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If the main battle of the streaming wars so far has been to get as many subscribers as possible, the next big battle will be to keep them.
Subscriber churn is an ongoing and growing problem for streamers trying to build sustainable user bases as consumers increasingly unsubscribe and re-start and switch between platforms month-to-month.
The proliferation of streaming services has naturally led to an increase in churn over the past three years. From early 2019 to late 2021, analytics firm Antenna’s weighted average monthly SVOD churn rate increased from 3.2 percent to 5.2 percent. Additionally, a third of consumers surveyed in a recent Deloitte report had both added and canceled a streaming subscription in the last six months (as of December 2021).
And this could be a best-case scenario for the foreseeable future. Migration will only accelerate if the economic climate deteriorates and consumers cut back on unnecessary spending amid runaway inflation and a looming recession. Then the question arises, which services are considered “unnecessary” or worthy of termination?
Obviously, the answer will vary between individuals and households. Families with young children, for example, will be more likely to stick with Disney+, with its arsenal of kid-friendly content. Prestige TV fans will likely stick with HBO Max and Hulu, both bastions of acclaimed adult drama series.
But if there’s one clear Most Valuable Player in the streaming game, it’s still the Big Red N.
Yes, Netflix is downand The other big streamers are on the way up (in terms of subscriber growth and penetration if not on Wall Street). The service’s monthly churn rate increased by a full percentage point per antenna between December 2021 and March 2022 — likely in response January price increase. With plans ranging from $9.99 to $19.99 per month, Netflix is now among the most expensive SVOD subscriptions out there. (By comparison, the $19.99-per-month Disney Bundle offers Disney+, ESPN+, and ad-free Hulu.)
But while Netflix’s growth has stalled, at least for now, we’re not seeing its user base collapsing just yet. Pioneering the streaming space and likely the first SVOD subscription most consumers ever bought, Netflix is still synonymous with streaming TV for many people.
Nielsen data shows that Netflix has remained the most-watched single streaming service, with a share of TV time that has remained steady between 6 and 7 percent over the past year. And its share of global demand for original content, while down compared to previous years, remains at a staggering majority: 45 percent versus Amazon’s 11 percent and Disney+’s 8.8 percent, according to Parrot Analytics.
Meanwhile, a recent report by Hub Entertainment Research found that 68 percent of Netflix users rated the service a “must have,” as opposed to a “nice to have” or one they could do without. That puts Netflix on par with YouTube — a platform, according to Hub’s report, “for which there is no easy substitute” — and makes it by far the most valuable SVOD service among its users.
However, as with everything in life, this status is only for the moment. There is little doubt that Netflix’s dominance will continue to wane; the question is how fast it can be done. And it remains to be seen if the changes are on the way — a cheaper ad-supported tier, a restructuring of the company movie strategy – will be able to slow down or reverse this trend.
What will then take its place as a Most Valuable Streamer? As far as consumers are concerned, it could be nothing.
We’re approaching a marketplace largely made up of savvy streaming customers who are hopping between services and juggling subscriptions—“churn and return”—with ease. )
In the first quarter of 2022, nearly 30 million subscriptions were canceled in the US, Antenna reported, but so were 37 million new subscribers, another sign that consumers are mixing up their subscriptions. Antenna data also indicates that many users who quit Netflix signed up for another streaming service last quarter.
It’s a portrait of consumers adjusting to a crowded, expensive market, and these trends will accelerate in a recession, forcing people to be more careful with their money. If streamers want to keep their subscribers, they have work to do as the years of plenty come to a decisive end.