By 
Subscribing millions of paying customers simultaneously isn’t easy.
Streaming services such as Netflix, Spotify, and Disney+ have revolutionised the way content is consumed. But did you know there’s a whole machine behind the scenes making sure everyone can access their favourite shows at any time?
It’s called subscription management. And it’s what separates the streaming winners from the losers.
What you’re going to learn:
- Subscription Management Defined
- Why Subscription Management Is Important
- How Streaming Services Manage Millions of Subscriptions
- Biggest Challenges of Subscription Management
- The Future of Subscription Management
What is Subscription Management?
In simple terms… Subscription management is the process of administering everything that has to do with subscribers.
From the moment they subscribe until the day they cancel their account. Billing, renewals, upgrades, downgrades, recurring payments, cancellations… you name it.
While managing a few thousand subscribers might be doable manually… Throw hundreds of millions into the mix and you’ll quickly realise just how complex things can become.
The subscription economy hasn’t slowed down anytime soon either. Recent data shows the global subscription economy is expected to grow to $2.1 trillion by 2025. So it’s more important than ever that subscription management systems can handle this weight.
For streaming services and IPTV platforms, a reliable IPTV streaming payment gateway to process recurring subscription management payments is essential. Without one in place capable of handling large volumes, there won’t be much of a business left to run.
Why Should You Care About Subscription Management?
Great question.
See, managing subscriber lifecycles isn’t just about receiving payments. Although that is a big part of it. Everything that happens after the click of that “Subscribe” button impacts:
- Subscriber retention
- Revenue growth
- Brand trust
If a customer’s payment method fails and they can suddenly no longer watch Friends part 317… They’re not going to be happy. And when customers aren’t happy, they churn.
Keeping a subscriber base happy is vital to growing a subscription service. But reducing churn can be tricky.
On average, monthly churn rates for subscription-based businesses sit around 5.3%. However, that number can vary depending on the industry.
Either way… That means out of every 100 subscribers, 5 will cancel their subscription every month.
Reducing subscription churn starts with having a solid subscription management process.
Here are few key areas where subscription management is critical:
- Accuracy of billing
- Payment recovery
- Flexible pricing plans
- Supporting international payments
Make sure these are nailed and subscriber retention rates will soar. Neglect them and profits walk right out the door.
How do Streaming Services Manage Millions of Subscriptions?
Photo by Erik Mclean on Unsplash
Now this is where it gets fun.
The largest streaming platforms in the world don’t rely on employees manually handling their subscribers. They have intricate systems and processes in place to automate almost every aspect of subscription management.
Take Netflix for example. They currently have over 310 million paid members across the globe. Yes, you read that right. 310 MILLION. To put that into perspective, that’s more than the entire population of Canada.
That’s how big of an industry this is.
Automated Billing
Every subscription has to be billed. Every month. With billions of transactions occurring yearly between subscribers and platforms… You better believe these are automated.
Manual billing systems don’t come close to processing PayPal transactions and charging credit cards at this scale. Automating this process also eliminates human error and optimises the entire experience for users.
Payment Retries
Credit cards expire. Banks decline transactions. Thousands of things can cause a payment to fail.
But modern subscription management systems automatically retry failed payments. There are even algorithms in place to determine the best time to attempt these payment recovery retries.
This process alone can help recover a lot of lost revenue.
Flexible Pricing Options
Did you know streaming services offer multiple different pricing tiers?
Most allow users to choose between their ad-supported plan, standard plan, and premium plan. Each with varying degrees of accessibility, video quality, audio quality, and price.
By allowing subscribers to self-serve their way through pricing plans it gives users flexibility. But it also adds another layer of complexity to the subscription management process.
International Payments
When you think of Netflix do you think of Canada? Or China? Australia? Netflix has subscribers in over 190 countries.
This means they need a way to accept payments from every single one of those countries. In local currency too. Using local payment methods.
This is why supporting international payments is so important. Because once a platform goes global… There’s no going back.
Managing local payments comes with its own subset of challenges when scaling up though. Time zones, currencies, payment methods… The list goes on.
What Are The Biggest Challenges with Subscription Management?
Source: Unsplash
As with anything at scale, challenges will arise.
Even the biggest tech giants in the world have run into plenty of obstacles managing billions of subscriptions. So it’s no surprise streaming services face similar difficulties.
With new statistics revealing 43% of Americans cancelling subscriptions to media services in just the last year, there are some growing trends of problems within the industry.
The list continues…
Streaming service costs are a bit out of hand these days. In fact, nearly 7 in 10 subscribers feel disgruntled by how much prices tend to rise.
There’s no doubt about it… Managing subscriptions is harder than ever.
The Future of Subscription Management
So where does the industry go from here? What does the future of subscription management look like?
AI driven personalisation is becoming the standard. Using AI to analyse user behaviour allows platforms to predict churn before it happens. Take actions to retain those users and bill them accordingly.
Hybrid monetisation models are also starting to take shape. By offering both subscribed and free ad-supported tiers, platforms can gain more revenue from the same user.
Bundling between platforms is also on the rise. Partnerships that allow users to access multiple services for one low price.
If anything… The future of subscription management is only going to continue expanding as more players hop on the bandwagon.
Wrapping Up
Subscription management is the hidden powerhouse of any digital entertainment platform.
Without it, billing systems fall apart. Subscribers churn and revenue suffers.
For any streaming service or IPTV platform to be successful in the long run, there needs to be a process in place to effectively manage subscriptions.
Automate the billing system, allow flexible pricing tiers, support international payments and watch revenue grow.
Comments