One of the biggest headaches for subscriptions publishers is the underlying fear of the churn spiral. Over-the-top streaming subscriptions services share those same challenges, but deal with them in a different manner.

OTT content services are typically more vulnerable to regular churn than traditional news or magazine publishers because of seasonal viewing cycles for popular series or sports seasons. Relatively low-cost monthly contracts, ample choice in services, plus seasonal viewing fluctuations mean that OTT media services regard churn as par for the course of providing a more flexible service to the annual subscriptions of traditional pay TV operators.

OTT services like Sky’s Now TV, Netflix, Amazon, as well as more niche streaming services, mostly have rolling monthly contracts rather than the more restrictive annual payment terms of pay-TV companies. They also often cost under £10 ($12.64) a month. That means they must be prepared for customers to drop off after, say, a specific season has finished.

“This light touch makes them easier to cancel and theoretically more vulnerable to churn,” said Richard Broughton, research director at Ampere Analysis, as such, the ways of managing a more fluid customer base also needs to flex. “But a particularly niche fan base might churn and can still be re-engaged with the right targeted message.”

To help manage this vulnerability for churning customers, services like Amazon Prime and sports-focused streaming service Dazn use pricing to incentivize annual subscriptions over monthly ones. This March, Dazn doubled the cost of its monthly U.S. subscription to $19.99 (£15.82) and introduced a new annual subscription of $99.99 (£79.12), which equates to less than $8 (£6.33) a month.

Dazn, which owns U.S. boxing rights, introduced the new pricing to cater to two cohorts of its subscriber base: those who watch content regularly and maintain a subscription, and those who use Dazn as a pay-per-view offering, subscribing to watch one event and then canceling. This economics for the latter model wouldn’t stack up at the lower price.

A spokesperson for Dazn said it’s created to be flexible, accessible and affordable, so people feel they can activate and cancel their subscriptions when it suits them to return to the service over the long term.

In sports, where content is highly seasonal, media companies also let people pause subscriptions. To prevent people from canceling in the summer, during the low season, Dazn has added a pause feature during the cancel journey. The company estimates that re-subscribe numbers have risen 140% since it introduced the feature last summer.

More choice, plus lower price points, means that audiences have the option to not only stack OTT services but switch more easily between them, making the task of re-engaging them less challenging. At least, that’s the theory.

Research from Ampere Analysis from the beginning of this year in the U.S. and Europe found that people on average pay for three subscription OTT services, and around 7% of households have more than five. Of these subscription bundles, 11% of people have Netflix and Amazon subscriptions with a third streaming service. Although niche services tend to have higher churn rates, annual rates of around 30% compared with 20% for broader-content streaming services like Netflix or Amazon, according to Broughton.

U.K. broadcaster ITV is also responding to the widening in consumer choice by offering different price packages. ITV Hub+, which has around 300,000 people who pay £3.99 ($5.04) a month to not view ads on the broadcaster’s catch-up service, are attracted to this tier for binge-watching box sets, rather than using it as a regular catch-up service.

To try and build on that, Steve Forde, director of digital products and online marketing, previously said that ITV is looking at annual passes for an ad-free ITV Hub+ as well as packages that could be “gifted” to users so they could watch their favorite shows without the ads for a set time period.

While customer acquisition cost is lower for OTT services compared with pay TV, as the market gets more saturated the cost is rising. The marketing cost for signing up a new customer for Netflix internationally is less than $60 (£47.48), whereas in the U.S. where there are more than 200 OTT services and Netflix is already in a lot of homes, the marketing cost for new subscribers is nearly $200 (£158.26). That adds pressure to retain viewers beyond a few months.

On top of that, shorter-term subscribers have an impact on measuring lifetime customer value.

“It changes the trajectory of someone’s perceived value over time,” said Broughton. “In the pay-TV world, the rule of thumb is if you lose someone it’s very difficult to get them back within three years. An alternative [for streaming services] would be to look at their annual contribution over a longer period of time.”

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