MOTIVATING CUSTOMER RETENTION AND ENGAGEMENT IN ONLINE VIDEO STREAMING INDUSTRY
Abstract:
Online video streaming has become popular all over the world. Firms in online video streaming industry usually gain revenue through two channels: online advertising and repetitive subscription fee from subscribers, both of which should be properly managed to maximize firm profitability. Because of some unique engagement patterns of online video streaming, such as long session duration, fast-forwarding of video contents and media multitasking (i.e. simultaneous consumption of multiple streams of media), the customer retention and engagement strategies in video streaming industry differ from those in other digital industries, such as online news and social media. However, academic research on firm profitability strategy and user engagement pattern in this industry is relatively scant. This dissertation fills in this gap by (1) examining the effect of a new customer relationship management strategy, the grandfather clause, on subscribers' behavioral and attitudinal loyalty, and (2) studying the ways of deliberately designing the emotion trajectories of a video to boost video consumption duration.
The grandfather clause is a behavior-based pricing strategy that exempts existing subscribers from a price hike or allows them to continue consuming a discontinued service. It is widely adopted among firms adopting subscription pricing model and intending to increase their subscription fee. We investigate the effect of this strategy on grandfathered customers' behavioral and attitudinal loyalty by taking advantage of a quasi-experiment, in which two groups of customers were grandfathered, but only one group of them were aware of this policy. Our analyses suggest that the grandfather clause increased grandfather customers' behavioral loyalty, but its effect on their attitudinal loyalty depended on their perceived relationship-norm with the firm. Only those communal oriented customers showed an increase in attitudinal loyalty.
The second study examines how video makers could boost viewers' video watching duration by deliberately designing the emotion trajectory of videos. Existing studies suggest that emotional stimulus could help to attract and retain viewers' attention. However, viewers' responsiveness to emotional stimulus declines over time, a phenomenon called 'hedonic decline'. Two solutions have been proposed to tackle hedonic decline: including strongly emotional scenes to arouse viewers (peak oriented solution, POS), and including less emotional scenes to refresh viewers' minds (trough oriented solutions, TOS). This study examines the relative effectiveness of both solutions under different contexts, such as video emotionality, quality and attractiveness.
After combining the video emotionality data with viewers' video consumption behavior, we found that overall speaking, TOS beats POS. In other words, video makers should include occasional and deep trough points to refresh viewers' minds and halt the adaptation process. However, we also found that the optimal solution is context contingent. When the video is of high emotionality, quality and attractiveness, the video makers should adopt TOS, and vice versa.
Overall speaking, this dissertation contributes to the customer relationship management literature by examining the effect of the grandfather clause on customers' behavioral and attitudinal loyalty; and contributes to the literature on encouraging viewer engagement in online video streaming industry by exploring the effect of video emotionality on viewers' video consumption duration.