New Online Platform Aims to Reduce Subscriber Churn Through Broadband Bundling, Content Recommendation

Streaming video subscribers are less likely to drop a SVOD service when it is bundled with third-party internet platforms. New data from MyBundle.com suggests that bundling streaming credits with broadband service reduces the first-year monthly churn rate for streaming services upwards of 50% to 4.3%, compared to the industry average of 8.6% for standalone services, according to a separate Antenna “State of Subscriptions — Premium SVOD” study.

The website found that when 300 subscribers to Norvado’s 1 Gb fiber internet broadband service were offered $20 in monthly streaming credits, the monthly churn rate of streaming services was about 4.3% after 12 months, using the same methodology as Antenna’s study. Both reports used a weighted average of monthly churn consumers in year one of their respective subscriptions.

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MyBundle reports that 21 of its 230 broadband partners are offering its branded “streaming choice” program enabling ISPs to better satisfy their subscribers.

“The concept of bundling content and connectivity is nothing new to the broader business of media and entertainment, however with this yearlong research, we now have strong empirical data that bundling streaming with broadband works,” Jason Cohen, co-founder/CEO of MyBundle, said in a statement.

The company offers users online guides to help determine which online TV service, with streaming option, is the best in their market location. It also offers guides for streaming apps and content recommendations based on IMDb data, among other sources.

“New customer acquisition is still important for streaming services, but reducing churn is now a close second priority,” Cohen said. “While the benefit to broadband providers is noteworthy, a potential 50% reduction in monthly churn is remarkable.”

Report: Crackdowns on Password Sharing Impacting SVOD Churn

Recent efforts by Netflix, and soon Disney+, to crackdown on subscribers sharing their passwords with non-members is contributing, along with price hikes, to upticks in churn, according to new data from Horowitz Research.

A survey of survey of 2,202 adult respondents conducted in January-February 2024 found half of TV content viewers (52%) have canceled or lost access to at least one of their SVOD services within the past year. Among those who cancelled or lost access within the past 12 months, the main reasons cited include efforts to cut subscription costs, recent price hikes, and perceived lack of value for the cost. Notably, almost 33% who canceled said not being able to share or borrow a subscriber’s password was a contributing factor.

The crackdowns and rising prices are having an impact on consumers’ wallets: About one third (35%) of streamers surveyed said that they are paying more this year than they were last year for streaming services, and the self-reported average spend on SVODs increased from $49.33 in the 2021 study to $60.60 in 2024.

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As a result, Horowitz found that 59% of respondents are receptive to ads if it means paying less for their subscriptions. In fact, now that Netflix has been offering a $6.99 tier with ads, almost 1 in 3 streamers in the study who have Netflix say they are on the ad-supported tier of service.

Still, almost 1 in 4 (23%) streamers plan to cancel one or more of their subscription streaming services in the coming months, an increase from 19% who intended to churn in 2023. Among those who plan to cancel, Netflix is the service most often mentioned as being on the chopping block.

“To avoid churn, subscription streaming services will need to focus on smart windowing strategies to keep audiences consistently engaged with their content and be proactive about helping consumers downgrade to lower-priced and/or ad-supported tiers as soon as they see a subscriber’s viewership and engagement dropping,” Adriana Waterston, EVP of insights and strategy at Horowitz, said in a statement.

Report: Digital Entertainment Subscriber Churn Rate Double That of Publishing

The number of subscribers not renewing entertainment streaming services is twice as high as the churn rate for digital publishing, or other media services, according to new data from Recurly, a  subscription management and billing platform.

Subscription fatigue and increased competition is driving high churn rates as subs dip in and out of services based on content offerings. Digital media and entertainment streaming services saw a median churn rate of 6.9% — more than 50% higher than the industry median. Digital publishing’s lower churn rate of 3.9% is likely due to less competition and higher brand loyalty, according to Recurly.

The digital media and entertainment industry has seen a 124% increase in subscribers since 2020, while the digital publishing industry saw a 536% increase in subscribers over the same time period.

Recurly found that the consumer appetite for streaming subscriptions remains strong despite a turbulent economy, including rising cost-of-living increases. This mindset is driving the industry to rethink traditional business models, including incorporating data-driven customization and user engagement strategies.

