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3 Reasons Why Customer Retention is Important for OTT Brands

By The Zype Team on July 29, 2021

What’s the most difficult part of launching an OTT platform in 2021? Of course, you must create a library of high-quality original content that strikes a chord with viewers. You also need a robust marketing strategy to attract a wider audience.

But the biggest struggle most OTT publishers face is retaining their existing customers. It’s crucial considering that most leading video streaming services use subscription-based monetization to generate revenue. In the absence of steady subscriptions, you’d have to rely on ad-based revenue, hindering the user experience.

The Importance of Customer Retention

Here’s the thing — the cost of acquiring a new customer is significantly higher than that of retaining an existing one. That’s irrespective of the monetization strategy you’re using for your video streaming app. It’s particularly crucial for OTT platforms that generate revenue from recurring subscriptions.

Failing to retain existing subscribers will adversely impact the customer lifetime value (CLV). This, in turn, will further escalate your customer acquisition cost (CAC) and affect your revenue. 

Let’s say you charge a subscription fee of $10 per month and spend $100 to acquire each customer. That means you’ll need to retain every new customer for at least 10 months to recover the money you spend on acquiring them. Now, let’s say a subscriber churns within the first two months. Then you’ll have to spend another $100 to acquire a new one. Also, you’ll need to recover the $80 you lost on the previous customer.

It’ll result in a cumulative CAC of $180. The new customer will have to stick around for at least 18 months before you can break even. Needless to say, it’s going to impact your bottom line and further skyrocket CAC.

While OTT viewership has skyrocketed during the pandemic, the industry is becoming increasingly competitive with the launch of new streaming services. That increases the likelihood of subscription fatigue and makes it even more essential to prioritize customer retention.

How OTT Brands Can Retain Customers

In the following sections, we’ll discuss some useful techniques to reduce churn and improve customer retention for your OTT platform:

1. Optimize Pricing Plans

Monetary incentives are one of the best ways to encourage longer subscriptions. According to a PwC report, 64% of consumers agree that streaming services should use discounts to boost customer retention.


Image via PwC

A simple way of implementing this is to offer discounts on annual subscriptions. It’ll encourage your customers to subscribe for a longer period and help minimize churn. Alternatively, you can provide low-cost mobile-only subscription plans, such as the one offered by Netflix in India. Or, you could partner with other live broadcasting and video streaming services to launch subscription bundles. For instance, Disney+ joined hands with various OTT platforms, such as Hotstar, Hulu, and ESPN to leverage bundled subscriptions.

2. Produce Exclusive Content

If you want consumers to choose your OTT platform, you must give them something they won’t find on a competitor’s app. In other words, focus on creating engaging original content that tugs at their heartstrings. It’s not surprising that the leading OTT platforms, including Netflix, Amazon Prime Video, Hulu, etc., have been producing remarkable original content.

3. Simplify Content Discovery

Do you want your customers to spend more time on your OTT platform? Then you must make it easier for them to find the right content. The best way of doing this is to track and analyze their viewing habits and provide them with personalized recommendations. Take it a step further by recommending content based on common directors, actors, and themes. Offer intuitive search options and let subscribers filter the search results based on genre, language, year of release, etc. Even if a particular title isn’t available, recommend similar content to retain your customers’ attention.

Final Thoughts

As the OTT industry becomes more competitive, content owners and service providers have to use innovative customer retention techniques. Leverage artificial intelligence and machine learning to deliver a seamless and personalized viewing experience. Also, offer affordable, tailor-made, and bundled subscription packages to reduce churn.

Ready to build an OTT platform that provides an awesome user experience? Get in touch to schedule your demo.

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