Over-the-top (OTT) services have shifted the regular consumption of media, available as video-on-demand, live content, and numerous other offerings, and have seen increasing growth globally. 

However, with such opportunities, the OTT platforms have the drawback of customer loyalty and the streaming service. OTT providers must also be extremely concerned with customer churn, as this is tantamount to the control of subscribers and thus, revenues.

Customer attrition is recognized as the cancellation or non-renewal of customers or users within a specific period. For an OTT service provider, churn is a significant for that has to be overcome to maintain growth and to stay ahead of the competition. 

In this definitive guide, you will learn what customer churn in OTT is, why it is important, its factors, and how to calculate before presenting ways to minimize the rate and improve customer retention.

What is OTT Customer Churn?

OTT customer churn means the rate at which customers stop subscribing to a particular platform within a certain amount of time. Retention analysis plays a prominent role for OTT platforms, where one can know about the implications of their retention strategies and the level of satisfaction of their users.

Why Does OTT Customer Churn Matter?

Churn is, therefore, one of the most delicate metrics for any OTT business, affecting both its financial and sustainability status. They help management address the high churn rates to conclude that users are dissatisfied, which could be a result of poor content, prices, or the wrong general experience. Customer churn erodes revenues by being far more expensive to obtain new customers than to keep existing ones, which is why it is crucial to manage it.

Types of OTT Churn Rate

Voluntary Churn

Subscribers consciously choose to opt out of receiving offers from a particular company, a given decision is likely to be due to dissatisfaction, these were the reasons consumers chose to unsubscribe.

Involuntary Churn

Some customer churn is bound to occur through factors outside the firm’s control, such as payment-related issues, account-related issues, or geographic constraints.

Recognizing various types of churn helps to decide on an approach to deal with the distinct problems that lead to consumers’ dissatisfaction with OTT platforms.

Causes of Customer Churn in OTT Platforms

To control churn, we need to first understand why customers are leaving. Here are some key reasons:

1. Variety and Quality of Content

The main cause behind churn is not having enough good content ideas. As has been discussed somewhere in this paper, if an OTT platform does not have many high-quality programs that captivate the customers, they are most likely to shift allegiance to other platforms. Subscribers expect new episodes, bonus materials, and shows that belong to different TV genres.

2. Problems with Pricing

Thus, pricing remains one of the leading causes of customer churn. Companies that set highly expensive subscription charges or precisely mould their prices see their customers churn. Furthermore, the usage patterns reveal that sudden increases in the price without relevant content upgrades or value enhancements result in user abandonment.

3. Interface and User Experience

It is worth investigating how the user interface (UI), which is often defined as the only customer touchpoint, directly impacts customer retention. The general requirement is a simple and intuitive interface and simple navigation; if the application is difficult to use, the users would go in search of easier-to-use applications.

4. Issues with technology and disruptions in service

OTT platforms are very much contingent on using streaming and technology. This kind of behaviour is possible when users encounter cumulative problems such as frequent buffering, sudden application failure, or generalized service disruption. Let’s point out the fact that any break in the show’s continuity may cause viewers dissatisfaction – if the platform doesn’t address the issue immediately

5. Absence of Customization

Customers today are more particular about the kind of experience they want to have. In this case, if the platform does not suggest a list of contents based on the viewing history, interests, or preferences, users may feel separated. The absence of material that is appealing to their preferences can cause them to unsubscribe from consumers, to rather interact with apps that provide them with their preferred type of content.

6. Offerings from Rivals

As there are many OTT platforms present with similar content, users shift quickly to other platforms if they offer better prices, new/restricted content, or more features for the same price on any competing application. Others are the offers made by competitors, such as offering a lower price than the company’s current price or combining services to give a better price than the normal price.

7. Inadequate Customer Service

When there is a problem, some users may get poor or slow customer service, which acts as a put-off. Customers with longer issue response time may churn from the platform and unsubscribe from the service. Practical customer service processes should therefore always be adopted in a business to ensure that the users are not frustrated by long waits for services.

8. Restricted Accessibility Among Devices

OTT users are hoping for the service to be provided across multiple platforms including Smart TVs, mobile phones, tablets, and game consoles. For this reason, if a platform is not optimized to work on devices that are more frequently used, then customers may churn to other more easily accessible services.

Measuring OTT Customer Churn

If you want to counter churn well, then it is essential to identify and measure it well. This is how churn can be measured by OTT platforms.

Churn Rate Formula

The churn rate is determined by the following formula 

• Churn rate = Value (No. of discontinuous customers at the end of period ÷ total number of customers at the beginning of the period) 

OR

• Churn Rate = Number of Customers at the Start of the Period ÷ Number of Customers Lost During a Period​×100

For example, a platform can have 10,000 initial users and have 1,000 users leave in a month, leaving a churn rate of 10%.

Tools and Techniques for Measuring Churn

1. Analytics for Customer Retention

For problems like customer retention, there are tools available, like Google Analytics, Mixpanel, and Amplitude, which provide information on how users engage with a service, where they might potentially drop off, and what specific functionalities they use the most, helping to pinpoint possible churn zones

2. Consumer Feedback and Surveys

Surveys can be sent, or feedback can be collected from clients who have defected in an attempt to determine why this was done and how to avoid deterring the same.

3.  Lifetime Value (LTV) and Analysis of Populations

Customer lifetime value and cohort analysis – customer group by the time of their joining the platform and tracking the retention rates – allow for determining when users are most likely to leave the platform

4. Models for Churn Prediction

Spatial data clearly defines that customer churn may be predicted using machine learning and predictive analytics based on the user’s behavior, content consumption, and interaction with the platform.

Tips to Reduce OTT Customer Churn

Arriving at a reduced churn rate is a function of considering proactive measures in different aspects of the firm. Here are some active guidelines to make the users stick to your site and stay loyal to it.

1. Superior, Unique Content

Always fill your content repository with new, relevant, frequently created, and non-shared content. It's perceived that subscribers are more loyal if they have the feeling that they get information that they will not get from any other source. This has proven to be effective as it will provide exclusive shows, movies, or live events to users different from what other platforms offer.

2. Reduce Costs and Provide Adaptable Plans

Businesses should offer competing price plans to meet the needs of all potential users. One way to entice users of such products and services is through Price promotions, such as bulk subscriptions or combined services. In the middle, you should always self-assess the pricing strategy and check whether the perceived value matches the price.

3.  Improve the User Experience

Upgrade and customize the design and layout of the homepage by targeting clear and accessible navigation features. Always aim for a fast and highly dependable site, as this will discourage users from abandoning your site. The responsiveness of the solution in mobile, tablet, and smart TVs guarantees that consumers can interact with content at their convenience.

Conclusion

Customer churn is inherent to every OTT customer base, yet it is not necessarily a devastating problem for every platform. With these insights, OTT platforms can gain a clearer understanding of churn, calculate it accurately, and reduce it with the help of several measures and best practices like creating quality content or improving the user experience in combination with powerful tools such as Enveu OTT customer retention solutions.

By leveraging Enveu's advanced platform, OTT providers can achieve a quicker time to value, leading to more sales, stickier customers, and greater CLV—ultimately building a profitable and sustainable OTT service business model.  Ready to reduce churn and enhance customer retention? Explore Enveu’s solutions today!