“Whether it’s watching the latest show, reading a book or catching up on the news, consumers are hungry for tailored experiences and flexible options that cater to their unique tastes,” Joe Rohrlich, CEO of Recurly, said in a statement.

The report contends that the median acquisition rate for digital media and entertainment subscriptions declined since 2020 as growth stabilized — with digital media and entertainment’s median acquisition rate at 5.8%.

The report found that the optimal digital entertainment subscription trial period is eight to 21 days long, with the overall trial-to-paid conversion rate at 52.6%, compared with 50% for digital publishing.

Customized subscription plans and add-ons also are driving revenue growth. The digital media and entertainment services that offered customized subscription plans saw $871 million in incremental revenue, while digital publishing’s customized plans saw $5.7 million in revenue.

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Finally, alternative payment methods are becoming popular, with 79.3% of transactions in 2023 completed via PayPal, and Apple Pay usage reaching 15.9%. Debit cards far surpassed credit cards in popularity, representing 71.8% of digital media and entertainment transactions, and 65.8% of digital publishing transactions, compared to the 68.6% industry median.

“We’re witnessing an era of intense innovation in the digital media and entertainment subscription industry, with momentum only continuing to accelerate,” said Rohrlich.

Hub: Only 10% of Consumers Feel Fully Satisfied With Streaming Service Recommendations

Just 10% of consumers feel fully satisfied with the recommendations provided by their streaming services, suggesting a significant failure to connect subscribers to the right content, according to Hub Entertainment Research.

This gap not only undermines the value of existing content libraries but also highlights a missed opportunity to enhance viewer engagement, Hub notes.

Connecting subscribers to the right content is critical to maximizing the large investments in that content, Hub notes. And despite the ability to deliver more personalized content promotions online, linear TV appears to be more effective at introducing new content via its promotional strategies than streaming services have been where users are relying more on external recommendations.

The inability to connect consumers with the content they like is contributing to churn, according to Hub.

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Magid: Subscription Streaming Video Churn Going Up in 2024

The growing number of subscription and ad-supported streaming video services will not reduce churn, or subscribers not renewing service, in 2024. In fact, churn levels will only go up going forward. At the same time while elevated churn is never a good thing, not all churn is bad, according to new data from consulting firm Magid.

Between January and October 2023, the Top 20 streaming services (including AVOD and FAST), on average, experienced a subscriber loss and gain of 8% per month, realizing an average net growth of zero percent in the U.S.

Although subscriber volatility across the landscape is high, with 40% on average saying they are likely to cancel their SVOD service in the next year, the data finds some positive tendencies among churners churn.

During a Dec. 11 virtual presentation, the consulting firm characterized churn as the “cholesterol of streaming,” meaning that some churn — like cholesterol — is actually good churn.

Based on a survey of 2,000 respondents queried monthly in the U.S., the consensus suggests churn isn’t solely based on dissatisfaction with a service. There are other factors, which include the predisposition of some subscribers – who are habitually inclined to churn – and others who will only unsubscribe if they experience a material service weakness.

The reports suggests that churn can be predictable, and can be a driver of subscriber growth. Consumer attitudes around churn can be better understood via psychological characteristics and traits such as values, desires, goals, interests, and lifestyle choices — that represent almost 33% of new SVOD subscribers on average in a given month.

Magid found that churn will increase as streamers see an imminent hit to their service library catalogs; aggressive price increases; ad-supported VOD becoming a viable option to SVOD; and consumers maxing out on monthly costs and/or feeling less daunted by the process of “unsubscribing.” As a result, streaming platforms large and small will experience turbulent churn seas ahead unless they develop strategies to manage churn.

“The battle for the acquisition and retention of churn-centric subscribers isn’t slowing down,” CEO Brent Magid, and Kate Morgan, chief product officer and head of the global media, entertainment and games practice, said in a joint statement. “The media industry is at an inflection point as savvy [subscribers] are presented with an unending list of viewing options.”

