About a third of
households are likely to adopt a vMVPD service within the
next year according to Parks
Associates research service OTT Video Market
Tracker, which analyzes the impact of new and existing video services
in the OTT space. Pluto TV, Crackle, and The Roku Channel are
the leading ad-supported OTT options, though Parks finds that no single service
currently dominates the vMVPD market.
Parks latest report finds that one-third of broadband households have trialed an OTT subscription service in the past six months. The good news is that two-thirds of those trialing OTT services subscribe to one or more of the services that they test.
That said, this is competitive market filled
with an ever-growing number of choices. Thus, Parks finds that churn is “particularly
intense in the pay-TV sector.” They
advise that “building a strong customer base over time and continuing to serve its
needs through content” is the best way to prevent churn. Netflix, Amazon, and
Hulu have substantially lower churn rates than less-established OTT players.
However, they point out that, particularly where differentiation is limited (as
in vMVPDs), tenure in the market may not be enough to produce loyalty.
Parks also finds
that:
Given
that vMVPD services are relatively new, service churn is high as consumers test
the different options available. Significant subscriber losses by DIRECTV Now
(AT&T TV Now) contribute to this figure.
A
preference by some consumers for pay TV, service contracts, bundling discounts,
and the hassle of switching providers all contribute to lower annual churn
rates for pay-TV providers compared with OTT or vMVPD services.
The
Pay-TVchurn figure for Q3 2018 includes all pay-TV services, including both
traditional and vMVPD.
OTT services are increasingly moving beyond customer acquisition as they seek to build a sustainable customer base. The upcoming market entry of Disney+, Apple TV+, HBO Max, and NBC’s Peacock (among others) has caused many industry players to reassess their approach to retention and consumers’ interest in subscribing to multiple streaming services.
By better understanding consumer attitudes, motivations, and
habits related to churn, service providers can more effectively create service
experiences will reduce churn and create a loyal customer base.
Readers once consumed the morning paper as regularly as their morning coffee. As well-trained hounds would retrieve that paper from the lawn, consumers had deeply ritualized routines around their consumption of news—be it a daily morning hit, the nightly news, or a Sunday deep dive. New research from Twipe examines the evolution of reader consumption patterns and the need to rebuild a “habit loop” in order to create loyal customers.
Pre-digital, many
consumers had a daily consumption pattern that, for example, involved reading
the morning paper. However, when news went online, the product experience
didn’t follow. In fact, most news organizations shifted from publishing any
sort of “edition” to publishing a constant stream of information. To compound
this, it was increasingly disintermediated and delivered on a wide range of
platform and contexts. Readers developed fragmented reading habits and, as
Twipe points out, publishers “failed to prioritise maintaining the habitual
relationship with their readers.”
This report, which is latest chapter of Twipe’s Reinventing Digital Editions research series, was based upon interviews with leading newspaper publishers across Europe and the United States. They analyzed these insights to create “a habit formation canvas for news” and to highlight best practices for forming habits with news products.
Cues, triggers, actions
Citing Charles Duhigg’s research in the “Power of Habit,” Twipe’s research looks at the cues and triggers that foster habits in content consumers. For newspaper publishers, time is a particularly important cue, as many people crave news early in the morning. Location is another key consideration, as forming habits with commuters provides a location-optimized opportunity. Twipe also touts the effectiveness of the popular red dot, which alerts readers to updates in a given app.
Cues and triggers alone won’t form a habit, however. The research suggests that publishers then follow Nir Eyal’s advice and prompt a “very simple action… that is easier than thinking,” such as a click, swipe, or tap that is then given a “variable reward.” This is an approach well-documented in casinos and other forms of “addictive design.”
For publishers in particular, Twipe suggests that “mixing
structure and predictability with the serendipity of discovering unexpected
articles offers a variable reward that powers the habit loop.”
Best practices
Based up its observations of, and interviews with,
successful publishers, Twipe offers five best practices for habit formation
with news products (which it explores in a series of case studies in the
report):
Know the existing habits of your readers
Your content is the key to the hook
Invest in product experiences for the right
habits
Transform your organization
Focus on the right metrics
The good news, as Twipe points out, is that “publishers have
this know-how in their DNA.” Given the longevity of the news business,
publishers understand how being a reliable, regular part of consumers’ lives
builds a deeper relationship. With the right understanding of habit formation,
combined with consistent respect for consumer needs and expectations, news
publishers can leverage digital to regain their role as part of a regular media
diet.
