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.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

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.

Follow us on Instagram!

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.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

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.”

Follow us on Instagram!

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

Subscribe HERE to the FREE Media Play News Daily Newsletter!

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.

Apple Services Q4 Revenue Up 26% to $18.3 Billion

Apple Oct. 28 reported fourth-quarter (ended Sept. 25) services revenue of $18.3 billion, up 26% from revenue of $14.5 billion during the previous-year period. Services revenue includes sales of movies and TV shows on iTunes, the App Store, Mac App Store, Apple Music, Apple Pay, Apple TV+, Apple Arcade and Apple News+, among others.

For the fiscal year, services revenue spiked 27% to $68.4 billion, from $53.7 billion a year ago. Quarterly margins in the segment remained strong, generating almost 70% in gross income in the quarter, up slightly from 67% in the previous-year quarter.

Meanwhile, iPhone sales skyrocketed 47% to $38.8 billion, compared with $26.4 billion in the previous-year quarter — underscoring the appeal of the new iPhone 13 model. For the fiscal year, iPhone revenue reached $192 billion, up more than 39% from $137.7 billion a year ago.

Mac sales increased 2% to $9.2 billion, from $9 billion a year ago. Apple iPad revenue increased 21.5% to $8.2 billion, from $6.8 billion. Wearables and home accessories revenue rose 11.5% to $8.7 billion, from $7.8 billion.

The record September revenue of $83.4 billion, up 29% year-over-year, prompted CEO Tim Cook to look beyond the finances, focusing on Apple’s loftier goals.

“We are infusing our values into everything we make — moving closer to our 2030 goal of being carbon neutral up and down our supply chain and across the lifecycle of our products, and ever advancing our mission to build a more equitable future,” Cook said in a statement.

CFO: Discovery+ SVOD Strong Out the Gate; Eyeing Tokyo, Beijing Olympics to Jumpstart Euro Debut

Upstart subscription streaming video service Discovery+ ended February with a projected 12 million subscribers since launching Jan. 4. The $4.99 monthly service with ads, $6.99 without, offers streaming access to Discovery’s portfolio of branded programming including Discovery Channel, HGTV, Food Network, TLC, Investigation Discovery, Travel Channel, MotorTrend, Animal Planet, Science Channel, and the forthcoming multi-platform joint venture with Chip and Joanna Gaines, Magnolia Network, as well as OWN: Oprah Winfrey Network in the United States.

Discovery CFO Gunnar Wiedenfels

Speaking March 8 on the virtual Deutsche Bank’s Media, Internet & Telecom Conference, CFO Gunnar Wiedenfels said the SVOD has performed as expected in the U.S., with plans to launch abroad ongoing.

“It’s early days, but everything we’ve seen so far has just been super encouraging,” Wiedenfels said. “Top to bottom there’s not one metric that’s disappointing. The engagement metrics are looking very strong. We’re making more money on our direct-to-consumer subs two months here out of the gate and we have significant growth potential, and I think pricing potential.”

Indeed, the CFO said subscribers have watched an impressive 93% of the platform’s 55,000-episode content offering.

“It’s all super encouraging,” Wiedenfels said, adding that more than 100 advertising brands are on the platform — a tally that is expected to double in a couple months. “We’re already seeing beyond what we saw in the linear TV world in terms of viewer time and our subscriber base.”

Notably, the bulk of Discovery+ subs are enrolled in the ad-free tier — largely due to the Verizon marketing tie-in that mandates the more -expensive pricing option following a 12-month trial period.

Rollout of the platform internationally includes partnerships with Sky in the U.K., Vodafone, Saudi Telecom, etc. These deals are expected to materialize in the second quarter over a 12-month period, according to Wiedenfels.

“The Olympics [Tokyo Summer and Beijing Winter] should be one the key drivers for the international rollout this year,” he said. “We’ll see the order of magnitude, but we’re very excited about it.”

International streaming expansion has already been started by Discovery’s former Dplay video-on-demand platform that has been transformed into Discovery+. The media giant operated Dplay in Italy, Japan, Netherlands, Nordic countries and Spain.

The streaming platform is eyeing 70 million U.S. homes, and 400 million internationally. Global rollout would focus on wireless distribution via portable devices.

“We’re not talking about 700 million TV homes, we’re talking billions of connected devices,” Wiedenfels said. “Total expansion of our addressable markets.”