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Deloitte: Millennials Reaching Their SVOD Streaming Limit

The subscription streaming VOD service market exploded after Millennials (25-40 years old) increasingly turned a cold shoulder to legacy bundled pay-TV programming in search of less-expensive over-the-top video alternatives.

Now, that SVOD subscription growth has slowed, and more consumers, i.e., Millennials, are opting for cheaper ad-supported subscription tiers and free ad-supported streaming television options. While consuming TV shows or movies at home remains dominant for the Gen X and Baby Boomers (41-75 years), across all generations there are mounting frustrations with SVOD. Nearly half of consumers say they pay too much for the SVOD services they use and about a third intend to reduce the number they subscribe to, according to new data from Deloitte.

That mindset continues to drive churn (when a subscriber cancels their subscription). Overall subscriber churn for paid SVOD services over a six-month period is 44% according to the consulting firm. For Gen Z and Millennial consumers, those numbers jump to 57% and 62%, respectively. Similarly, around a quarter of consumers have “churned and returned,” canceling a paid SVOD subscription only to renew that same subscription within a six-month period. Again, these figures jump by double digits for Gen Z and Millennials, who often subscribe to watch specific shows and movies and then cancel when they’re done — only to resubscribe to watch a new season or film.

 

While data exists underscoring consumer frustration with chasing content across multiple subscriptions and/or losing access to content due to expiring license rights, the cost of sustaining myriad SVOD services is wearing thin as well.

The report found that about half of consumers (47%) say they have made a change to their entertainment subscriptions because of current economic conditions, including canceling a service to save money, switching to a free ad-supported options such as The Roku Channel, Pluto TV and Tubi, or bundling services such as the Disney offering cheaper access to Disney+, Hulu and ESPN+ collectively, and Paramount+ and Max combining Showtime Anytime and Discovery+, respectively.

Around 60% of households are now using a free ad-supported streaming video service, and roughly 40% say they watch more ad-supported streaming video than they did a year ago, whether paid or free. In Deloitte’s 2023 Global TMT Predictions, it’s estimated that by the end of 2023 nearly two-thirds of consumers in developed countries will have at least one subscription to an ad-supported video service, including lower-priced options from Netflix, Disney+ and Hulu, among others. Subsidizing prices with ads could help acquire and retain more cost-sensitive subscribers, but it changes the economics of streaming video: If subscription prices drop, revenue depends more on successful advertising, according to Deloitte.

Millennials drove the adoption of SVOD but may now illustrate the impacts of subscription fatigue and cost-sensitivity. The oldest among them turn 40 this year, and many may now have children, mortgages, and other financial obligations — including record household debt, according to the report.

Millennials spend more than any other generation on paid streaming video services — an average of $54 per month. They churn through SVOD services at the highest rates and are more likely to cancel paid gaming and paid music services. Streaming media providers might hope that cheaper ad-supported options could retain these cost-conscious consumers, but Millennial behaviors and preferences tend to skew closer to Gen Z, which means more cancelations.

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Whip Survey: Delayed Content Due to Strikes Increases Subscriber Urge to Churn

Based on how consumers perceive the potential impact of the strike today, every major SVOD is likely to see higher churn if a strike significantly delays new U.S. original programming, according to a new survey from Whip Media.

Though Hulu started with among the lowest percentage of subscribers who said they might cancel, it saw the largest increase on that measure when people considered the impact of the strike on new U.S. original programming.

Netflix appears to be least vulnerable to the impact of the strike on delays in release of new U.S. original programming; it was the only service to see less than a 100% increase.

The survey was fielded to 2,011 consumers from Whip Media’s U.S. panel of TV and film consumers from July 7-17, 2023. Respondents were between the ages of 18 and 54.

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Churn, Churn, Churn: Streamers Battle to Retain Subscribers

Kim and her husband are “Ted Lasso” fans, but they’ve never paid to watch it.

They got a free month trial for Apple TV+, and Kim’s budget-minded husband suggested they binge the first two seasons in those four weeks to save the cost of a subscription.

At the end of the month, they canceled.

They did the same with “Ted Lasso” season three, waiting for all episodes to be available, binging the series and then canceling the subscription.

