How AI Helps Maintain Binge-Worthy Subscribers
What do we do when a pandemic emerges? We turn to the tube.
Quarantine and stream is the new norm. Per the Economist, “citizens face what could be months of isolation at home, ideal conditions for binge-watching1.”
And, that’s exactly what we’re doing, some of us for over 8 hours a day, binge-watching three shows in the past week2.
Streaming and video on demand (VOD) companies like HBO Now, Netflix, Amazon Prime, Hulu, Disney+ and literally hundreds of others are in a race to capture this content-obsessed audience and turn it into long-term profitability. While content is critical in determining where people tune in and subscribe, the customer experience will pave the way for higher lifetime value.
Binge-worthy streaming rates: Is it enough to hook long-term customers?
This Covid-19 captive audience has companies scrambling to entice viewers to use their service: HBO is streaming 500 hours of movies and shows for free3; Comcast is making on-demand and content available to select customers for free4; Hulu has added a live news stream; and at least a dozen others streaming companies are offering free trials 5. And these are just a few examples.
People are hungry for content. As live sports are cancelled and we have more hours in a day to fill, streaming is skyrocketing around the world: Spain (+191%); France (+187%); Italy (+116%); Mexico (+89%); United States (+89%); Germany (+75%) and United Kingdom (+71%) 6.
No one should be surprised by this boost. After all, streaming during a crisis is nothing new. During Hurricane Harvey in Houston in 2017 and a New York blizzard in 2016, when people were also homebound, streaming too skyrocketed.
In these weather situations, viewership uptick turned out to be a short-term boon1. So will it be different during this time? Will Showtime hold on to its 78% increase in viewership and HBO Now its incredible 90% bump in its subscriber numbers7? What about Netflix and its 15 million new subscribers (more than double what was expected)8? There are mixed thoughts.
The Economist reported that “although households will be parked on their sofas and looking for entertainment during the pandemic, it is unclear whether this sudden surge in demand will help the likes of Netflix in the long term.1”
Conversely, AB Bernstein analyst Todd Juenger, says “the adoption of streaming will be accelerated and further ingrained into the culture.” While Conviva CEO Bill Demas says, “We anticipate streaming providers will retain new viewers long after the coronavirus.9“
To help sustain long-term viewers, higher ARPU and engrain new viewing habits, streaming companies need to prioritize the C/X. But, this hasn’t been easy during the Covid-19 pandemic.
The customer service challenges for streaming companies could have long-term implications for the “now” generation
There are few things more frustrating than forgetting a password when logging into a new device to stream a show or being interrupted at the climax of a drama with a buffering issue.
When a viewer encounters a problem, (and there’s been a few — just search #NetflixDown on Twitter), customer support has been hard to come by throughout this crisis. It’s commonplace to hear things from companies like “Thank you for your patience” as we’re experiencing “unusually high call volume” and “longer-than normal wait times.”
With a growing audience base, it’s not surprising that these companies are seeing a surge in customer service tickets. The situation is only confounded by the fact that agent teams are working remotely, and lacking the right tools, proper work environments and quality control measures to assist customers in the same way as they did before. In a few examples, Roku and Netflix have shut down phone support. Hulu stopped offering 24-hour support, while Netflix limited support hours. Disney+ warns of long wait times on live chat10.
Even when an agent team is facing challenges in an unprecedented environment, companies need to strive to provide convenient, quick and effortless support. Customers still expect resolutions now – to everything from how to troubleshoot buffering issues, reset passwords, sign in to new devices, update payment details and cancel accounts.
The support provided today will directly impact the lifetime value of a customer. When a person becomes frustrated with a streaming service, 60% of users will take some sort of action, including abandoning the service altogether11.
The most important thing to focus on is a speedy response and eliminating long hold-times. Forrester has found that 60% of people say valuing their time is the most important thing that a company can do with customer service. And this is why VOD companies that prioritize the C/X are adopting AI. This is for a few key reasons:
- AI automatically resolves everyday tickets instantly, without human intervention. Low resolution times for common troubleshooting, account and payment issues.
