Streaming TV Marketers Look to AI to Solve OTT Churn

BLOGJun 04, 2021

Matt Smith

Symphony MediaAI joined the IABM to discuss the most promising artificial intelligence (AI) and machine learning (ML) applications in media and entertainment. In this blog post, we explore how OTT providers are leveraging these cutting-edge technologies to solve subscriber churn. View the full webinar on demand here.

The Covid-19 pandemic has been a catalyst for change for the TV industry. With most of the global streaming audience confined to their homes, it led to an unprecedented spike in content consumption and rise in the number of subscribers to streaming video services.

In the United States alone, over 75% of households now hold a subscription to a streaming platform. Direct to consumer (D2C) services, which have become increasingly prevalent over the last decade, have grown at an accelerated pace since 2020. With many new services launching, content distributors are battling to win and retain subscribers in an increasingly competitive market. We have seen major studios pivot their distribution businesses to “digital first” and launch their own streaming services, such as Disney+, HBO Max, and Paramount Plus.

Now that consumers have an overwhelming choice of streaming platforms and content to choose from, there will be a fundamental shift from customer acquisition to subscriber retention among content distributors. AI is becoming an essential tool to help marketers identify subscribers at risk of leaving and generate prescriptive recommendations to retain them.

Subscriber churn is one of the biggest challenges faced by D2C services, currently averaging around 40%. In Q4 2020, Apple TV had the highest churn rate of all the streamers (15.6%) with Peacock closely behind (9.5%). With much of the world gradually returning to pre-pandemic routines and subscription fatigue on the rise, post-pandemic subscriber churn is a major threat to OTT platforms.

Reliance on short-sighted marketing KPIs such as quarterly subscriber growth is no longer an accurate indicator of financial health given high churn rates. More holistic marketing KPIs like customer acquisition cost (CAC) to customer lifetime value (CLV) ratio are helping OTT providers measure long-term profitable revenue.

Predictive, prescriptive, scalable insights are the only way to remain connected to the wants and needs of subscribers.

  • Predictive audience insights reveal who’s likely to churn, with AI-generated predictions yielding the highest accuracy
  • Prescriptive recommendations reveal how to engage subscribers and stop them from cancelling
  • Scalable insights enable business units throughout the enterprise to extract value from data

AI technology can identify why customers are staying or leaving and their perception of a service’s value. (Content availability is a key reason consumers cancel their subscription as they evaluate cost versus perceived value.) Media and entertainment marketing teams can use this data to hone their campaigns and focus their spend on acquiring and retaining the right subscribers.

AI software can identify high performing content and content affinity across demographics, genres, and even talent to ensure relevant content recommendations are provided to subscribers. Additionally, it can also uncover content trends in key regions to help drive geographically targeted marketing campaigns. Rather than relying on reactive strategies based on limited and outdated data, AI ensures that marketers can be proactive with subscriber engagement.

AI can also help segment subscribers at a more granular level, identifying key stages of the customer lifecycle to enable highly personalized experiences. It can identify subscribers at high risk of cancellation, help win back old subscribers and convert trial users with personalized promotions and new content recommendations based on previous viewing preferences. The ability to build meaningful audience segments based on high, medium, and low churn risk, for example, provides real value to marketers who often rely on broad segmentation across demographic and genre affinity for their campaigns.

Audience insight is key to the success of marketing teams to increase subscriber retention rates and reduce churn. AI makes that insight readily available.