Can 7 hours of viewing per month really be worth billions?
Mentioned in this article: Disney, Hulu, MAX, Netflix, Peacock, Paramount+, WBD, Apple TV+, Comcast
It’s obvious. Higher engagement with streaming services leads to lower churn. But how much of an increase is needed for a meaningful reduction? How strong is the correlation? Is the relationship linear, or is there a magical threshold?
Through the lens of Streamonomics[1], we can tie that question to value created. As the Streaming Wars give rise to multiple battles, engagement is the one to win. Gone are the days when streamers were judged primarily by how many subscribers they added each quarter. While ‘gross additions’ still matter, higher engagement helps at three levels:
1. Retaining more subs (the ones just added, plus the existing ones);
2. "Hitting the zeitgeist" with more shows (which in turn attracts talent); and
3. Selling more ads.
For consumer apps, engagement is measured by time spent and frequency of use, since habit begets habit. Daily Active Users are more valuable than Monthly Active Users, who in turn are more valuable than Subscribers Who Just Forgot to Cancel.
To find out whether there is a meaningful correlation between engagement and churn across different services, we partnered with Antenna, the leading company tracking subscriptions and churn for premium streamers in the US...
[1] Streamonomics: the unit economics of TV/Film making and remaking, licensing and marketing in the age of free and paid streaming.