The CFO said rollout of the service would take longer due to individual country challenges, including timelines and existing distribution deals. Wiedenfels doesn’t think there will be a drop in linear carriage agreements with the advent of streaming video.

“We should be able to find win-win common ground in partnerships,” he said. “We have to acknowledge that the landscape is changing. These discussions are now one notch more complicated than they used to be [due to streaming]. I feel very good about and our [linear] partners are very excited.”

It’s Time to Streamline Streaming Services

Last Sunday evening, we played Twister with our daughter after she complained, “I’m bored and there’s nothing on TV.”

Are you kidding me?

We have Netflix, Disney +, Amazon Prime, Apple TV +, Hulu, Pluto, Tubi and Peacock streaming to us here in Silicon Valley; and you can’t find anything?

You’re not trying!

But we rolled out the Twister mat and went to work climbing, stretching, falling over each other, getting some exercise and having fun. We’re pretty sure we were more agile in “the old days” and despite the fun it sort of reminded us of the constantly changing entertainment world, with everyone jumping from one circle to be at the right place at the right time.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Back before our daughter could crawl, we had a growing number of TV channels/shows but a single pipeline of distribution and selection.

Then the industry started wheeling and dealing — and all of a sudden, we had special stuff and paid-for services like Hulu, Showtime, Starz, Epix and others to expand our viewing options.

Content distributors suddenly discovered:

  • Consumers had taste and could tell good content from stuff;
  • People who wanted more than pablum would actually pay to watch solid creative work.

 

Life was good; except for the fact that inevitably, the shows you wanted to watch were on at the same time as other good shows so you had to make a choice.

Fortunately, the Internet emerged and a new streaming service emerged that let you pay-to-store programs you missed to watch later.

Andy Marken

That streaming was OK but Netflix was tired of mailing you red envelopes and wanted to “give” you a subscription service that BAM! you could watch anytime you wanted on any screen you wanted and … as much as you wanted at one sitting. Viewers liked it so much that Netflix spread around the globe; and today, it has more than 183 million subscribers in 190 countries.

Tech and media companies realized that Netflix CEOs Reed Hastings and Ted Sarandos had a good thing going so they set up their own OTT service sites with their own unique, original content for a “reasonable” subscription fee.

In no time, consumers around the globe had an embarrassment of rich, anytime/any screen content choices from Amazon, Disney, Apple, NBCUniversal, Hulu, CBS All Access, Pluto, Tubi, Britbox, Alibaba, Tencent Video, Hotstar, Canal +, Joyn, Viu, Stan, Foxtel and hundreds of other streaming SVOD services.

Well, yes, there was a “reasonable” subscription cost with some, but others were ad-supported services.

AT&T liked the idea, so they went into debt for $85 billion for WarnerMedia on top of the $67 billion for DirecTV and then proceeded to improve what they bought by cutting operations and staff.

It didn’t take long to make a good thing, aahh … better?

To compete more aggressively with NBCUniversal’s Peacock and the other streaming powerhouses, ViacomCBS said enough is enough! It was time to rebrand CBS All Access and show their 16.9 million subscribers (and the competition) that they were going all in to become a true international super service. Rolling out early next year, that service will instantly have more than 40,000 TV episodes and movies from Paramount, Nickelodeon, Showtime, BET, Comedy Central, MTV, Nickelodeon and Smithsonian as well as live programming, news, tentpole events, sports, local CBS stations nationwide and CBSN, CBS News and more all for a “reasonable” ($6 with ads, $10 without) monthly subscription.

It will also offer international streaming, focusing on “high value” countries including Australia, Latin America, the UK, Nordics, EU and countries to be named later.

It has already buffed up its free streaming service, Pluto TV, and helped it expand the ad-supported stuff to meet the demands of APAC viewers and the desires of folks in the ROW.

“We want to be big in AVOD — Pluto TV has nearly 30M active users in 20+ countries – and we want to be big in SVOD. Those two services I see as completely complementary to each other,” said ViacomCBS CEO David Lynn.

Most of the pay TV cable bundle companies didn’t really mind that consumers cut, shaved or never had their service because firms like Comcast owned NBCUniversal, Peacock and Sky — and, admit it, you did stick with them for their high-speed, reliable Internet service.

