PREVENTING SUBSCRIBER CHURN
The subscription model has been transformative in the entertainment industry. The average American now has five different subscriptions. But in many ways the sector has been a victim of its own success—the new challenge is subscriber churn. With so many different streaming options to choose from, customers will often bounce around different providers, signing up for a few weeks or months and then ditching their plan. For some streamers, the churn rate can be up to 50% per year.1
Media companies are employing a number of strategies to fight high cancellation rates. One approach is to prevent involuntary churn, such as when a customer’s card has expired and automatically declines a payment. Many streamers now receive information
directly from the card issuers, so customer card details can be automatically updated upon expiry.
Another approach is to shift away from a strict reliance on subscriptions. The idea is that someone may cancel their monthly deal, but could be enticed to keep spending on the platform if different kinds of payments were possible. This could include allowing stand-alone purchases for certain products, or pay-as-you-go options.
But arguably the most novel strategy has to do with diversification. Entertainment companies are going beyond the familiar practice of simply bundling platforms together into single packages that cost less than taking out multiple subscriptions. This can still be powerful—it is estimated that bundles can reduce churn by 20% to 50% as they broaden options and offer value for money2—but the big new idea is to shift towards in-person experiences. “Tapping into things like live sports and other live events is at the forefront of what the streamers are doing right now,” says David Shaheen, Head of Media and Communications of Global Corporate Banking at J.P. Morgan. One streamer, for instance, has created physical spaces where fans can enjoy interactive experiences from their favorite shows and buy merch, while a number of others have started selling
tickets to concerts or sports events.
As streamers start to straddle the physical and digital worlds,
they are leaning into a key trend in modern payments: omnichannel. In a nutshell this means a single payments platform that integrates all payment channels—online, in-store, mobile—so the business has a single view of customer interactions and the customer has a consistent, joined-up experience no matter where or how they
pay. Having all physical purchases tied to the same online customer account means that refunds and disputes are easier to manage, for example, while recommendations and targeted offers can be made based on entire purchase histories.
State of the art payments technology can help elevate the omnichannel experience in physical settings. Biometrics now allow people to pick up items and pay for them with a swipe of their palm or by scanning their face—sometimes ambiently, enabling them to walk out of the store without visiting a checkout—with the transaction automatically charged to the online account which already has the payment credentials. This speeds up the checkout process, reduces queues and allows the customer to be more present and immersed in the live event.
Jennifer Acosta, Global Head of Media and Communications at J.P. Morgan Payments, describes an ideal consumer journey wherein fans “pay for the ticket via a simple click on the app and immediately enroll in a biometric capability. From entering the venue, to paying for merchandise and buying concessions, you can use your face or hand to check out and spend less time waiting in line and more time experiencing the event. The idea is that you enjoy your visit from start to finish without multiple friction points.”
‘ The preceding article may include information circulated by third parties ’
‘ Some details of this article were extracted from the following source www.jpmorgan.com ’