A true crime fan, Kim also subscribed to, and then canceled, Peacock to watch a particular “Dateline” episode, paying nothing. Meanwhile, her husband, who has the Hulu, ESPN+ and Disney+ package, shares the password with his daughter, who is away at school.

Kim’s family is not alone. Churn, or subscribing to and canceling a service, has been a regular feature in the subscription streaming marketplace since its inception. Consumers have also gotten used to sharing passwords, a practice previously quietly tolerated by streaming services looking to boost the online habit.

But now these SVOD services are taking notice as they strain to turn a profit.

They are downsizing the content and marking up the price on what had been a seemingly endless buffet of viewing options at the monthly cost of a fast-food meal. This has been compounded by a looming content desert due to the writers strike, password-sharing crackdowns and inflation — all with the potential to increase consumers’ incentive to churn.

“Churn is a big issue right now,” says one veteran observer who worked closely with one of the major streaming services and was privy to strategy discussions.

“[Streaming] gives the consumer so much more authority than they ever had before because it gives them the ability to watch programs, not channels, not even bundles when you think about it,” Walt Disney Co. CEO Bob Iger remarked on the company’s first-quarter financial call. “And because you are signing up in most cases for a one-month subscription, you can sign up for one program, pay a relatively small amount of money and then end up basically unsubscribing. That’s tremendous change.”

Speaking in March at the Morgan Stanley Technology, Media and Telecom Conference, he said, “While I’m pro consumer, generally, I think we have to take a look at how easy it is for the consumer to not just sign on, but sign on sometimes under promotional circumstances where it’s not only less expensive, in some cases, it’s free, and the sign-in you get for three months. You get one month free, watch all you want in a month, so sign off that and go to another one that’s doing the same thing. So, I think we have a lot of rationalization to do from a pricing perspective.”

Warner Bros. Discovery CFO Gunnar Wiedenfels noted that the combination of HBO Max and Discovery+ into Max might result in a loss of subscribers at the standalone Discovery+. “While we intend to keep Discovery+ going as a standalone product, we expect a large portion of these 4 million subscribers (overlapping between Discovery+ and HBO Max) will likely churn off Discovery+,” he said, speaking on the company’s first-quarter earnings call. “The exact cadence of course being unclear at this time,” he added, “but we do expect a fair amount of it to happen in the first few months after launch.”

At Netflix, which began cracking down on password-sharing among subscribers, co-CEO Greg Peters noted that consumers may balk.

“It’s very much like a price increase,” he said on the company’s first-quarter fiscal webcast. “We see an initial cancel reaction, and then we build out of that, both in terms of membership and revenue as borrowers sign up for their own Netflix accounts, and existing members purchase that extra member facility for folks that they want to share it with.”

“While churn rates for individual services may rise and fall, churn on a household basis has either held steady or increased along with the increase in subscriptions per household,” said Brett Sappington, VP at research firm Interpret. “Churn slowed during the pandemic, but has become a bigger issue today as consumers re-evaluate their spending on streaming services.

“The worrying thing for streaming services is that consumers are being trained to churn. They understand that there will always be some show or movie available on a service that they don’t subscribe to. They can simply subscribe for a while and cancel. If they feel like they are spending too much, they can always trim back and watch free tiers of service. With consumers increasingly desensitized to churn, subscriber volatility will become greater over time.”

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By the Numbers

Research shows consumers have gotten used to churning.

“Churn — or the percentage of consumers who have canceled a paid SVOD service in the previous six months — has remained relatively stable over the last few years, though we did see a slight uptick in the churn rate in our recent Digital Media Trends data,” said Jana Arbanas, vice chair of Deloitte LLP, and the firm’s U.S. telecom, media and entertainment sector leader. “The six-month churn rate for consumers overall currently sits at around 44% — with rates for Gen Zs and Millennials being closer to 60%. ‘Churn-and-return’ — the percentage of consumers who have canceled a paid SVOD service and later renewed that same subscription in the last 12 months — has also remained stable year-over-year at around 25%. These younger consumers are driving churn, and ‘churn-and return’ numbers, as they get savvy with swapping services in and out as content becomes available, as better deals and discounts hit the services, and as new services and offerings enter the market.”

