With households maxing out at up to 5-6 streaming subscriptions a month, new options constantly appearing on the market, and a return to the choice fatigue reminiscent of channel TV, it’s not surprising subscriber churn is high and unlikely to resolve soon. Rather than fighting against the current, consider how you can make ‘churn and return’ viewers work with your platform.
How churn became inevitable
Churn is a concern for subscription platforms everywhere. Increasing subscription costs, decision fatigue from the sheer content volume, and the dispersal of big hits across platforms have changed the streaming landscape. Deloitte’s 2022 Digital Media Trends Survey puts streaming services churn at around 37% in the United States. And Jana Arbanas, Deloitte's US Telecom, Media, and Entertainment sector leader, notes this isn’t "a one-time bump", warning streaming companies "have to grapple with this consistent volatility with subscribers" (Hollywood Reporter).
Increasingly, viewers subscribe to platforms for the content releases they most want to watch, then unsubscribe until another talked-about show or movie becomes available on a platform. This shift in viewing habits is partly age-based: tech-savvy and cost-conscious younger viewers are willing to spend extra time on admin to save the costs of a service they won’t use. It’s also partly a result of sheer choice as the streaming wars reach a head: with Disney+’s The Mandalorian, Apple TV’s Ted Lasso, and the proliferation of hits across platforms such as Amazon Prime, Hulu, and HBO Max, a single Netflix subscription no longer cuts it for most households.
Utilize it or suffer
This switch in behavior has profound implications for streamers. To date, Netflix has relied on a steady increase in subscribers in line with platform adoption and focussed on the rollouts of new originals and territories. However, as its recent subscriber losses of Q1 and Q2 2022 reveal, relying on this model is now a recipe for disaster. Apple TV+, too, has consistently struggled, with a churn rate of 10.4% in 2021, according to Antenna.
With the trend not going away, Apple TV might have an unwitting headstart in the necessary new streaming strategy. Streamers that bury their heads in the sand and double down on consistent subscriber statistics are now fighting an uphill battle with little chance of success. There’s simply not one streaming platform that can do enough to keep users consistently satisfied anymore. Ultimately, to adapt to the market, streamers need to consider how they can use this behavioral change to their advantage while riding out the wave of streaming options. The most successful approaches will accept churn as inevitable while offering users consistent value. This strategy will decrease persistent churn as providers gain semi-regular returned custom, improving subscriber count volatility.
How to work with the churn uptick
Streaming platforms must carefully consider their content rollout, focussing on creating consistent reasons for viewers to return rather than just enticing initial sign-ups. Apple TV+ does a great job at acquiring new viewers through promotional offers and bundles from partners or purchases of an Apple product. However, it currently has a 5x higher churn than Netflix (source).
Arbanas emphasizes that although “content is what drives people to a platform, it is cost that makes them leave.” To avoid persistent churn, viewers need to feel they are receiving value for money and that they are receiving consistent quality content. Satisfaction here ideally tides over viewers throughout the months with content lulls, but at the very least pulls them in to return frequently, decreasing the volatility of future churn statistics. Adapting to churn might mean providers focus less on quantity and more on quality to increase content resonance, for example through content localization for new markets.
Consider diversifying into AVOD or FAST
Another option is to lower costs and introduce an ad-supported tier if you don't have the next big thing to release each month. Moving to a free advertising-supported model removes the pressure of subscription costs and introduces consistent advertising revenue. It also takes away the need for static lifelong subscribers.
Diversifying your revenue model makes your offering accessible to a larger audience and suits platforms with varied content (I.e., if you have exciting new releases and also an underutilized back catalog). According to Deloitte, although 41% of respondents preferred a streaming service with a higher subscription cost and no ads, 25% wanted an ad-light subscription, and 34% a free ad-supported service (Hollywood Reporter). Providing several options for how users can engage with your offering improves your odds of success and can ultimately optimize your content performance.
It's no longer possible to achieve uncomplicated long-term customer loyalty. Instead, look at how you can make your subscription model work for a cost-conscious younger generation who are savvy about their consumption and product value. Consider options like partnership bundles and offers, subscription optionality, and content release dates to work with this new method of consumption - churn isn't going anywhere.