Episode 1: The One With The Churn
Published on 06/11/2019
In this episode we will consider churn – are there circumstances where churn is good? Is churn an inevitable part of emerging video subscription experiences? Before you shout too loudly that of course churn is bad!! – lets look at some interesting data.
If we check out this data that was observed after the finale of Game of Thrones we see something very interesting.
The Game of Thrones finale that happened on Monday morning, wrapping up the last season of the epic HBO hit show, triggered a lot of subscribers to the cable network to cancel their subscriptions.
This reaction doesn’t come to a big surprise, as the show’s popularity seems hard to match in the near future. It is inevitable that we are going to witness a substantial churn in subscribers of HBO’s pay TV and OTT subscribers. There is learning for Operators from this data, which we will cover in the second video of this blog.
Is Churn always bad?
Michael McCluskey, VP of Product Management at Enghouse Networks talks about why video service providers have traditionally seen churn as bad and as a key business measure of service success – the lower the churn rate the betterHe then describes the opportunity for operators to serve a more transient audience and summarizes some of the key implications of service these transient consumers.
It’s very interesting discussing Churn; traditionally for pay-TV operators, churn was fundamentally bad thing that drove cost. Churning was something to be avoided pretty much at all cost. High churn meant your business was behaving poorly. Low churn was a sign that your business was operating highly effectively. I don’t believe that churn is something we can completely ignore going forwards, but the perception of churn and the implications to your business definitely change. There are consumers in certain segments who fundamentally will churn, and you have to respect that. And if you wish to serve those consumers then you have to behave and set up your services in a manner that allows you to serve them so you can look at the lifetime value of those consumers and still make good money on it. So let’s take for example a consumer’s reason to churn. A consumer might look for a sports event and watch a sports season. It could be football for a season that could be baseball for a season, or it could be Game of Thrones for the season. And that consumer will come on may well be prepared to pay reasonably premium price for the period of that season, and then they may want to unsubscribe and recent scribe at the next season.
Implications for Operators: Connecting the dots
Remember the game of thrones data explained above. Michael McCluskey talks how such situations can used in the favor of the operators.
The implication for the operator is to have ways in which he can run onboard that consumer at very low cost because if they’re going for a common goal you do not want to have a price premium to onboard that customer. Secondly you may want to look at how you target such consumers. You may even want to create differentiation and value by the fact that you have something that permits them to subscribe for the season, unsubscribe and come back, and you want to track that consumer so that when the next season is about to start you’re really targeting those people as part of your onboarding and retried campaigns. So I think this really represents a change in the way you want to target certain consumers. And it also is an example of how you might wish to use digital techniques to better serve that and also to do so in a manner that makes economic sense.
The business transformation enabling efficient serving of these customers is described in the vision paper we published earlier in the year. If you have questions regarding Churn and how transient consumers can be a profitable segment? Just reach out here. We would love to know your feedback and the topics which you would like us to talk about in future.
In the next episode we will talk about Micro Segmentation.
VP Product Management
VP Product Management