SVOD platforms have benefited from customers taking up new services during the COVID-19 pandemic, but churn rates have also accelerated, according to Deloitte.
According to Deloitte’s latest Digital Media Trends Survey, 80 percent of U.S. consumers subscribe to a paid streaming video service. Since the pandemic, 23 percent of consumers added a streaming video service subscription. And subscribers are now paying for an average of four services, up from three prior to the pandemic.
Meanwhile, since the start of the global health crisis, 17 percent of subs canceled a paid service. High costs and expiring discounts or free trials were cited as the top reasons for cancellation.
For almost 25 percent of subs, a free or discounted rate was a big factor in choosing a paid streaming video service. Having a broad range of shows and movies and content that can’t be found elsewhere are key factors for purchasing a subscription.
“To win subscribers rapidly, many streaming video services are offering low introductory rates and free trials,” said Dr. Jeff Loucks, executive director at the Deloitte Center for Technology, Media and Telecommunications. “But with cheap trials and easy cancellations, consumers can binge-watch their favorite shows, drop the subscription, and then return when the next season launches. Since the COVID-19 pandemic began, streaming services have attracted more subscribers than ever. The biggest challenge for providers will likely be to retain customers once their series is over and the full price kicks in. Free ad-supported streaming could gain market share from paid services as budgets tighten.”
Deloitte found that 47 percent of U.S. consumers used at least one free AVOD service during COVID-19 as they sought “budget-friendly entertainment.” Per Deloitte, more U.S. consumers want access to cheaper, ad-supported streaming video options, both before (62 percent) and since the COVID-19 pandemic (65 percent), while 35 percent of consumers will pay to avoid ads.
Pre-COVID-19, the average U.S. consumer had 12 paid entertainment subscriptions (including TV, music, books, news, magazines and gaming). Millennials averaged 17 subscriptions, Gen Z had 14, while Gen X had 13. Pre-COVID-19, 40 percent of millennials were “overwhelmed” by the number of subscription services they manage, and 43 percent intended to reduce them.