Home Analysis IBM Cloud Video: Technical problems still account for 17% of SVOD churn

IBM Cloud Video: Technical problems still account for 17% of SVOD churn

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Research from IBM Cloud Video has found that despite rapid improvements in OTT video delivery quality over the last decade, technical issues still remain a significant reason for subscribers cancelling their service.

A third (31%) of respondents said they had cancelled a streaming service at least once. When asked which issue was most likely to make them cancel a subscription to a streaming service, 17% answered ‘technical problems’.

When asked separately which type of technical issue they encountered most often when streaming, nearly three-quarters (73%) replied either ‘buffering’ or ‘delayed starts’ (see Figures 1 and 2 below).

Figure 1: Which of these issues are most likely to make you cancel a subscription to a streaming service?

Reason for cancellation Percentage
Too many ads 27%
Too expensive 25%
Not enough shows 20%
Technical problems 17%
2 x streams at a time not supported 4%
Not available outside the US 3%
Can’t share login 3%

Source: IBM Cloud Video

Figure 2: Which of these technological problems have you encountered most often when using a streaming
service?

Type of technological problem Percentage
Buffering 49%
Delayed start 24%
Video quality 15%
Audio sync 12%

Source: IBM Cloud Video

David Mowrey, VP of Strategic Planning at IBM Cloud Video, said that “if you go to any of our industry events, you can see people talking about how the capacity of CDNs (has increased) and the optimisation of the encoding and the streaming. I think that in theory those problems have been solved, but they’re still popping up in the eco-system somewhere. I don’t see them magically going away.”

It seems that technically-related churn could be an even bigger issue for video-service providers were it not for the fact that consumers usually tend to blame their Internet service-providers for such technical glitches, rather than the streaming services themselves.

“They always come back to their ISP,” comments Mowrey. “It’s not a problem with the service, it’s not a problem with their device, it’s a problem with their ISP.” The reality is that the causes are a “complex question,” he says.

The survey also looked at the issue of ‘active’ versus ‘passive’ subscription cancellations. Last year, Reed Hastings, Netflix’s CEO, attributed lower-than-expected subscriber growth in part to “the on-going transition to chip-based credit and debit cards.”

In other words, Netflix had been unable to collect subscriptions because some subscribers’ existing cards had been replaced and they had forgotten to update their details.

This is called ‘passive’ cancellation as opposed to ‘active’ – where the subscriber deliberately cancels (for example, because of technical issues such as those mentioned above): the survey found it was a significant source of churn.

16% of respondents said that they had lost their subscription to a streaming service because they had received a new credit card and had failed to update their billing information.

However, of the 16%, only a quarter, or around 4%, would actually churn out of the service permanently if that happened: most would choose to re-subscribe.

The research found that the phenomenon seemed to impact 30-44 year-olds much more than other age groups, with 28% of that group confirming that passive cancellation had happened to them.

Finally, the research also looked at ‘password sharing’, where subscribers allow someone who does not have a subscription to a streaming service to ‘borrow’ their password to access it.

In July, a US federal court ruled that doing so without the authorisation of the system’s owner was technically a federal crime.

Research company Parks Associates published a study last year suggesting that SVOD services stood to lose upwards of $500 million in revenue in 2015 from this practice.

The IBM survey asked respondents if they had borrowed a password to try a service before they subscribed, and 27% said they had done so. However, most of the borrowing appears to take place between family members, the survey found. A little under half (48%) said they did not share their password at all, with 42% saying they shared it with family members. While 6% said they used someone else’s, only 4% shared their password outside the family circle (see Figure 3).

Figure 3: do you share the password for the streaming service you pay for
with anyone else?

Response Percentage
No, don’t share 48%
Yes, with family 42%
Use someone else’s 6%
Yes, with friends 2%
Yes, with room-mate 1%
Yes, with anyone 1%

Source: IBM Cloud Video

Mowrey said the research demonstrated how critical it was for providers of SVOD services to be “intimately familiar with and working with the data that you’re capturing on your service […] and that you understand and can act upon that data. Everything from how your customers are coming in, how they’re churning out, what they’re watching, how they’re being billed, what’s their average revenue per user, customer acquisition costs – those are critical components to making a successful service. And the services that leverage that data the best are going to be the ones that survive.”


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