"We are running into the global arena faster than anybody," Jeff Hirsch, Starz COO declared at a June 2019 conference. He was referring to the fact that the Starz digital platform will soon serve over 50 territories throughout the world. Starz is not alone in focusing on global growth; Roku reported, in its recent fourth quarter earnings release, an expansion into Brazil, one of the largest digital markets in Latin America, as well as a diversification strategy away from its heavy U.S. focus. As content owners and platforms grow geographically, so too is the depth of consumer distribution touchpoints—take for example Acorn-TV, the largest purveyor of British themed programming in the U.S. Acorn is now available over Apple TV Channels, Roku Channels, Amazon Channels, Android TV, Chromecast, Comcast/Xfinity, and via Vizio Smart TV.
Why so many venues for Acorn? The competition for eyeballs, subscriptions, and share of consumer discretionary spending is clearly intensifying. To secure a foothold within such a diversified global audience, content owners and platforms need to be where the viewers are. They want their assets available for viewing on license window start dates, to feature accurate, localized metadata/artwork, and to be displayed properly within listing pages. Equally important is confirmation of the relevancy of programming selection and curated choice for consumers. But all of this is not so simple.
The level of complexity needed to perform these tactical compliance checks, while simultaneously achieving business goals, is daunting for resource constrained companies. Indeed, Spherex analysis has discovered that over 90% of episodic titles do not move to on-demand folders as part of the next-day-TV release window and approximately 45% of features are not taken down by license window end dates.
These monitoring tasks, when not diligently and systematically performed, have the lasting and cumulative effect of suppressing potentially higher return-on-investment metrics and confidence within underlying distribution and licensing agreements. With price remaining the principle consumer consideration for a subscription package, the majority of content platforms (outside of the few very large market dominators) complete on the basis of specialized focus and the ability to refresh with ongoing compelling content and overall product quality. A series of recent commentaries looking at the evolving media subscription-based commerce landscape predicts (not unlike retail eCommerce) one-in-five digital content consumers will consider cancellation as they no longer want the content presented (i.e. not compelling vs. other offerings), while one-in-ten will claim deterioration in product quality, including product descriptions.
Overall, a conservative estimate for this rate of churn can be taken at approximately 10% post the initial subscription period. With the assumption that a targeted D2C streaming platform achieves a successful market position with 1MM global subscribers paying on average $4.99 per month each, annual revenue loss due to overall churn could be as high as $500,000; if one-fifth of this is attributable to lack of competitive content catalog and product quality, that equates to an avoidable annual loss of $100,000 to the bottom-line. Believing in the competitiveness of a catalog/programming assortment relative to competitive outlets and knowing that factors influencing product quality are being monitored, the threat to financial stability and growth for subscription platforms--especially across a global audience base—is removed.
