Streaming Companies are Leaving Money on the Table

The business dynamics of video streaming are changing quickly. Gone are the days when the number one priority was subscriber growth. Today, all streaming businesses face tough market realities—and the pressure to demonstrate real profitability is mounting. Content production and licensing fees are surging, and subscription fatigue and the luxury of choice mean consumers are quick to cancel their services if they don’t see value—or feel valued. 

Faced with global cost of living challenges, households are thinking twice about how many streaming subscriptions they really need to maintain, with the annual subscriber churn rate in the US currently standing at 50%, according to Parks Associates.

So, facing rising churn rates and increased competition, how can providers take action and boost streaming profits? Here’s something our industry understands: Subscriber retention is vital. A Harvard Business Review study found that acquiring a new customer can be between five and 25 times more expensive than retaining an existing one. Offering a personalized experience and removing friction throughout the subscriber journey is fundamental to fostering platform loyalty—and it should be table stakes for forward-thinking content providers that want to achieve sustainable growth. 

But what many folks often overlook is that there are several quick-fix, straightforward tweaks in how streamers engage with their audiences that can lead to huge revenue gains across millions of subscribers. 

Data-Driven Decisions for Real Profitability Gains

The truth is that many streaming providers are missing out on revenues by not fixing the avoidable leaks. Even the smallest leaks in revenue can impact your bottom line if you're not quick to address them. Staying ahead of subscriber churn is a great place to start. 

Today, providers must take a proactive approach to customer churn, identifying signs that a subscriber’s payment may default, or that a sports fan might ditch their service once the season wraps up. Harnessing advanced analytics and behavioral insights allows you to catch these signs early and step in with tailored engagement strategies such as intelligent payment retries, personalized offers, or customer-friendly features like letting subscribers pause their subscriptions and return when they're ready.

Once you’ve fixed the leaks, it’s time to talk about experimentation—fundamental to landing on real growth strategies. Major video streaming companies are rapidly increasing the number of subscription tiers they offer. The big question is, which of these options are hitting the mark, and where? Streaming players need to use data-informed insights to trial and double down on the products, business models and partnerships that resonate best with diverse audiences.

Get Closer to Your Subscribers

How often do video streaming businesses really ask themselves: “How well do I actually know my consumer? What’s their next move? Where’s the upsell opportunity?” Today, providers need to understand and engage with their customers on a deeper level, harnessing user data to tailor product offerings while pioneering customer-centric subscription options like event-based pricing or loyalty programs.

 Gaining a deeper insight into every element of the subscriber experience is also critical. Take video Quality of Experience (QoE) for example: by joining the dots between real-time video QoE metrics and subscriber engagement data, streaming companies can identify customers struggling with subpar video experiences and proactively deliver personalized offers and targeted retention tactics. For example, if a streaming service identifies poor viewing quality during a live sports event for certain customers, why not offer 50% off their next bill or other enticing promotions to keep them on-board?

Alongside powering real-world revenue game-changers with AI-backed tools and a range of flexible subscriber engagement tactics, providers are missing a trick if they underestimate the complexities of global payments. Keeping up with constant evolution in local trends and global payment intricacies is a significant operational burden—robust systems and localized strategies are critical to reducing friction in onboarding and minimizing payment-related churn. 

Failure to support a broad range of payment options like Apple Pay and other digital wallets can hurt your subscriber acquisition capabilities. Ultimately, it’s all about getting closer to your customers to empower user-centric, self-driven onboarding and subscription experiences that put them in the driving seat while fueling long-term revenues.

The Business Case For AI

People want to hear about the tangible business benefits of new—and sometimes shiny—AI-powered tools. The good news is there are several compelling areas where AI is already making a real difference in improving subscriber engagement and revenues. For example, right now there are AI/ML engines at work that proactively analyze subscriber behavior and determine when they may be likely to churn. 

At the same time, AI tools are identifying potential payment defaults and automatically enacting optimal retry strategies, increasing payment recovery rates from 59% to 70%. Another AI-driven strategy is the ability to dynamically alter pricing strategies based on real-time fluctuations in demand and changing subscriber behaviors. 

Based on audience-segmented data, AI can help create tailored price points, promotions and offers to specific target demographics, maximizing profitability potential and enhancing the subscriber experience. Elsewhere, improving the user experience around cancellation with AI/ML driven workflows enables more effective retention strategies, offering personalized, data-informed incentives to stay based on reasons for cancellation. We’ve seen major direct-to-consumer sports services retain 20% of those who wished to cancel through more intuitive cancellation surveys and proactive, customized customer engagement strategies.

As the streaming landscape continues to evolve and change, shifting focus from subscriber acquisition to sustainable profitability has become a critical priority for all key players in the industry. By actioning key strategies such as fixing revenue leaks, enhancing customer engagement, optimizing payments and leveraging AI to reduce churn, media industry innovators can efficiently and reliably deliver real-world profitability game-changers.