OTT subscribers grow restless:  Will quality content or smart plans curb the churn?

When the third season of Mirzapur released in July, many subscribers may have taken up a monthly subscription of Prime Video to watch the popular show. However, at the end of that month, many of these subscribers did not renew the subscription. Similarly, Netflix may witness a rise in subscriptions during the release of its popular shows like The Squid Game or Bridgerton. But these subscribers may also leave after watching their favourite shows. This trend, known as ‘subscription churn’, is a common concern among OTT platforms today.

Churn rate refers to the number of OTT service subscribers who cancel or let their subscriptions expire. This could be voluntary or involuntary. Voluntary churn occurs when users intentionally cancel their subscriptions, such as after finishing the series they signed up to watch. Involuntary churn happens when users unintentionally lose their subscriptions, often due to issues like expired payment methods or declined transactions. It's a crucial metric for any OTT provider, as it measures the loss of subscribers from a streaming service over a specific time period.

Shailesh Kapoor, founder and CEO of Ormax Media, a media consultancy firm, says that churn rates of 30-40% have become the norm for OTT platforms, making it a perpetual concern for them.

“It’s a genuine concern. Generally, 20-25% churn is manageable, but smaller platforms with 40-50% churn should be concerned,” he says. 

Kapoor says that people prefer short-term subscriptions to premium platforms, as consumer behaviour shows that subscribers are reluctant to pay upfront. “This mindset mirrors the practice of buying shampoo in sachets instead of bottles,” he explains.

However, the problem was aggravated to some extent after the Reserve Bank of India (RBI) issued a guideline in 2021 mandating that all recurring transactions require additional authentication. With this, automatic payments needed customer approvals and soon automatic monthly renewals of OTT platforms began to see a decline.

“Indians are generally hesitant to commit to annual subscriptions. This leads to churn, as consumers often subscribe for just a month to binge content and then return months later to do the same,” Kapoor says.

Karan Taurani, senior vice president, Elara Capital, says that subscriber churn depends on two key factors: the depth of content and its success. “Platforms with extensive, varied content, including a global catalogue, tend to have lower churn rates,” he explains.

What is the solution?

Some OTT platforms combat this trend by releasing content in a drip format, either by releasing one episode per week or splitting a single season into two parts. This approach aims to prevent subscribers from binge-watching the entire season at once, encouraging them to keep returning to the platform for the next episode.

However, experts say there's no easy solution, as it requires a combination of factors. They suggest that consistent content, competitive pricing, and app quality—including features and technology—are all crucial.

Uday Sodhi, senior partner, Kurate Digital Consulting, says that to retain subscribers over the long term, OTT platforms must deliver both quality content and a steady stream of new content. Easy online payments and sachet pricing have made it simple for customers to choose platforms based on the content they want to watch, leading subscribers to gravitate toward the best options.

“If the shows are not consistently good and there isn’t enough content to keep customers engaged, they will either pause their subscription or move to another platform that offers better content. Customers have many choices for high-quality content and will freely switch to the OTT platform that provides the best content at any given time,” says Sodhi, who was formerly the head of digital business at Sony Pictures Networks India.

Manish Kalra, chief business officer, Zee5, says that the solution is to provide content that the audience enjoy and want to come back for. 

“We rely heavily on analytics—examining cohorts, content preferences, frequency, timing, genre, and language. Our goal is to acquire new subscribers while retaining existing ones, ensuring steady year-on-year growth. To achieve this, we must maintain a steady stream of content that aligns with their preferences,” he says.

Kapoor believes that simply providing more content may not be sufficient unless it's must-watch content like live sports. He suggests that the solution lies in offering more customised subscription plans.

“Most web series don’t demand immediate viewing, so many Indian consumers prefer to subscribe for a month, binge the shows they want, and then cancel until there's something new they want to watch. This budget-conscious approach is common in a price-sensitive market. Encouraging annual subscriptions is one solution, but it's a complex market. Consumers also consider data costs,” he says.

