NAB
Subscriber churn is systemic and won’t be beaten by tinkering at the edges of
streamer business models.
That’s the stark warning to Apple TV+, Peacock, Britbox,
Netflix, Hulu, HBO+ and others, according to Deloitte’s 2022 Digital Media
Trends survey.
article here
“Media and entertainment executives — and especially those
in SVOD — should be thinking hard about how people socialize around
entertainment and how entertainment itself is becoming more personalized, interactive,
and immersive,” the report states. “The business models that have brought them
this far, and even the technologies they have relied on, may not carry them
through the next wave of change.”
Deloitte’s report found the churn rate for streaming services
in the US is at 37%, with countries like the UK, Germany and Japan seeing about
a 30% churn rate.
Perhaps more worrying for streamers is that there is a clear
delineation by age, with more than half of millennial and Gen Z respondents
saying they added, cancelled, or added and cancelled a streaming service in the
past six months.
Around 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.
“I think there are two driving factors behind it,” Jana
Arbanas, vice chair of Deloitte LLP and US telecom, media and entertainment
sector leader, told The Hollywood Reporter. “First, they are comfortable
with it, they are digital natives. Signing up for and accessing something and
then cancelling and reupping it is not daunting to them in the way that it is
to some generations that are not digitally native. The second part of that is
cost, they are more cost-conscious in that generation.”
So-called “churn and return” is not a new phenomenon, with
consumers increasingly getting comfortable (“savvy”) with subscribing to a
service for a particular show, knowing that they can easily cancel and return
in a few months when something else they want to watch becomes available.
Streamers can counter that with a few initiatives. Content
is the main one, but that is highly expensive if the aim is to retain
subscribers with regular — almost weekly — drops of originals.
Offering flexible pricing options could be the most direct
path, appealing to the cost-conscious audience. Deloitte’s survey found that
more than half of consumers would like an ad-supported offering, 34% of
respondents preferred a free ad-supported service and many respondents thinking
of cancelling a paid SVOD would likely keep their subscriptions if they could
get a discount.
“Even when there are lulls in engaging content, subscribers
may not cancel their subscription if the cost is low enough.”
Worth noting also that a solid 41% of those in US say they’d
actually be happy to pay more to view a service without ads.
But the problem is greater than any tweaks of the business
model can remedy. SVOD itself may be facing an existential crisis in the
evolving preferences of younger generations who have grown up with social and
interactive media.
Deloitte even has cause to question the very essence of the
content streamers provide.
“Like TV and movies before them, SVODs have relied on the
innate emotional and intellectual value of their stories to engage audiences
and monetize their attention. But will people always value this kind of
passive, lean-back-and-watch experience?”
Back to the stats: Watching TV and movies at home is the
favorite activity of older generations. Across all five countries surveyed, Gen
Z respondents cited playing video games as their favorite entertainment
activity.
Social media and gaming further challenge retention for SVOD
services.
“Every time a streaming show ends, a recommendation fails to
engage, when subscription costs mount, or even when attention strays — these are
moments when people may turn to social media and gaming.”
The Impact of Social Media
As Deloitte points out, social media provides both passive
and active experiences and offer up “near-infinite streams of personalized
content — all lit with swarming behaviors around trending content. And it’s all
free and available anywhere, anytime.”
In contrast to SVOD services, social media is full of
content that is bite-sized, snackable, and highly personalized. In the US, 80%
of social media users say they use social media services daily and 59% use
these services several times a day. Across all countries, Gen Z, Millennial,
and Gen X consumers are consistently more likely to use these services.
Another differentiator from SVOD: social media is largely
free. And the library of content is massive and seemingly never-ending. Users
are listening to music, reading and watching news, watching TV shows and
movies, and playing games, all in one place. Their newsfeeds are personalized
by algorithms that serve up exactly what they want. No chasing content, and no
subscription needed.
“With hundreds of millions — even billions — of users,
social media services and the brands they support can capitalize on fast-moving
trends. So, while the audience for SVOD is larger than ever, experiences that
are social, interactive, and shoppable are competing for more of our time,
attention, and money.”
The Impact of Gaming
It is the social nature of games which are considered to be
most appealing to younger generations and something that SVODs needs to
replicate, somehow.
Deloitte advises streaming video providers to note that
about half of all gamers regardless of country say that playing video games has
taken time away from other entertainment activities; these percentages increase
for younger gamers.
“People play with friends, against strangers, and in front
of audiences on social streaming services, reinforcing engagement,” the
consultancy stresses. “Gaming allows people to become part of the story, gives
them autonomy and a chance to win, enables them to share rich experiences, and
it can support their emotional needs.”
About half of US gamer respondents say that playing video
games helps them stay connected to other people, and a similar share say making
connections is important to them while gaming — sentiments that emerge at a
higher level for men.
Game companies are capitalizing on this with freemium mobile
games and gaming subscriptions, in-game purchases of new content, and an
economy of virtual goods that has drawn in more brands and franchises. It is
entry-level metaverse, and that spells even more trouble for SVODs that can’t
respond.
“A major shift is underway, one that could radically
recompose internets and economies,” Deloitte underscores. “In the integrated
marketplace of the future, streamers, social media, and gaming companies could
see their business models further disrupted — not just by younger generations,
but also by the emerging infrastructure of Web 3.0.
“For now, streaming video, social media, and gaming are all
very successful without full immersion, tokenized economies, and universal
interoperability. But the twin engines of capital and human behavior may be
moving irrevocably toward that kind of unlimited reality.
“M&E may need to collaborate more to create a future
where they remain at the center.”
No comments:
Post a Comment