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.

Report: Pricing, Packaging, Promotion Drive SVOD Sub Retention

Subscription streaming video services’ focus on pricing, promotion and marketing are key to retaining and attracting subscribers, according to new data from Recurly, a direct-to-consumer subscription management and billing platform.

Citing research from more than 2,200 client merchants that support more than 55 million active monthly subscribers globally, Recurly found that in 2022, consumers took advantage of almost 35 million free trials from 851 participating subscription sites. Overall, the average site-level conversion rate was 38.1%, demonstrating that consumers are more likely to try new services if those services include a discount or trial.

“Benchmarks and best practices are a critical part of how [streaming services] partner with our customers,” Dan Burkhart, co-founder and CEO of Recurly, said in a statement.

The report found that flexible payment options are key. Debit cards are a primary form of payment across North America and Europe, accounting for 52.9% of global monthly transactions. Credit cards follow with 26.7% of total transactions, and PayPal comes in third overall as the most popular alternative payment method.

Taken together, the data reveals that consumers expect choices. The report also found that decline rates have remained steady, but are lowest for credit cards and highest for debit cards. Furthermore, APMs resulted in a 1.5% lower rate of fraudulent declined transactions when compared against credit and debit cards.

Roughly 40% of surveyed merchants make subscriber personalization adjustments each year. Recurly found that dunning emails, which are sent to customers to remind them a payment is due, are an effective marketing tactic for post-subscriber acquisition, responsible for recovering $214 million in revenue in 2022 alone.

Given that churn rates are a reflection of shifting consumer behavior and preferences, the increase in the average overall churn rate from 6.6% year-over-year to 6.8% in 2022 can be attributed to economic factors, namely the pandemic and rising global inflation, according to the report.

Access to exclusive content, brand preference and discounts are primary drivers of subscription signups, while price increases and perceived decreasing value have the opposite effect. This means that subscription businesses must intentionally communicate both the value and relevance of their product or service and remain conscious of the impact, which pricing decisions can have on churn.

“Subscription-based businesses can use these findings to evaluate their own performance against industry benchmarks, but also identify efficiencies and execute strategies, which will help them level-up in 2023,” Burkhart said.

Survey: Streaming Video Subscriptions Top Winter Holiday Gift Requests

Streaming content subscriptions are on the top of consumers’ gift wish lists as the cost of subscription streaming video and audio services increase and the holidays approach, according to a survey conducted by Recurly, a subscription management and billing platform.

According to the survey, 63% of respondents said they would consider giving subscriptions as a gift, and 70% said they would be interested in receiving subscriptions as a gift themselves. Gen Z (73%) and Millennials (72%) spearheaded the majority saying they are interested in receiving subscriptions as gifts.

The Sept. 8 survey, based on 2,472 U.S. residents ages 18 and older who are planning to give gifts this holiday season, found that among Gen Z and Boomers, the top three preferred categories of subscription gifts to receive were streaming video (40%), retail (28%) and streaming audio (27%). Streaming video (54%), gaming (39%) and streaming audio (36%) represented the top three subscription categories most likely to be given as gifts.

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“This holiday, consumers are looking for gifts of experience and utility, and that translates directly to a desire for subscriptions,” Theresa McEndree, chief marketing officer at Recurly, said in a statement. “Subscriptions as a gift allows consumers to try something new or dig deeper into something they already love.”