An Xperi survey conducted in the fourth quarter of 2022 found that consumers had stepped up the practice, with 26.6% of respondents reporting they had canceled a service in the preceding six months. That compared with only 18.2% in the fourth quarter of 2021. The survey found that only 37.8% keep a service on average for more than a year, and 42.8% have at least one shared password.

Interpret research this year found that among those who canceled a streaming service in the past six months, 26% canceled one service to subscribe to another, 19% canceled multiple services at the same time, 15% now use someone else’s credentials to access a canceled service, and 85% said that the canceled service did not reach out to them to keep them as a subscriber.

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The Price Is Not Right

After an initial — and loss expanding — growth-at-all-costs phase, SVOD services have been straining to make streaming profitable in part by raising prices, just as inflation is hitting the wider economy.

“The streaming business, which I believe is the future and has been growing — is not delivering … the kind of profitability or bottom-line results that the linear business delivered for us over a few decades,” said Disney’s Iger on the earnings call.

At the Morgan Stanley event, he noted, “In our zeal to grow global subs, I think we were off in terms of that pricing strategy, and we’re now starting to learn more about it, and to adjust accordingly.”

In recent years, there’s been a domino-effect across the media landscape as subscription streaming video services raise their monthly fees to absorb operating costs and reduce losses. Netflix in 2022 raised rates $1 to $2 depending on the plan. The standard plan increased to $15.49 from $13.99, while the premium plan increased to $19.99 from $17.99. The basic plan increased to $9.99 from $8.99. Netflix’s new ad-supported basic tier bowed on Nov. 3 for $6.99.

This year, Netflix began rolling out “extra member slots” for standard and premium subscribers to afford non-subscribers access to their service plans for an additional $7.99 per month per user, depending on the number of non-subs allowed per plan.

When HBO Max transitioned to just Max, it stuck with existing pricing (until November). Under new pricing, access with ads costs $9.99/month or $99.99/year. Ad-free costs $15.99/month or $149.99/year, while “ultimate” ad-free costs $19.99/month or $199.99/year.

Disney+ plans to increase the price of its $10.99 ad-free plan later this year to create a bigger gap between its newly launched Disney+ with ads, priced at $7.99.

Paramount+ on June 27 launched a hybrid streaming service with Showtime Anytime, at the same time upping the monthly fee of its ad-supported essential plan (without Showtime) to $5.99 from $4.99, and the ad-free premium plan (with Showtime) to $11.99 from $9.99. The Showtime standalone app will discontinue at the end of the year.

Peacock is eliminating its free, ad-supported option to force users to subscribe to the $4.99 premium plan with ads or pay $9.99 for the ad-free option. Existing Xfinity pay-TV subs will no longer receive free access to Peacock.

Amazon in early 2022 increased the monthly fee for its Prime membership, which includes access to Prime Video streaming, to $139 a year and $14.99 a month, from $119 a year and $12.99 a month. The price hike marked the e-commerce behemoth’s first price increase since 2018. Standalone Prime Video access remained the same at $8.99 per month.

Hollywood executives are cautiously optimistic about these price hikes.

“Regarding price increases, first, we were pleasantly surprised that the loss of subs due to what a substantial increase in pricing for the non-ad was supported Disney+ product was de minimis,” said Disney’s Iger on the company’s second-quarter earnings call. “It was some loss, but it was relatively small. That leads us to believe that we, in fact, have pricing elasticity.”

Paramount Global CFO Naveen Chopra, likewise, expressed optimism about price increases.

“I think it is worth reiterating, all the pieces are in place for us to, I think, to successfully raise pricing without a significant impact on subscriber churn and subscriber growth,” he said on the company’s first-quarter fiscal call. “The value proposition for Paramount+ both relative to other streaming services and traditional pay-television remains incredibly strong.”

Netflix has not only raised prices, but has also attempted to make those sharing a password (and cutting down on costs) pay. Co-CEO Peters said that to reduce churn among existing subscribers who now must pay an additional fee for sharing their account, Netflix has attempted to create a structure that supports choice by giving subscribers the option to spin off multiple lower-priced “borrower” accounts to family members.

“We’re … using pricing to both satisfy those customer choice goals as well as thinking about long-term revenue optimization,” he said.

