People are drawn to streaming services by their content—but often leave because of the cost, a clunky user experience, or a favorite show moving to another service
After 15 years of growth, streaming video on-demand (SVOD) services have successfully unbundled video, lowered costs to consumers, and ignited fierce competition among providers. Top SVOD services are consolidating content and taking the competition for subscribers into global markets. But they face greater pressure to attract and retain subscribers who have grown savvier about their subscriptions and more cost-conscious.
Indeed, over the past two years, U.S. consumers have become increasingly frustrated when they lose content to other services, have to manage multiple subscriptions, and receive poor recommendations, according to Deloitte’s 2022 Digital Media Trends survey, which polled 2,000 consumers from the United States and 4,000 consumers from Brazil, Germany, Japan, and the United Kingdom. These conditions lead to churn when people cancel, or both add and cancel, a paid SVOD service. In the United States, the average churn rate has remained consistent since 2020 at about 37% across all paid SVOD services, the survey finds. (The consumer churn rate is the percentage of people who have cancelled, or both added and cancelled, a paid SVOD service in the last six months.)
People are attracted to SVOD by the content, but they often leave due to cost. Gen Z consumers are especially sensitive to services being too expensive. It costs money to acquire subscribers, so losing them too quickly can hamper providers’ ability to recoup their acquisition costs. However, canceling a service doesn’t mean consumers won’t return. One-quarter of U.S. survey respondents have canceled a streaming video service in the past 12 months and resubscribed to the same service, with younger generations significantly more likely to return.
Why do respondents churn and return? Either a new season of their favorite show was released, they got a free or discounted rate, or content they wanted to watch moved to the service, according to survey respondents. Approximately a quarter of people across the countries surveyed admit they routinely cancel and resubscribe to manage costs. In every country surveyed, consumers—particularly Gen Zs and millennials—are getting savvier about determining how much money they will spend on what content.
To support the survey, Deloitte separately interviewed U.S. consumers about streaming services. In the above video, part of a series, individuals offer their thoughts on the user experience, relevant content and ads, and the hassle of juggling multiple subscriptions. “Ideally, I would like to subscribe to one thing, have one cost, and be able to watch whatever I can,” one consumer explains.
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Content by: Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities.
This article first appeared in www.deloitte.wsj.com
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