CLIQ Digital, the self-proclaimed "global streaming provider for the mass market," just released its Q1 2024 earnings transcript. On the surface, the story is bleak: sales flatlined, EBITDA plummeted, and the company issued a significantly revised full-year outlook, painting a picture far less rosy than the one presented just weeks ago at their Annual General Meeting.

However, buried beneath the headline numbers and the scramble to explain away disappointing performance lies a subtle, yet potentially seismic shift in CLIQ's business model. While analysts are understandably fixated on the credit card refund program cited as the main culprit for the downturn, a closer read of the transcript reveals a quiet pivot away from the core principle that fueled CLIQ's meteoric rise: customer acquisition at all costs.

For years, CLIQ has thrived on a model that prioritized acquiring new subscribers above all else. Their focus wasn't on retention or building brand loyalty, but on relentlessly converting "eyeballs" into paid memberships, no matter how fleeting. This strategy, while effective in a booming digital ad market, has become increasingly unsustainable.

The transcript is riddled with mentions of rising customer acquisition costs (CAC), particularly in Europe, their second-largest market. The Magnificent Seven, CLIQ's new strategy of diversifying traffic sources, reads more like a desperate scramble for cheaper eyeballs than a well-calculated expansion plan.

But the most revealing clue lies in CLIQ's response to questions about customer re-registration and retention programs. Their answer? Essentially, "We're not interested." This stark departure from their core customer acquisition focus suggests a company grappling with the realities of a maturing market and the limitations of their previous strategy.

The Hypothesis: A Shift Towards Customer Lifetime Value (LTV)

Here's the hypothesis: CLIQ is realizing that their high-churn, acquisition-heavy model is no longer viable. The ease with which customers can now obtain refunds through credit card programs has exposed the fragility of their subscriber base. Instead of doubling down on acquiring ever-more fleeting members, they might be quietly shifting towards a model that places more emphasis on customer lifetime value (LTV).

This is supported by a few intriguing details. Firstly, the transcript mentions CLIQ testing lower price points, a tactic aimed at attracting more price-sensitive consumers who are likely to stay subscribed for longer. Secondly, despite the emphasis on expanding their content library, CLIQ acknowledges that affordable content is readily available. This suggests a focus on optimizing content acquisition for value rather than simply acquiring more "star-studded" titles.

The Numbers Tell a Story

Let's look at some numbers. In 2023, CLIQ's LTV increased by a whopping 70% to €85. This was primarily attributed to the shift towards bundled-content streaming services, which tend to have higher retention rates. However, in Q1 2024, LTV dropped by 7% to €81. While this decline was blamed on the credit card refund program, it's plausible that it also reflects the lower LTV of customers acquired through the new, less optimized traffic sources.

The Magnificent Seven: A Desperate Scramble or a Calculated Gamble?

CLIQ's Magnificent Seven strategy, aimed at diversifying traffic sources beyond Google Display, is a crucial element of this potential pivot. The company is exploring Search, Affiliation, Video, E-mail, Social Media, Influencers and Artificial Intelligence to reach new customers.

Can CLIQ Navigate the Transition?

This silent pivot towards LTV is likely to be a gradual process. CLIQ's management has repeatedly emphasized their commitment to their midterm sales target of achieving a €500 million revenue run rate by Q4 2025. Achieving this goal while simultaneously grappling with rising CAC and a shifting business model will require a delicate balancing act.

The question is, can CLIQ successfully navigate this transition without sacrificing their aggressive growth ambitions? Can they transform their marketing machine to attract not just eyeballs, but loyal, long-term customers? Only time will tell, but the clues are there for those willing to look beyond the headlines.

"Fun Fact: CLIQ Digital closed its UK office in Q1 2024 as part of its "Fit for the Future" transformation program. The company, originally headquartered in Düsseldorf, Germany, now operates primarily from Amsterdam, Netherlands."