While many industry executives are confident of their pricing power, research shows consumers aren’t as sanguine.

“Anytime that consumers are thinking about price rather than content is a bad time for a streaming service,” said Interpret’s Sappington. “It means that they are pondering whether the service is worth what they are paying. Price increases, password-sharing crackdowns, and big credit card bills all trigger that type of thinking.”

“Services being ‘too expensive’ remains the top reason consumers give for recently canceling an SVOD service,” added Deloitte’s Arbanas. “And nearly 50% of consumers said they made a change to their entertainment subscriptions — including canceling a paid entertainment subscription or dropping a paid service for a free ad-supported version of the service — in the previous six months, as a result of broader economic conditions.

“This cost consciousness could be playing a role in both churn (and churn-and-return) rates, as consumers are looking to stretch their entertainment budgets.

“Forty-six percent of people say they spend too much for the streaming services they use, a number that has increased since we began asking the question in 2019 — with the average subscribing household spending $48 per month on all paid SVOD services combined. Many consumers, especially those in younger generations, are also finding free, interesting and relevant user-generated video content (UGC) on social media platforms.”

The Xperi survey found the most respondents (21.7%) cited “the service raised its prices” as their top reason for canceling a service. Meanwhile, 10.4% cited “I needed to tighten my budget” and 9.1% cited “it wasn’t worth the amount we were paying for it.”

A March 2023 Hub Entertainment Research survey found 82% of respondents agreed that “budget is the main factor limiting how many subscriptions I have.”

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Content Is King?

While SVOD services have been raising prices, many streamers are also beginning to take a harder, more cost-conscious look at what they’re spending to produce the amount of content they offer. Services had been turning down the spigot on content costs even before the pipeline of new movies and shows was cut off by a writers strike.

Disney’s Iger on the second-quarter call noted the company would be “rationalizing the volume of the content we make and what we’re spending” on streaming service titles as it looked to other distribution windows.

“When we launched [Disney+] … the goal was, as you know, global subs, and we wanted to flood the so-called digital shelves with as much content as possible to achieve … as much sub growth as possible,” he said. “And now, as we grow the business in terms of the global footprint, we realize that we made a lot of content that is not necessarily driving sub growth, and we’re getting much more surgical about what it is we make. … We believe that there’s an opportunity for us to focus more on real sub drivers. … Everything needs to be marketed. We’re spending a lot of money marketing things that are not going to have an impact on the bottom line, except negatively, due to the marketing costs.”

“We are in the process of reviewing the content on our DTC services to align with the strategic changes in our approach to content curation,” added then-CFO Christine McCarthy. “As a result, we will be removing certain content from our streaming platforms.”

Disney+ May 26 culled a significant amount of content, including such high-profile series as “Willow,” “The Mysterious Benedict Society,” “The World According to Jeff Goldblum” and “The Mighty Ducks: Game Changers,” while content removed from Hulu includes “Y: The Last Man” and Rosaline.

Paramount has combined Showtime and Paramount+.

“We are always looking for ways to be even more efficient with that content spend,” CFO Chopra said on the earnings call. “That’s one of the reasons that we decided to integrate Showtime and Paramount+, which … means more than $700 million of future expense savings, not all of which is content. And I think I also noted at the time that does mean DTC content expansion in 2024 should be less than what we originally indicated. And we are not stopping there. We are pushing even harder to unlock additional savings.”

At Warner Bros. Discovery, streaming content write-offs have included the mothballed $90 million Batgirl movie, “The Time Traveler’s Wife,” “Finding Magic Mike,” “Minx” and “Westworld.”

“Things are stronger today than they were last year,” Wiedenfels told investors in January at Citi’s 2023 Communications, Media & Entertainment Conference in Scottsdale, Ariz. “We shaved off a lot of the excess [spending] last year. We took the courageous decisions that had to be made.”

“We’ve seen fewer announcements of big licensing deals, and stories have emerged over the past few months of major services stopping production or opting out of releases of titles,” noted Interpret’s Sappington. “Warner Bros Discovery is one of the highest-profile [services] to do so, but it is not the only one. Many services are evaluating the bottom line in an effort to reach profitability, and content costs are one of the biggest cost areas on their books.”

