How to increase subscribers and ARPU in the video streaming industry

This article is part of our Opinions section.

The state of the video streaming industry is in flux and the future is uncertain. With a recent YouGov survey revealing that over 31% of UK consumers have cancelled or removed at least one streaming service in the last 12 months, mitigating subscriber churn and maintaining average revenue per user (ARPU) are key concerns for pay-TV and streaming operators – and they are fervently looking for solutions.

Tackling content fragmentation with super aggregation

It’s essential to understand that consumers are dissatisfied with the fragmented landscape of the video streaming industry. With such a variety of content on offer from the streaming giants, including Netflix, Amazon Prime and Disney+, consumers are feeling overwhelmed by choice and paralysed by decision fatigue.

For pay-TV providers (arguably the players that have seen their subscribers eroded the furthest as a result of the streaming-video-on-demand boom) bringing content back under one roof could be a guiding star for better subscriber engagement. Super aggregation represents the bundling of content of online video apps, streaming services and traditional pay-TV offerings into one, unified user-experience hub. Over 40% of US subscribers surveyed by Deloitte said that they would be willing to pay more for premium services that include bundled content, even if ads are still included within this. With this in mind, super aggregation offers operators the chance to appeal to a wider audience, keep subscribers in one place and reduce churn in the process.

Leading on from this, super aggregated content can also be better monetized through the offering of tiered subscription models, with ad-supported content to supplement lower-priced subscriptions. By catering to differing consumer demands and expectations, operators are able to limit subscriber churn further.

This being said, finding the right balance between ads, price point and subscriber loyalty is crucial. Take Amazon, for example: in January, it introduced ads to its streaming service, with existing subscribers having to pay £2.99 a month to remain ad-free. This greatly impacted consumer satisfaction and, consequently, subscriber churn, as subscribers ‘rebelled’ in response by jumping to alternative streaming platforms.

Innovating user experience

Another essential tactic to maintain ARPU and reduce subscriber churn is to innovate user experience and deliver a best-in-class service – OTT platforms particularly come into play here. By increasingly experimenting with interactive content such as branching narratives and ‘choose your own story’ type of shows (think Black Mirror’s Bandersnatch episode), OTT platforms are driving innovation to pique viewer interest and stay ahead of competitors.

Now also offering cross-device compatibility, consumers are able to watch content across devices on smartphones, tablets and smart TVs, anytime and anywhere. With some operators even offering offline viewing, operators are able to offer flexibility to their customers and increase audience reach accordingly – the modern consumer is now able to watch in any way they see fit.

The introduction of additional accessibility features such as closed captioning, audio descriptions and customisable subtitles in multiple languages also greatly boosts subscriber satisfaction. Consumers are now able to adapt their settings at the drop of a hat, which expands reach to viewers who may have previously had difficulties consuming content and generally increases user satisfaction and experience across the board.

Another exciting UX development is the experimentation we’re seeing with recommendation algorithms. Gone are the days of asking your colleagues what to watch, apps are now doing this for us through personalised recommendation engines, and AI will surely evolve these recommendations further. By leveraging data analytics to understand viewer preferences, behaviour and engagement patterns, operators can drive engagement, boost subscriber satisfaction and increase monetisation. With the richness of consumer data potentially available to pay-TV operators and telcos, these recommendation engines could deliver significant value to customers and could act as part of the solution to make subscribers ‘stick’.

Reducing reliance on king content

Exclusivity has always been a key selling point for operators. However, with the shift to super aggregation, differentiation between content has been reduced and exclusivity is dropping in value. With sports, for example, it’s very expensive and can be difficult for smaller distributors, given that large distributors often have exclusive details and longstanding relationships with content creators and studios. When revenue challenges abound, operators must carefully consider the cost of exclusivity.

As an alternative, pay-TV operators should consider the demand growing elsewhere. Take event-based viewing as an example: the finale of the popular UK TV show ‘The Traitors’ reached a peak audience of 6.9 million viewers in January, more than double the viewers of the season one finale, with anticipation remaining high for season three. By staying up to date on shifting consumer demands, operators are able to optimise strategy and maximise opportunity to maintain revenue.

Boosting subscribers and ARPU is no simple task, and unfortunately, there is no one-size-fits-all solution. Despite this, with a sound understanding of changing consumer demand, operators are able to adopt the right tactics to boost consumer satisfaction and make subscribers stick.

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