June 9, 2021
Churn, or streaming video subscribers canceling their service, is a occupational hazard in the SVOD business. According to new data from Interpret, only 20% of streaming video subscribers are content to stay with their current providers.
The aggressive marketing of new streaming services has in recent years provided consumers with more incentive to cut the pay-TV cord and sign up for alternative services, but subscriber churn has now become an increasing problem for streaming service providers as well.
According to Interpret’s Video Churn Today: Trends, Changes and Outlook 2021 report, SVOD subscribers increased by 14% in the second half of 2020 — driven in part by the pandemic. During the same period, the rate of cancellation increased to 20% from 15% — signaling that churn is not unique to pay-TV providers. Linear TV operators saw churn increase two points to 7% during the second half of the year.
“Subscriber churn was a concern for many video service providers prior to the pandemic, particularly for pay-TV,” Brett Sappington, VP of research at Interpret, said in a statement.
Sappington said the interruption in content, household income and viewing behavior, along with heightened competition during the pandemic, has led to changes in how consumers value and evaluate video offerings. Specifically, subscribers now realize that they can’t get all of their preferred content in one place, according to Sappington.
“The industry is essentially training consumers to be churn tolerant,” he said. “So, the question for the future is less about how to stop churn, and more about how to make churn work in your favor.”
According to the Interpret report, consumers who subscribe to multiple SVOD services also have a willingness to watch ad-supported streaming (AVOD) services, providing ad agencies growing inventory on streaming outlets. Consumers, moreover, are actively taking advantage of trials without subscribing, and adding and dropping services on an increasing basis. Nearly 20% of subscribers report switching among services to watch platform exclusives, and 13% report canceling a service after watching a selected video series.