i3 | May 03, 2022

Fickle Streaming Subscribers

Gary Arlen
iPad with streaming service icons

Service hopping is the new media churn

Two extensive viewership analyses warn that behaviors — especially among young audiences — are forcing media companies to revamp their practices. Both studies found over one-third of video streaming subscribers are adopting “service hopping” or “churn and return” patterns as they drift between program platforms.

Deloitte’s 2022 Digital Media Trends survey found 37% of streaming subscribers drop services such as Netflix, Disney+ and Hulu, then buy in again when they want to see shows on those channels. A new report from Parks Associates, Data-Based Decision Making for Video, came up with a near-identical 36% churn rate.

Both studies surfaced at the same time as post-pandemic updates about the outlook for subscription video-on-demand (SVOD) aggregators such as Amazon, Apple, Roku, Comcast and Redbox. Plus, an eMarketer evaluation of traditional subscription services characterized legacy operations “in free fall.” It’s not just cord-cutting, although that plays a significant role. eMarketer predicts that pay TV households will drop below half of U.S. homes next year and fall to just 42.4% by 2026.

This research underscores challenges facing streaming brands as they establish their own identities and try to retain viewers.

Consumer Confusion and Churn

Hub Entertainment Research’s annual Evolution of Video Branding study pinpointed several challenges facing streaming providers. “Consumers don’t have a strong understanding of many TV streaming brands,” Hub says despite a high awareness (over 96%) of the top five SVOD services (Netflix, Hulu, Disney+, Amazon Prime Video and HBO Max). Hub contends audiences can’t identify “distinct value propositions” between providers.

Fickle audiences have been around for years but today’s costly and fragmented programming is generating new levels of industry response. As Deloitte concludes, media companies are “feeling more turbulence from the deeper currents shaping consumer behavior.”

The process assumes greater significance because a core constituency — younger viewers — are the most volatile churners. About 39% of Disney+ viewers are younger than 25 years old, but Netflix (32%) and YouTube (33%) also skew young, compared to the 28.5% of connected TV viewers in that age bracket, according to eMarketer. 

Over one-third of video streaming subscribers are adopting “service hopping” or “churn and return” patterns as they drift between program platforms.

Deloitte found over half of millennials and Gen Z viewers added or canceled a streaming service in the past six months. Jana Arbanas, vice chair of Deloitte LLP and U.S. telecom, media and entertainment sector leader, says younger viewers are comfortable signing up for something then canceling and re-upping. Equally significant is “they are more cost-conscious” and sensitive to the prices of streaming subscriptions.

“Churn is here to stay,” Arbanas told The Hollywood Reporter. “Streaming companies are going to have to grapple with this consistent volatility with subscribers.”

The Parks Associates analysis spotlighted a decline in households subscribing directly via an OTT provider’s website, with viewers opting to use aggregators. Elizabeth Parks, president and CMO of Parks Associates, explains as streaming companies scramble to establish new subscriber engagement tactics from subscription to platform usage, they are “rapidly diversifying” their approaches. She encourages suppliers to adopt data tactics that enable them “to identify subscribers at risk of churn and tag service hoppers’ who will jump in and out so that providers do not waste resources chasing them in vain.”

Consumer Frustration

In its Future of OTT Aggregation study, media firm Interpret says U.S. homes subscribe to about four SVOD services, but 20% believe that is “too many.” Interpret determined about one-third of subscribers want to manage and search for available content from one place.

That leads back to the existential corporate approaches to streaming. Interpret Vice President Brett Sappington believes aggregation will be “important to mid-sized or smaller streaming services that cannot afford to out-market global or regional streaming giants.”