The impact of churn on ad revenue for content publishers can be significant. Advertising revenue has become an increasingly vital income stream for content publishers. According to PwC’s Global Entertainment & Media Outlook 2024-2028, by 2028, “advertising will account for about 28% of OTT global streaming revenues”, a steady rise from the 20% recorded in 2023. With more than a quarter of streaming revenue coming from ads, customer churn poses an even greater threat to content publishers’ long-term revenue.

In this article, we take a closer look at the impact churn has on ad revenue, why it is becoming an increasingly important source of income for content publishers and distributors, and how churn can doubly impact their business due to the loss of subscribers.

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Higher competition means lower fees

As competition intensifies, many content providers are lowering subscription fees to attract more viewers. To compensate for the reduced subscription revenue, these companies are turning to advertising. This trend has affected even the biggest players in the industry. For instance, in 2023, Netflix introduced a "Standard with Ads" plan for $6.99, significantly lower than their $15.49 "Standard" plan, yet offering the same 1080p resolution. The response has been overwhelmingly positive, with subscriptions for the ad-supported plan soaring to 40 million global monthly active users by May 2024, up from just 5 million the previous year.

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The role of data in targeting advertising 

In order to turn ad placements into revenue, advertisers need to be able to target the right ads towards the right audience. This precision often relies on data derived from streaming platforms' subscription information, which provides insights into audience demographics, interests, and viewing habits and enables advertisers to create more effective, targeted campaigns. 

When this data-driven ecosystem functions well, both advertisers and content publishers benefit, reducing churn and boosting revenue while maintaining viewer satisfaction. However, when churn increases, it not only reduces subscription income but also diminishes the effectiveness of advertising, leading to a dual revenue loss for content publishers.

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Reducing churn by enhancing streaming quality

In order to mitigate churn and secure both subscription and ad revenue, content publishers must focus on ensuring a high-quality streaming experience. At System73, we believe the key to reducing churn is high QoE and that the key to high QoE is visibility, that is, the ability to observe and understand the reasons behind network congestion and QoE challenges. Our solutions can help address this challenge by enhancing the quality of streaming and the overall viewer experience while reducing OpEx and delivery costs for content publishers.

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System73's Data Logistics Platform

Our Data Logistics Platform provides unprecedented visibility into content delivery, allowing publishers to track the impact of QoE on immediate churn and track their content from source to screen, and proactively detect potential issues. We can then track the number of QoE-induced events —unrelated to content— to the likelihood that a subscriber will abandon the service, therefore helping to protect and even increase revenue. However, not only does our Platform increase visibility, we also offer highly cost-effective solutions for both VoD and live content broadcasting that are designed to enhance QoE, reduce churn, and ultimately increase profitability. 

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To find out more about our Data Logistics Platform, our content delivery solutions, and for more insights into trends in live streaming and content consumption visit system73.com and follow us on social media.

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