The number of people hopping between video services has increased dramatically over the last seven years. Could loyalty programs help keep the hoppers beyond their trial periods?
The dramatic increase in app hopping
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%)
App-hopping is a huge problem for SVOD
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. They have invested heavily in the 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
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.
FAST services have an even worse problem with churn than SVOD. According to TiVo, almost a third of US and Canadian FAST users only use a service for three months or less. They are beginning to employ loyalty programs to keep more viewers for longer. Chicken Soup for the Soul Entertainment launched a reward program in May that spans the company’s direct-to-consumer services. It is based on 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 is using the same approach.
A loyalty program could help SVOD services turn some app hoppers into loyal customers. Offering free program membership and bonus rewards during the free trial and promotional periods gives users an extra incentive to stick around. It could also be a key differentiator from a competitor.
[1] Percentage of adult SVOD users that rate at least one statement as describing their behavior “very well” or “spot on.”
