Churn of the century: why unsubscribing has never been so popular

The other day I received a non-negotiable annual bill that had swollen since last year. I stared at it for a few minutes, resolved to pay it, then immediately responded by cancelling the media subscription at the top of my danger list.

I’d cut a discretionary purchase and would still be worse off than I was before the bill landed, but I had at least freed myself from the guilt of rarely using that particular subscription enough to justify its monthly expense. The victory was mine, really. In your face, global inflationary pressures.

Apologies for sharing this humdrum January non-saga, but its ordinariness is sort of the point. People love announcing when they have unsubscribed on a point of principle.

The motive is at least as often a dull financial one combined with every media company’s greatest enemy: indifference. There’s no big break-up, just a slow fizzling out.

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Churn, that disdainful-sounding word businesses use for their rate of customer attrition, isn’t as fun a topic to slide into corporate presentations as growth and growth potential, but it’s becoming a more common one in the media world. On the bright side, it’s a problem that only comes with the luxury of having subscribers in the first place.

This is a churning point. Consumer choice is proliferating at a time when personal finances are in flux, markets such as subscription video-on-demand seem saturated and demand for some types of content – from home entertainment to hard news – is coming off a crisis-inspired spike.

Add inflation to the mix and the media industry could be approaching the churn of the century.

For subscription video-on-demand, Deloitte Global has predicted that 2022 will see "at least 150 million" paid subscriptions cancelled worldwide, with churn rates as high as 30 per cent. "Amplified" competition will lead to an "acceleration" in churn, even in Europe, where rates of churn are typically lower than those in the more mature US streaming market.

The good news is that streamers will gain more subscribers than they lose. Not only that, the average number of subscriptions per person will rise and, in the markets with the highest churn, people who previously cancelled a service may actually resubscribe.

Subscriber retention

In news media, figuring out how to both win and retain digital subscribers is a relatively new activity, but one of increasingly critical importance.

You only have to look at newspapers' share of the Irish advertising market – which dropped from almost 25 per cent in 2014 to 8 per cent in 2021, according to GroupM – to understand why.

In the Reuters Institute for the Study of Journalism’s 2022 trends and predictions report, four in five of the publishers surveyed say pushing ahead with subscription and membership strategies is one of their most important revenue priorities this year.

This brings with it the challenge of hanging onto the subscribers gained during the Covid-19 crisis and countering “subscription fatigue”. Limiting churn must become part of the skillset.

The Reuters Institute suggests some publishers will use cut-price offers and differential pricing, “especially if the economy cuts up rough”, while for others, the answer will lie in designing new products and new product bundles.

Indeed, the ability to reach a wider audience through subscription bundles is a large part of the rationale for the New York Times Company's decision to acquire sports news publication The Athletic for a sizeable $550 million (€487 million).

NYT chief executive Meredith Kopit Levien last week told stock analysts that The Athletic, as well as having room to grow as a standalone subscription, would also be used to help the NYT gain market penetration and give it "a retention benefit". The company would have "more things to engage with" when it talks to customers: "Ultimately, you have begun to hear us talk much more about the promise of the multi-product bundle," she said.

A similar tactic is at play when video streamers like Netflix and Disney Plus choose to make their services available as part of a bundle sold by cable and satellite television companies. These platforms extend their reach, while the bundled billing of services lowers the chance that customers will cancel any of them.

Netflix, still the leader in the video streaming market, has long been thought to have lower churn rates than its competitors, a belief that appeared to be confirmed in a 2021 study by US research firm Antenna. The same research concluded that among the biggest names, Apple TV Plus had the highest rate of churn.

Watch-and-go

Neither finding should be surprising. Apple TV Plus is free to buyers of new Apple devices for three months if they redeem the offer within 90 days. That’s plenty of time to watch everything you want, then skedaddle.

Netflix, meanwhile, is ridiculously savvy at everything from pay-TV partnerships to interface design (those ever-changing thumbnail pictures) to email marketing. Of course, its diverse, global and ever-shifting approach to content also contributes. But even its laissez-faire attitude to the sharing of passwords between households seems smart on the churn front: you’re less likely to cancel a service that somebody else is accessing too.

The subscription I cancelled was managed through Apple, which happily made it a no-fuss move. I chose the path of least resistance. If I could have delegated the necessary phone calls, I might have jettisoned another under-consumed subscription first.

But that’s not an endorsement of the sadly common practice of making unsubscribing an awkward or technically difficult process.

Companies telling subscribers they can cancel anytime, just as long as there’s a full moon, an “F” in the day of the week and they agree to answer this short telephone questionnaire, don’t have an anti-churn strategy, they have a guaranteed method of deterring former customers from ever returning.

Better to have a policy of easy go, easy come back. That way departing subscribers can get on with the business of realising their terrible mistake – well, maybe after a discount sweetener or two.