- Always-on, always-available support. There are no “office hours”, breaks or disruptions with a remote workforce. AI can respond to customers around the clock.
- AI assists agents with recommended responses and data to help them work smarter, not harder. Agents focus on critical and high-risk needs.
- AI scales up instantly. There is no need to hire new and train new agents when demand and ticket volume surges. AI can manage an infinite number of tickets simultaneously.
The result of bringing AI into the workforce is a good customer experience that results in long-term engagement.
The churn dilemma and courting customers with AI
While we don’t yet know how long new subscribers will stick around, the churn rate for streaming companies averages around 18%12. Shrinkages of current subscriber bases should be expected. Netflix’s letter to shareholders notes that “viewing [will] decline and membership growth [will] decelerate as home confinement ends.13“
So how can these companies reduce churn as much as possible? AI can identify potential customers at risk of churning to preemptively intervene with an incentive to stick around, such as a free add-on product or bumping up to a premium service.
With so many new viewers, though, these companies need to be able to prioritize their courting resources. Who is worth an incentive as there is a high potential ARPU? Who plays hot potato with services and simply jumps around? (In one survey, half of respondents “confessed to starting a free trial of a platform and then canceling it once they finished the show they wanted to see.”2)
By analyzing troves of data these companies have at their fingertips, AI can cluster and identify target audience groups based on profile attributes and behavior to spend resources in the right places that will pay off in lifetime value.
It’s a big business. With big competition.
The streaming sea is getting full of more and more fish. In fact, there are over 200 OTT providers in the U.S.14 and newbies are still jumping in, including NBCUniversal’s Peacock, WarnerMedia’s HBO Max and Walmart has sold its video-on-demand service, Vudu, to Fandango.
The bottom line is people have options. To keep subscribers happy and tuned-in, streaming and VOD companies need to prioritize customer support with a focus on meaningful, quick resolutions whenever and wherever customers want it. While content may be king, the C/X is queen.
Can we discuss how to use AI to maintain binge-worthy subscriber numbers? Get in touch. We’ll pause our show to talk to you any time.
- The Economist: https://www.economist.com/graphic-detail/2020/03/27/covid-19-is-a-short-term-boon-to-streaming-services
- New York Post: https://nypost.com/2020/04/14/average-american-streaming-content-8-hours-a-day-during-covid-19-according-to-new-research/
- HBO: https://help.hbogo.com/hc/en-us
- MultiChannel.com: https://www.multichannel.com/news/comcast-opens-on-demand-svod-titles-during-covid-19-outbreak
- Bustle: https://www.bustle.com/p/12-streaming-services-with-free-trials-amid-the-covid-19-pandemic-22663732
- The Observer: https://observer.com/2020/04/netflix-disney-plus-hbo-streaming-ratings-traffic-coronavirus-lockdown/
- CultofMac: https://www.cultofmac.com/695697/apple-tv-misses-out-covid-19-surge-video-streaming/
- The Verge: https://www.theverge.com/2020/4/21/21229587/netflix-earnings-coronavirus-pandemic-streaming-entertainment
- MarketWatch: https://www.marketwatch.com/story/netflix-in-the-age-of-covid-19-streaming-pioneer-may-have-new-edge-on-competition-2020-04-07
- Variety: https://variety.com/2020/digital/news/netflix-drops-phone-customer-support-worldwide-coronavirus-1203543349/
- ClickZ: https://www.clickz.com/survey-streaming-mobile-video-user-frustrations-worldwide/226092/
- Broadcasting Cable: https://www.broadcastingcable.com/blog/as-streaming-wars-intensify-so-does-fight-to-keep-subscribers
- Netflix: https://s22.q4cdn.com/959853165/files/doc_financials/2020/q1/FINAL-Q1-20-Shareholder-Letter.pdf
- Digiday: https://digiday.com/media/evolution-streaming-video-services-4-charts/