Pricing, Bundling Key to Limiting Churn in the U.S.

Bundling and pricing discounts will be key to U.S. SVOD platforms as they look to limit churn amid intensifying competition, according to Ampere Analysis.

More recent entrants, such as Disney+, tend to have higher levels of new sign-ups and churn, Ampere says, given their reliance on individual show launches. For the more established players, sign-ups and cancellations are more related to pricing changes, Ampere found.

U.S. SVOD homes now use an average of 4.5 services, Ampere reports. With consumers approaching a “stacking ceiling,” attracting new customers and limiting cancelations will be a challenge. Discounted ad-supported tiers will be key to mitigating churn among younger, lower-income demos. To mitigate price sensitivity, bundling is key, Ampere says, noting that Hulu and Disney+ have benefited from the Disney Bundle. About 32 percent of Hulu subscribers have bundled with Disney+.

Mayssa Jamil, analyst at Ampere Analysis, says: “The increasingly competitive SVOD market makes it hard for established services to maintain growth, while newer players continue to see strong gross additions but struggle to retain those customers. Pricing and content offering being the main drivers for sign-up and churn, a great way to aid customer retention is through bundling: it combines both of the above by offering larger catalogs and more frequent content additions at cheaper prices. We see this at play when looking at the way Hulu and Disney+ sign up and churn rates increasingly mimic one another thanks to the strength of the Disney Bundle.”