Deloitte: Streaming Video Value “Under Pressure”

Streaming video providers are set to face new challenges as viewing habits continue to evolve, Deloitte finds in its latest Digital Media Trends report, with almost half of consumers finding that they are paying too much for SVOD services.

Deloitte also found that about a third of consumers intend to reduce the number of services they subscribe to; indeed, subscriber churn for SVOD rose 44 percent over a six-month period. Those numbers are higher for Gen Z (57 percent) and millennials (62 percent). Further, about 25 percent of consumers have “churned and returned”—as in, canceled a service but then renewed it within six months. Again, that rate is higher among younger demos.

With the proliferation of services, consumers are increasingly frustrated over “chasing content” across multiple services, Deloitte says. The expense of multiple services is also a concern; 47 percent say they have made a change to their entertainment subscriptions because of current economic conditions. This includes canceling a service, switching to an ad-supported tier or opting for a bundle. Free services are gaining traction, now being used in 60 percent of homes, while 88 percent have an SVOD service. By the end of 2023, nearly two-thirds of consumers in developed countries will have at least one subscription to an ad-supported video service, Deloitte predicts.

Millennials, who helped drive the SVOD boom, are the demo analysts are watching when it comes to subscription fatigue and cost-sensitivity. They spend more time than any other age group on streaming video—about $54 a month—but churn at higher rates and are most likely to cancel services. Millennials and Gen Zs are flocking to user-generated video, Deloitte observes.

“It’s not that SVOD experiences are in decline and social, user-generated videos are taking over,” Deloitte says. “But watching TV shows and movies at home may not be the dominant, ‘go-to’ activity it once was—especially for younger generations. People have more choices and seem to be dividing their digital entertainment options more evenly based on the kinds of value they offer. For many, digital media is not just entertaining but can also offer utility, foster community and support emotional needs.”

Social media should be tapped into to aid discovery, Deloitte reports, with more than half of all consumers—and nearly three-quarters of Gen Zs and millennials—often watching a TV show or movie on a streaming video service after hearing about it on social media.

“People, creators and content move between TV, movies, user-generated video streams and video games,” Deloitte says. “M&E companies should as well. Depending on the size of a given company, the shape of their strategy, and where they play in the media ecosystem, content executives should consider how best—and at which scale—they should be participating across this tapestry. Regardless of where their content originates, how can they optimize and monetize it on all these channels? How can content, fandoms, and digital media come together to build stronger franchises? How can executives develop multichannel strategies that deliver more social and emotional value that may better engage and retain? M&E companies don’t need to be everywhere all at once, but they should think strategically about how to add value to audiences increasingly moving across these digital media.:

Streamers may need to spend more to retain subs, expand and build out ad offerings. “How they approach, measure, and even define advertising may require more innovation and more understanding of UGC creator communities that combine entertainment, information and trust. Older generations and fans may pay more for premium SVOD subscriptions and benefits. But streamers should also strengthen their relationships with younger generations in younger media that can deliver more interaction, immersion and social benefits.”