Talk to any service provider, the one thing they will always bring up is the churn rate. The word churn or the phrase subscriber churn rate most commonly occurs in earnings reports of telecom providers, Wall Street Journal reports and is also finding its way into popular lingo. So why is churn important?
Churn rate measures subscriber loyalty. It is not limited to telecom or specificaly mobile world but it is more commonly used in the mobile context. It concerns you and I as mobile subscriber. When you switched to AT&T to get the iPhone you contributed to the churn.

Churn represents the turnover rate of the customers. Churn is an extremely appropriate measure of performance for the big three wireless providers, Verizon, AT&T and Sprint. This is because of the axiom that “all good subscribers are all taken and wireless companies can grow only by cannibalizing each other”. They all have to come up with better mobile devices (iPhone), better data speeds or better mobile content (movie clips, games etc) to keep their churn rate low and engender churn in others.
Sprint has the highest churn rate of 2.3% per month compared to 1.1% and 1.7% for Verizon and AT&T respectively.

A churn rate of 2.3% a month means 2.3% of Sprint’s subscriber base leave Sprint every month. That is 27.6% per year or 100% in in less than four years. This means, Sprint would’ve turned over its entire customer base in 44 months (less than four years).

An average customer stays with Sprint for about 44 months. Say if Sprint gets an average of $50 per month, then it could expect to get $2200 over the life of a subscriber’s stay with sprint. Factor in the customer acquisition costs, phone subsidies, marketing charges and servicing charges, this does not bode well to Sprint or for any service provider with such high churn rate.

Compare this to a churn rate of 1.1%. This means an average customer stays with Verizon for 8 years, more than double that of Sprint customers.

This morning I received an email from the Sony Connect Music Service:

Today Sony announced its intent to move to a Windows Media Technology platform for Walkman® products in the United States, Canada and Europe. We strongly believe that the decision to embrace a more open platform for these devices will enable us to provide you with a better overall experience. As a result of this change, we will be phasing out the CONNECT™ Music Service based on Sony’s ATRAC audio format in North America and Europe. Specific timing will vary by region depending on market demand, but will not be before March 2008. 

Wow. Of all major digital media and technology companies, Sony was perhaps best positioned to really make a major mark on the industry. After all, how many other conglomerates can boast such a fully integrated vertical supply chain? Think about it- Sony owns music, television, and movie studios, they operate distribution channels like Movielink and Connect, and they produce the portable and home media devices!

I don’t know why Sony couldn’t capitalize on their seemingly advantageous position- and beyond academic curiosity I don’t even want to know. I, like most people, abandoned Sony’s draconian platform for a better alternative a long time ago. Welcome to the 21st century, Sony.

The Haas School of Business proudly presents >play, the third annual Berkeley Digital Media Conference. >play will take place on Saturday, October 27, 2007 at the Haas School of Business at UC-Berkeley.

The theme for this year’s conference is NOW- Current and Emerging Intersections. We will be exploring how technology is intersecting with disparate fields–more than ever before–to create new business models and innovations.

What’s on tap:

• More Attendees: We are expecting up to 500 industry professionals, experts, and students
• New Case Competition: We are building on the success of last year’s case competition and expect to draw students from top 10 business schools across the country.
• More Expo: This year’s expo will be expanded to include new technologies and unforgettable hands-on experiences.

Tickets will go on sale soon, so watch this blog for details. You’ll find the latest information about keynotes, panels and the expo at the >play conference web site.

Thank you everyone who participated in the logo contest and voting!

I am happy to announce that we will be using a new logo and with that a re-vamped look to the >play conference this year.

There have been some questions about why we’re updating our look, and I’d like to address them briefly here. Also, Elisabeth will try to be on the call tonight to answer any questions you may have.

Simply put, many of us wanted to freshen up the old logo. Compared to well-known Web 2.0 logos, it didn’t quite pop or look as cutting-edge. In addition to it’s design, the old logo used colors that don’t reflect the Berkeley brand, and it’s important for >play to maintain its connection to the school.

We believe that the new logo is professional, looks techy and cutting edge, and incorporates our school colors- blue and gold.

If anyone has any concerns or other questions, please contact me to discuss.

I’m looking forward to a great year, and this conference is really shaping up to elevate the conference to all new level! See you all in the fall!

Matt M