Magid Predicts More Churn, Increased Bundling for 2024

In 2024, churn will continue to increase, Magid predicts, noting that movement between services and bundling offer a growth opportunity for streamers as subscribers notice price increases for certain SVODs and view AVOD as a viable option.

As free services continue to grow in popularity and perform well in news, kids, family and reality content, Magid notes that SVODs will need to do a better job of delivering and marketing their higher-cost and premium content.

The result of this, Magid says, will be SVODs that “look and feel more akin to the HBO of old, turning to, for example, expensive dramas and movies off-net in their first run outside of theatrical and sports rights as a way of differentiating their service when it comes to quality content.”

The challenge for SVODs is whether they can be effective in this effort, as free video is reaching maturation and SVODs are being forced to spend less on productions.

Magid also predicts that consumers will be recreating the bundle that they once had via cable 15 years ago. “We will see bigger, value-added, stickier bundles that justify a consumer shifting away from a monthly commitment toward an annual one with greater consequences for cancellation,” the consulting firm says. “Partnerships will be more effective and efficient if anchored around a channel-based option (à la a virtual MVPD) that facilitates more bundling (and vertical broadband integration).”

This predicted bundling trend means that services that have been competitive in the past will need to put aside their differences and “play nice in the sandbox by partnering strategically,” Magid says. In other words, “enemies [will] become frenemies.”

“Ultimately, services will have to marry each other in order to stabilize their businesses and establish a sustainable business model,” Magid notes. “With one single subscription, one access point and an annual bundle option, SVODs will improve discovery, reduce volatility and increase licensing value. And, contrary to conventional thinking, bundles that feature an anchor broadcast partner will create greater overall value, including amortization strategy for new dramas and sitcoms.”

Regarding marketing, Magid predicts that precision marketing will be the way to go in 2024. “Marketers’ decisions around spend, especially when it comes to hidden gems, will take on new importance as streamers attempt to identify who’s watching and why and work to attract brand advocates who will tout the value of their service.”