Consumers notice when content leaves a service.

“From the consumer perspective, content leaving streaming video services is a major pain point,” said Deloitte’s Arbanas. “Close to 70% of consumers say they get frustrated when content they want to watch is no longer available on their streaming video services. And around a third of consumers who recently canceled an SVOD service cited a lack of new content that interests them as a reason for cancellation.”

“Consumers have regularly complained about content leaving services and the lack of visibility for content leaving services,” Sappington added. “However, as long as services continue to deliver something new and interesting, consumers will likely stay. It is when users tune in and find nothing to watch that they consider leaving the service.”

For consumers — if not so much for streaming executives — content remains king.

In the Xperi survey, 11.3% of respondents cited “I subscribed to watch a specific show, and I finished” as their top reason for canceling an SVOD service.

In a January 2023 Hub Intel study, 41% of respondents said that in the past year they had signed up for a new streaming service just to watch one show, up from 35% in 2021. Hub also found the most common reason that people drop a streaming platform is that they “ran out of things to watch.”

With the writers strike bringing new production to a halt, consumers could balk at paying for subscriptions, observers say.

“If the ongoing writers strike persists long enough to significantly disrupt content pipelines, the value proposition of most services won’t be attractive enough to entice subscribers to return any time soon,” said Hub senior consultant Mark Loughney. “It could be two years or longer to determine whether the decline in the first quarter was a momentary pause in the growth of the SVOD ecosystem or a permanent reset.”

“Consumers don’t yet feel the crunch of the writers strike, but they certainly will if it drags on,” added Interpret’s Sappington. “Content producers still have series and movies ‘in the can’ that can be completed and released. It will be several months before the lack of content is really felt. Because it will hit the entire industry all at once, all services will be affected. We can expect another glut of unscripted content (as with the previous writers strike).”

Indeed, a May Whip Media survey found consumers are paying attention to the strike and its consequences. In the survey, 83% of American respondents said they were aware of the strike, and about 60% said the strike could be significantly disruptive to their viewing activity later in the year. Meanwhile, nearly three-quarters (72%) of U.S. respondents said they would be “somewhat upset” or “very upset” if new movies and shows were delayed for several months by the strike. About a quarter (24%) of U.S. respondents said they would watch more internet-based content creators (TikTok, YouTube, Twitch) if the production and release of new content were to be significantly delayed. Over 12% said they would watch more reality shows, news or sports, and more than 16% said they would watch less content in general. On a demographic basis, 34% of U.S. respondents between the ages of 18-34 said they would turn to more internet-based creators if there is a significant delay in production and releases.

Streamers will have to change tactics to lure subscribers, Sappington noted.

“Rather than promote big new releases, marketing will have to take a different approach to luring consumers in,” he said, adding that on the bright side for streamers “consumers may take the opportunity to try new services that they hadn’t considered previously in their search to find something new and interesting to watch.”

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Back to the Future With Ads

Ad-free viewing, one of the key enticements of the early subscription streaming business, appears to be going by the wayside as streamers look to keep consumers engaged and reduce churn. In response to consumers’ reluctance to pay more, streamers have turned to lower-priced, ad-supported tiers — a move that many in the industry have noted mirrors the old-style TV business.

This is likely to keep consumers on the subscription hook, maintains Wedbush Securities media analyst Michael Pachter.

“Subscribers have a cheaper alternative to quitting, can remain customers on the ad-supported tier and keep the service for $6.99 year-round rather than pay $15.99 for six months and quit for six months,” he said.

“Though the direct subscription revenues are lower for ad-viewing customers, advertising has the potential to exceed the per-user revenues of subscriptions,” added Interpret’s Sappington. “Services are making a bet that the increase in ad-revenues from new users and downgraders will more than offset the subscription revenue loss of cannibalization. The decline in ad spending hasn’t helped this math work in their favor so far, but the votes are not all in.”