The Ormax OTT Audience Report: 2024 reveals that the Indian OTT audience universe is currently pegged at 54.7 crore. Of this, around 10 crore are active paid (B2C) subscriptions. However, the report highlights a waning need among audiences to subscribe to too many platforms. The average number of platforms subscribed to per paying audience member has come down from 2.8 to 2.5 in 2024.

While tentpole content might drive subscriptions, not everything reaches that level of demand. Moreover, globally, the amount of content being produced has decreased in the past few years. This is also evident in the reduced number of direct-to-OTT film releases, as platforms have realised that theatrical films provide better returns. 

Kapoor describes this as a post-pandemic correction. During the pandemic, particularly in 2020-21, a significant amount of content was commissioned, but now the focus has shifted toward profitability.

“Companies are now focusing on sustainability over simply acquiring new subscribers at any cost. The boost OTT received during the pandemic has waned, and we're now seeing a market correction. Mergers and acquisitions, like the Sony-Zee merger that didn’t go through and the Disney-Star situation, have also contributed to disruptions and slowed down production. However, as clarity around mergers and leadership changes settles, there’s hope for gradual improvement," he says.

Kalra agrees that content creation is Zee5’s biggest expense. However, he says it's about finding the sweet spot between content quality and cost efficiency. 

“We aim to provide the best value by optimising content creation costs while maintaining high quality. Coming from Zee's legacy, we understand both content costs and the creators' needs, so we continually optimise to our best advantage,” he adds.

Arghya Chakravarty, COO, Shemaroo Entertainment, says, its Gujarati OTT platform ShemarooMe is addressing this by mixing different types of content—like plays, web series, and movies—while focusing on fresh content, which is key to retaining users. 

"Content creation is becoming increasingly expensive due to the growth of multiple platforms, but the number of production houses hasn't kept pace. From my perspective, the key is smartly curating a mix of content. Not every new piece needs to be expensive—what matters is engagement. Consumers don't always want something new; they want something engaging, whether it's a well-crafted, lower-cost production or a big-budget piece. Today’s audience is open to diverse content, not just star-studded shows or specific genres,” he shares.

Chakravarty says the challenge lies in creating a balanced content mix that is both engaging and cost-effective, as the Indian consumer is highly price-sensitive. “We can't just keep raising app prices; there's too much competition, including free content on platforms like YouTube. The goal is to provide meaningful, varied content that keeps spending rational and sustains engagement," he adds.

The OTT platform is working on auto-renewals, and is also rationalising content costs to manage spending. 

“While we're providing fresh content every month, including occasional Hindi originals, we must be mindful of costs to avoid them spiralling out of control. Through smart offerings and engagement strategies, we're working to maintain user stickiness," he says.

Meanwhile the platform is also conducting extensive A/B testing and consumer studies to explore different content packages and pricing strategies. However, Chakravarty feels that these strategies might offer short-term solutions, but the key is managing and rationalising input costs. 

“Coming from an FMCG background, I’m familiar with pack-price plays—like adjusting bottle sizes and pricing for specific channels. We're applying similar strategies here, testing various permutations,” he adds. 

Similarly, Zee5 has also tried various approaches: starting with monthly packs, then introducing three-month, six-month, and annual packs. It also introduced a low-value pack for budget-conscious users. 

“Ultimately, consumers are looking for quality content, and if we deliver that, they will stay—whether they choose a monthly or annual pack. Our key focus now is to optimise and scale this approach,” Kalra says.

User experience also plays a crucial role. Sometimes, even poor app performance and UI can drive subscribers away.

“The solution is to maintain or improve user experience while ensuring a consistent content pipeline. Regularly announcing new content, such as a monthly slate, combined with a deep and successful content library, helps reduce churn and keeps subscribers engaged,” says Taurani.

Hero image: Designed by Shubhankar Sen