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More evidence if it were needed that the video streaming model is shape-shifting under its own weight forcing players to adapt a much more sophisticated approach to market.
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In its analysis from November
2023, Omdia found the number of SVOD services per home has declined
in a number of markets for the first time. Market analyst Antenna in its latest
“State of Subscriptions” report also finds that subscriber growth among Premium
SVODs slowed last year to 10%. Deloitte in its “2024 Digital Media Trends”
report found more than a third of Americans no longer think subscription VOD is
worth the price they are paying.
On average, Deloitte says, US
households spend $61 per month on streaming services. That’s a 27% increase
over last year’s average of $48 per month. And streaming services might want to
think twice before increasing prices further, as nearly half (48%) of the
people Deloitte spoke with said they would cancel their streaming service —
even their favorite one — if prices went up by $5 per month or more.
“With 36% of Americans surveyed
believing content on SVOD isn’t worth the money, providers shouldn’t assume
that advertising, bundles, and contracts are enough to help their business,”
said Deloitte.
Its survey data shows that US
consumers are questioning the value of streaming media while also declaring
their unwillingness to ever pay for social media.
“This is a generational shift,” the
report stated. With some eldest millennials in their 40s, “it’s no longer
merely ‘younger generations’ who are giving their time equally to TV and
movies, social media and user-generated content, and immersive and social
gaming.”
Cancellations are already a problem for
the industry, notes Chris Morris, analyzing the Deloitte report at Fast
Company. Deloitte reports that 40% of consumers have cancelled a streaming
service in the past six months.
Antenna found that churn had tripled
in the last four years, pressuring net additions and growth overall. It also
identified a category of “Serial Churners” — individuals who have three or more
cancellations of a premium SVOD service in the past two years. That segment now
comprises nearly a quarter of users.
Antenna attributes the overall
increase in churn to the surge in mergers and acquisitions among the major
streamers since 2019. Almost half of Premium SVOD Subscriptions (excluding
Netflix) are in their first year of tenure, it notes.Cr: Antenna
On the plus side, 10% of
cancellations resubscribe the next month, and one in three are back by six
months after cancelling.
Antenna concludes that if the
previous stage of the streamer business model was focused on acquisition to
amass scale, the next stage necessitates a shift to managing their subscribers.
“This will translate to much more
sophisticated marketing and product strategies, new success KPIs, and a whole
lot more reliance on data,” says Antenna, which of course can deliver all of
this.
Part of the problem is that viewer’s
time is being more and more fragmented away from TV, away from streaming TV and
onto social media sites and video games.
As Deloitte put it in its report,
“Streaming video at a crossroads: Redesign yesterday’s models or reinvent for
tomorrow?,” consumer expectations of M&E may now be shaped more by social
media, content creators, and video games than by TV and films. How people weigh
the value of entertainment options appears to be changing shape as well.
“The biggest challenge for SVOD
providers and studios may be that they are no longer addressing a mass culture,
but rather a fragmented landscape of competing digital entertainment options,”
Deloitte execs state. “Trying to rebuild pay TV business models around
streaming services could help reduce SVOD churn and slow attrition in the near
term, but the long game for success will likely involve reinventing the medium
to be more personalized, more shoppable, and more social.”
Providers will also likely need to
widen their scope beyond TV and films to reach modern audiences, it suggests,
and make their IP work across social and video games.
“The industry has had 20 years to
understand the size and shape of the streaming disruption. Now they should come
together to work to build something truly contemporary.”
This would include partnering with
social media creators and influencers to facilitate “discovery, hype, and
trust,” and using generative AI to improve the quality of content creation.
However, Deloitte warns that this could also “lead to a flood of cheap and
novel content that further dissolves the boundaries between ‘real’ and
synthetic, commodity and premium.”
Simultaneously, free video stacking
is still on the rise. YouTube’s continued growth as the top video service
provider in key markets, is charted by Omdia. Strong growth in other social
video platforms and Free ad-supported television (FAST) services sees free as
the major streaming strategy that all major SVOD services are leaning into.
Also in Europe, the legacy of public
service broadcasting remains strong, with traditional free TV and broadcaster
video on demand (BVOD) services in high demand.
“The allure of social media platforms
such as TikTok and Instagram Reels has reshaped how individuals consume video
content,” says Omdia analyst Maria Rua Aguete. “The appetite for free content
is ever-increasing and the major streamers are clearly leaning into this as a
strategy. With engaging formats and vast user bases, social media services
offer compelling alternatives to mainstream streaming services.”
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