Churn is rampant among SVOD and FAST users, despite billions being spent on content and discovery features meant to keep them. Could loyalty programs help hold on to users longer? Listen on to find out.
New data shows that many Internet TV viewers have little or no loyalty to the streaming TV services they use. This week we will look at the data to see how big the problem is, and at two companies – Chicken Soup for the Soul Entertainment and Rewarded TV – that have recently introduced viewer loyalty programs to boost customer lifetime value and reduce churn. But first…
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Now, back to the podcast.
Internet TV services have a loyalty problem (2:00)
SVOD churn is up (2:20)
New research from Aluma Insights paints a difficult picture for SVOD providers. The company surveyed 2,001 US adult broadband users in April to better understand how frequently they switched – or “hopped” – services. The survey results are published in the new report Quantifying App Hopping Behaviors Among US Adults.
Aluma classifies SVOD service users into four groups: non-hoppers, occasional hoppers, moderate hoppers, and heavy hoppers. Moderate and heavy hoppers use more SVOD services overall than average and more free trials, promotional offers, and borrowed credentials than average. According to the research, there has been an alarming increase in moderate and heavy app hoppers, from 7% of US adult SVOD users in 2017 to 17% in 2023.
The most popular app-hopping behaviors are:
- Regularly signing up for free trials and canceling before the first charge (40%)[1]
- Regularly signing up for promotional pricing, cancel before the price increases (39%)
- Prefer to hop between services rather than stay subscribed (35%)
- Regularly sign up, binge all the good shows, and cancel. (27%)
FAST loyalty close to zero (5:00)
There is no question that people love FASTs. According to TiVo’s Q4 2022 Video Trends Report, almost two-thirds of US and Canadian adults say they watch one or more of the services. And the number one reason they watch them is overwhelming 
because they’re free. Two-thirds of users selected that reason. The second most popular reason was that they aren’t worth paying for but are worth watching a few ads (but this reason was opted for by under a third of people.)
However, because the content is free, there is nothing to hold on to viewers but the content. And that does not appear to be enough. A third only uses a service for three months or less.
Churn is a huge problem for Internet TV providers (6:00)
Whether you view app hoppers as gaming the system or simply optimizing their video service spending, the big increase in the group represents a huge challenge for SVOD providers. They are spending huge sums on content, and the last thing they want to see is a growing segment of consumers binge and bolt from their service. The behavior is particularly disconcerting when there are almost certainly more titles in the library that they would enjoy.
Customer retention has always been a priority for SVOD services, which must justify their value to subscribers each month or face the risk of cancellation. It is an even bigger priority for FAST services without the security of the subscription payment to underpin its business. Both have invested heavily in recommendation and advanced search functionality to ensure customers can always find something new to watch in their vast content libraries. However, these efforts appear to be fighting a losing battle with the expanding app hopper segment. Service providers need to find a new approach.
Loyalty programs could help with app hopping (9:00)
One tried and trusted mechanism to encourage customers to select one brand over another is the loyalty program. A study by McKinsey in 2021 showed that 3 out of 4 members of top-performing loyalty programs changed their behavior to generate more value for businesses. Nearly two-thirds were more likely to purchase more frequently, and 35% were more likely to choose one brand over its competitors.
Chicken Soup for the Soul Entertainment loyalty program (10:20)
Streaming services are starting to give the approach a try. In May, Chicken Soup for the Soul Entertainment launched a reward program that spans the company’s direct-to-consumer services: Redbox, Crackle, and Chicken Soup for the Soul streaming apps. It is based on the blockchain platform TaTaTu and allows viewers to earn TTU coins for watching, which they can use to bid on prizes and buy frequently updated products.
Rewarded TV loyalty program (11:30)
Rewarded TV, another free TV service, uses the same approach. Rewarded TV is, on the face of it, just another video aggregation and viewing service. It includes on-demand and linear channels providing various content, including comedy, news, documentaries, and much more. However, you won’t see any ads and won’t be asked to give up credit card information and pay a subscription. Instead, the service uses web 3.0 technology to gamify the TV viewing experience and take a different approach to the value exchange between the viewer and content provider.
Rewarded TV was created by the Web 3.0 native Imagine Replay Inc., which describes itself as a “crypto native VoD & live streaming service powered by Replay Blockchain.” Replay uses RPLAY tokens as the currency to exchange value within Rewarded TV. Users can earn RPLAY tokens for watching and completing challenges and use them to unlock access to content available within the experience.
How viewers benefit from Rewarded TV
There is plenty of free content to watch on Rewarded TV. For example, you can find on-demand titles like My Music Brain, Born2Race, and Bad Therapy and on linear channels like FlixFling Now, Thriller TV, and Poker Night TV. And users earn RPLAY tokens for watching it.
Rewarded TV further gamifies the experience with incentives to continue to watch. There are also opportunities to attend scheduled watch parties. For example, you can join a scheduled watch party for the Alan Arkin comedy Flag Raising this Wednesday. A viewer also earns achievement badges for watching. Watch the Alan Arkin movie, and you’ll receive a Replay Watch Party Badge. Watch for 50 hours on Roku and receive a badge for that achievement too.
The service also provides a marketplace where users can buy collectibles, accelerating the rate at which RPLAY tokens are earned. For example, if a user buys the Cyko KO Bubble Gum NFT for $9.99, they will earn double the rewards for attending the Alan Arkin movie watch party.
The marketplace is powered by Theta Drop, an NFT marketplace from Theta Networks, which provides Web3 blockchain infrastructure for video, media & entertainment.
What content providers get out of Rewarded TV
Some content providers might wonder why viewers need to be rewarded for watching. After all, isn’t the content its own reward? Andrea Berry, Head of Business Development at Theta Labs, explains why rewarding viewers with RPLAY tokens matter to content providers:
“It’s a points system, a loyalty system. Airline miles are a great example of gamifying, incentivizing behavior, doing something that makes it more likely that I will only fly Alaska Airlines because I get status, I get my free vacation.”
Viewers get exposed to free content from content providers and can use the RPLAY tokens to buy access to more. They can also buy access from the Theta Marketplace. For example, FlixFling – a free channel on Rewarded TV – also has subscriber-only content. Buying the FlixFling Platato on the Theta Market gives viewers access to the paid content until at least June 2024.
Loyalty programs are a work in progress for Internet TV (14:10)
No SVOD service has introduced a loyalty program yet, though it seems to have great potential. Disney is considering introducing one, though it’s unclear if it would extend to its direct-to-consumer services. However, it’s safe to say that if Chicken Soup for the Soul and Rewarded TV have success with their programs, others will follow quickly.
As usual, you can find a rough podcast transcript at www.nScreenMedia.com and see diagrams that make the data I discussed today slightly clearer.