“The introduction of free, and lower-cost, subscription tiers is certainly attractive to consumers,” said Deloitte’s Arbanas. “The majority of people say they would prefer to subscribe to a free or lower-cost ad-supported SVOD service (61%) vs. paying for the full-priced top-tier version of that service and avoiding ads (39%). Again, consumers (especially those in younger generations) are showing signs of cost-consciousness. And 44% of consumers say they watch more ad-supported streaming video services than they did a year ago (56% of Gen Zs say this).”

Nearly seven in 10 (69%) TV content viewers in the United States use free streaming services at least monthly, a sharp increase from 42% in 2019, according to a 2023 Horowitz Research study. Parks Associates projects the number of U.S. households using ad-supported streaming services will reach 52 million in 2027, a compound annual growth rate of 67%.

Crackdown for Growth

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One bright spot in the streamers’ future may be the shared-password crackdown.

Analyst Pachter noted that the password-sharing crackdown is good for the streamers’ bottom line and “will eliminate non-paying accounts who didn’t count before, so any new accounts don’t impact churn at all, but take ARPU up.”

Indeed, since alerting subscribers in the United States that it would begin to curb password sharing on May 23, Netflix had the four single largest days of U.S. user acquisition in the four-and-a-half years that Antenna has been measuring the streaming service, according to the research firm. Netflix saw nearly 100,000 daily sign-ups on both May 26 and May 27, according to Antenna. Average daily sign-ups to Netflix reached 73,000, a 102% increase from the prior 60-day average. Antenna reported the jumps exceeded the spikes in sign-ups it observed during the initial U.S. COVID-19 lockdowns in March and April 2020.

Cancels also increased during this period, but not as much as sign-ups, according to Antenna. The ratio of sign-ups to cancels since May 23 was up 25.6% compared to the previous 60-day period.

Hub: Streamers Reaching Peak Subscriptions, Taking Advantage of ‘Quick Churning’

Streamers have finally reached peak subscriptions, and savvy consumers are taking advantage of “quick churning” or moving in and out of services, according to a Hub Intel study.

In June, Hub surveyed consumers about their maximum number of video platforms. In the survey, 22% said they didn’t have a maximum number in mind, a third (35%) said they had a maximum, but had not reached it yet; and the biggest segment (43%) said they’re at their maximum number right now. All three groups top out at roughly the same number: seven different sources, across all categories (free and paid, cable and streaming, live and on-demand.)

With streaming, there are no barriers to jumping in and out of subscriptions, and consumers are taking advantage, according to the Hub survey. More than 40% said that they’ve signed up for a subscription just to watch one show, and 42% said they have signed up for a new platform, then dropped it within the first six months.

“Quick churning” is especially common among some of the most important viewer segments: younger viewers and high spenders. Almost 60% of viewers under 25 say they have dropped a new subscription soon after signing up. Viewers who spend the most on TV are also more likely to “quick churn.” More than half of those with four or more paid TV subscriptions have dropped a new one soon after signing on.
The most common reason for quick churn?  “I ran out of things to watch.”

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“Victory in the streaming wars had been defined by adding the most subscribers — usually via a firehose of flashy original content,” Jon Giegengack, Hub principal and founder, said in a statement. “As we’re seeing viewers max out on subscriptions and content budgets contract, job No. 1 for streamers will be keeping subs engaged after the show they signed up to see is over.”

The Subscription Dance

I recently asked several of my acquaintances, friends and relatives if they had subscribed to and canceled a subscription streaming service (i.e. had they churned in and out of a platform)? It may not come as much of a surprise to anyone to learn that many of those I asked said they had.

Many of the churners said they had subscribed during the free trial period, watched or binged what they wanted to see and then canceled the service. Some admitted to forgetting to cancel before that first charge, but they did eventually cancel when they saw the programming they sought.

Why do they do it? In part, probably because they can — but also because the subscription model doesn’t necessarily match some consumers’ viewing patterns. I know I can go a month, sometimes more than one, without watching any content on some of the subscription video services to which my family subscribes. At some point, consumers who do the same may take a second look at their monthly video subscription fees and question those recurring charges.

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SVOD services have often been likened to an all-you-can-eat buffet. But it turns out some consumers are more interested in a la carte entertainment. They are dancing in and out of services to see just the content they want without paying a big price or without paying anything at all.