, one thing is clear: success relies on optimizing all channels to market, native and off-platform, by adapting technology and strategies which maximize and protect revenue in the face of continually evolving consumer demands.
- Download the full report to dive deeper into the trends shaping the subscription economy and learn how you can optimize your SVOD
Request a consultation to discover how payment blocks might be affecting your re-subscription rates and how to address this issue effectively
This article is Sponsored Content