“Each streaming service by itself is great,” said Allan McLennan, CEO of PADEM Media Group. “However, people are getting to the point where they are being overloaded with subscription fee on top of subscription fee, as well as the subscription fee plus pay-per-view for special stuff. It makes them think of the ol’ bait-and-switch marketing of yesteryear.”

“No service has everything an individual or family wants to watch,” he noted. “For example, my wife likes a certain type/set of shows, our son has content he follows as well as game channels, and I like specific genres.

Trying to find something we all like at the same time is a challenge.

“The same holds true for households around the globe and it can take 10-15 frustrating minutes for someone to find something they want to watch or settle on watching,” he added. “People are questioning their subscription budget and the real value of all of the great content selection. They’re yearning for a single content source solution but without the restrictive long-term contract.”

According to GlobalWebIndex, 36% of respondents said their growing list of streaming services is getting too expensive.

Twenty-eight percent of UK and U.S. users expressed frustration with the need for multiple services to access the content they want to watch.

People have discovered they have to subscribe to four, five or more SVOD services just to assemble their own personalized content bundle.

If the consumer is at their budget maximum and alerted to a new “gotta see” set of movies/TV series, they cancel their least-used service and add the new, more interesting service that better fits their needs.

All of the streaming services are focusing on grabbing the other guy’s subscribers, creating churn in the existing streamer pond rather than developing long-term, increasingly profitable consumer relationships.

Because of the explosion of content and the explosion of services, consumers are increasingly suffering from an explosion of confusion.

“With more than 300 SVOD platforms in the US and 1000s globally, consumers are getting tired of navigating between multiple services to find the specific content they want to watch,” McLennan said. “People are finding they have to weigh the intangible of what content in service A is worth to them compared to the content on service B.

“When the entertainment value shifts, consumers leave,” he added. “Every business owner will tell you it costs more to sign a new customer than keep an existing customer and that it’s difficult and expensive to win that customer back.

“No content creator/producer wants that. And no consumer really wants to go back to their old cable bundle. What people do want a well-executed aggregated, single-sourced solution that delivers a very wide range of content choices that will present intelligent content recommendations with a single front end and stable user experience.”

The “new” CBS super service seems to be a move in the right direction.

Smart TVs from firms like Sony, LG and Samsung as well as vMVPD solutions such as Roku and Apple TV could potentially provide the single-source service consumers want without the binding service contract.

“Depending on your personal interpretation, we’re on the cusp of the third or fourth wave of broadcast/entertainment growth,” McLennan said. “We’re entering the new golden age of content that could provide each viewer their own television experience … an empowering moment societally.”

The ultimate solution is a single source that can quickly search global, regional or local genres — depending on an individual’s licensing/fee agreement — and deliver just the content you want, when you want it, to the device you’re looking at at that specific time.

We understand that such a complex, comprehensive solution is quite a ways off because it will require an intelligent platform that will know confidentially the individual consumer as well as the service’s ability to understand and deliver entertainment regardless of the influence of the creator/owner.

The personalized content service would require a robust amount of AI that would know or anticipate what the viewer wanted to see, depending upon a wide range of personal data.

“We are close to having the technology to sync up with and deliver the right content along with production/distribution needs to enhance and expand the availability of super aggregators — services and devices,” McLennan said. “The sooner we get there, the sooner we can eliminate or minimize expensive customer turnover to benefit all segments of the ecosystem.”

More importantly, we believe the move will be an important step in removing the industry’s massive overhead cost caused by content piracy.

We’re really fed up with people — primarily academics or pirates themselves — justifying the hundreds video pirate sites like Pirate Bay and BitTorrent as being “good for the industry.”

For example, the most recent was a University of Georgia study released in Management Science that piracy actually improves viewership (they also included theater ticket sales but that’s too far in the future to even think about).

Let’s lay our cards on the table regarding piracy … it’s not a victimless crime!

Video content piracy — something for nothing — has been around forever.

People snuck 8mm cameras into theaters to shoot crappy content off the screen.

Studio people “borrowed” master prints.

Folks griped about expensive cable bundles and the need to pay for the hundreds of channels to get the few they really wanted to see.

IP-based streaming “eased” the pirate demand until “everyone” got into the act offering their service for $5 to $15 plus subscriptions and suddenly the overload complaint returned.

In addition, streaming made it remarkably easy for pirates to divert excellent quality content to their torrent sites and offer a “better” subscription service at a very reasonable fee.

