NAB
Watching a movie on Netflix is a passive one-way lean back
experience watching high quality video which we all love, right? Wrong.
Millennials want interactive social connection and if SVODs don’t offer it…
well they’ve been warned.
That’s the key takeaway from Deloitte’s latest annual Digital
Media Trends survey, that also finds that if streaming providers are seeking a
long-lasting marriage with subscribers, it now looks more like a dynamic game
of speed dating.
The report that cements the understanding that pandemic has
accelerated online entertainment, with an estimated 21% boost in consumer
spending on subscriptions in the first half of 2021. But people — especially
younger generations — are managing costs by adopting ad-supported options,
looking for discounts and bundles, and moving on and off services to meet their
content needs. For streaming video providers, keeping these subscribers is
harder than ever.
At the same time, consumers’ attention is being frayed by
the continued aggregation and innovation of content on social media — mostly a
mobile experience, and entirely free — and by the increasingly social
experiences available in video games, which are also often free-to-play.
Combating Churn
The survey revealed that 84% of respondents now pay for a
SVOD service, and the average household has four subscriptions — figures that
have remained largely unchanged over the past year.
People still prioritize new original content, a broad
content library, and a low enough cost to subscribe. But they are getting
better at developing strategies to optimize costs and content. For providers
seeking to retain them, the overall churn rate — the number of people who have
cancelled, or both added and cancelled, a paid SVOD service — has remained
stable at about 38%, although it varies from service to service.
The top reason people cancelled a paid SVOD service was due
to high cost, suggesting there will be more growth ahead for ad-subsidized and
free ad-supported subscription tiers.
The second most common reason was that they finished the
show they signed up to watch. Consumers, finds Deloitte, are enjoying the
benefits of easy cancellation, choosing to turn the tap off rather than leaving
it running when they don’t need it. This “churn & return” behavior is most
common among younger generations: Almost half of Millennials and 34% of Gen Z
respondents cancelled and then resubscribed to the same service later.
However, providers looking to reduce churn by adding
friction to unsubscribing should know that the second-largest frustration
people have with SVOD services is when they make it harder to cancel.
Get Cuter with Social
The use of social media and online services is widespread
among US consumers and is a daily activity for many. About 90% of respondents
cited using at least one social media service, and the average person uses five
different services. This number increases to seven for Gen Zs and millennials,
with about a quarter of each using 10 or more different services.
We’re not only watching more videos on social, especially
short videos made by average users and influencers. M&E options are
migrating onto them, and social commerce is booming.
“It’s clear people still want to enjoy socializing with
friends and family, even if that means the experience is online and the
interaction is from within their home,” says Deloitte’s Jana Arbanas, leader of
telecom, media & entertainment. “Streaming video in its current form
doesn’t satisfy this social desire, so to meet this need, consumers are
spending increasingly more time on other forms of online entertainment. Given
this, streaming companies need to evolve their offerings into connected social
experiences in order to keep subscribers interested and engaged… whether
through partnerships, acquisitions, or simply establishing a really effective
social media department.”
Virtual worlds, real interactions
Gaming and game-related content, such as live streams and
video, continue to compete for entertainment time. And, for many gamers, these
activities have become social too. The survey reports 65% of respondents as
frequent gamers, playing at least once a week. Gen Zs and Millennials play
closer to 13 or 14 hours weekly.
Game companies have “inadvertently” become immersive,
interactive social media services. When Deloitte asked gamers about important
factors related to their gaming experience, more than half said ‘having
positive interactions with other players’ and ‘being able to personalize my
game character or avatar’ were important, followed not far behind by ‘chatting
or socializing with other players and meeting up with friends online to play
together.’
“Younger generations have grown up connecting through
digital networks, engaging with digital and interactive entertainment, and
relating to the world through a social lens. Gaming is meeting these
expectations with unique, immersive experiences that can put players in the
starring role. For streaming video providers, understanding social gaming and
creating strong relationships with gamers may be critical to future growth.”
Deloitte’s Prescription
In the near term, SVOD players should address churn and retention
among diverse segments in different markets, and shift from measuring
subscribers to understanding how to unlock the lifetime value within their
customer bases.
In the future, says the consultant, they should better
address how customers are paying attention to and how they are choosing to
engage and be entertained.
“Streaming video will likely continue to be a dominant
force, especially as leading services are now pursuing global markets. However,
any social elements are deferred to the “second screen” — mobile — which, for
many, is really the first screen. Interactivity on SVOD is an early experiment.
“It may or may not make sense for SVOD to offer social and
interactivity directly in their services, but they will likely face greater
competition in courting younger generations and keeping them as lifelong
subscribers if they don’t integrate a social element in some way.”
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