Since pirate viewing was running rampant, some folks liked to tout the volumes of “free” views as a hint as to the project’s success:

  • The first episode of season seven of “Game of Thrones” was pirated 91.74 million times and the season accumulated more than 1 billion illegal downloads a week after it ended.
  • Disney’s “Mandalorian” was pirated three hours after the first segment release and quickly became the most pirated TV show – at that time.
  • While Netflix’ Hastings called sleep the streaming service’s leading competitor, freeloaders cost the company an estimated $192 million in monthly revenues.

 

According to anti-piracy experts at Nagra, illegal piracy costs the US industry more than $1 billion a year.

Their joint report with Digital Citizens Alliance noted:

  • An estimated 9 million fixed broadband subscribers in the U.S. use a pirate subscription IPTV service.
  • The $1 billion industry is even larger because it includes the sale of pirate streaming devices as well as ad- financed piracy.
  • Since they don’t pay for programming, their profit margins are between 56% (retailers) to 85% (wholesalers).
  • The ecosystem relies on legitimate players to exist including hosting services, payment processors and social media.
  • Pirate sites partner with malware hackers that steal/use personal and financial data, use individuals’ systems for cryptocurrency mining, adware, ransomware, DoS botnet attacks.

 

We understand the frustration consumers have with:

  • Favorite content suddenly being pulled from their subscription service to another service they don’t subscribe to.
  • Really great shows, content available in certain countries – especially if one of them is “just across the road” because of governmental “limitations.”

 

But is the potential indirect cost to the consumer worth it?

The U of G academics and others (including studio/service heads who want to minimize the loss to non-thinking stockholders) like to picture piracy as a marketing expense to prove the value of the content and stimulate WOM advertising to attract more paying viewers.

Are you outta your mind?

Piracy is an “inconvenience” for companies like Netflix, Hulu, Peacock, Disney+, Apple TV+, Amazon Prime Video, CBS All Access, Hotstar, Sky, Tencent, Alibaba and hundreds of streaming services around the globe.

Those illegal activities mean profits have been siphoned off the content creators, studios and distributors’ bottom line.

That means they don’t have added money to invest in new, different, more exciting, more enjoyable video content that is produced by tens of thousands of independent creative pros — writers, producers, directors, shooters, editors, audio engineers, boom operators, grips, FX, stunt, animators and more — who use their expertise to give people more visual stories.

We realize the pirates don’t care and consumers really like the free stuff those folks have liberated for them. But money feeds the ecosystem that creates new, different, interesting content.

Without it, the ecosystem dries up and you’re left with TikTok or YouTube stuff to watch.

Or, you’ll end up playing Twister with us; and we warn you, we’ve really gotten good at it … again.

Then you’ll have to reluctantly agree with Rob in High Fidelity when he said, “You know, it sounds boring, but it wasn’t. It wasn’t spectacular either. It was just good. But really good.”

Andy Marken is an author of more than 700 articles on management, marketing, communications and industry trends in media and entertainment, as well as consumer electronics, software and applications.

Premiere Digital Appoints Andrew Buck EVP

Premiere Digital, the media services, distribution and technology solutions company, has appointed Andrew Buck EVP, based in Toronto.

Buck will be responsible for expanding the company’s distribution services and SaaS tools on a global level, including Storefront, the company’s flagship platform for managing global content and a SaaS tool that provides monitoring to both content owners and digital retailers around content avail management.

He reports to Michele Edelman, head of growth.

Most recently, Buck was CEO of Toronto- and Los Angeles-based Juice Worldwide — a company he co-founded in 2004 to focus on the digital distribution of film, TV and music content across the world’s top OTT platforms. As CEO for nearly 16 years, Buck was involved in all aspects of the company, from business development to sales and marketing, resulting in its 2015 acquisition by Los Angeles based Vubiquity, and then again in 2018 by Amdocs. As part of the newly formed Amdocs Media Division, Buck continued on as CEO of Juice until 2020.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“Having a world-class team to expand our products and services is top priority,” Edelman said in a statement. “I could not be happier to have Andrew on the team as he brings a wealth of industry knowledge and relationships. As our company continues to hit a high note, continuing to expand our presence was critical and Andrew checked all the boxes.”

Over the last few months, Premiere has announced a number of expansion plans. In addition to hiring Buck, the company announced the acquisition of Stamford, Conn., based CMI and has established a presence in London with the addition of former Sony Pictures exec Abigail Hughes, VP of growth at EMEA.