Deloitte: SVODs Face Stiff Competition from Social Media, Gaming


Deloitte’s latest Digital Media Trends survey has found that while consumers are still spending more time at home due to Covid-19 concerns, on-demand content platforms are facing significant competition from other online entertainment options, including social media and gaming.

Per the study, 84 percent of American consumers are spending more time on online entertainment activities and less on in-person entertainment outside of the home, largely due to Covid-19 concerns.

For Boomers and Gen X consumers, watching TV shows or movies at home remains the preferred home entertainment activity, while for Gen Z it’s playing video games. Across all respondents, 65 percent are frequent gamers, with the same percentage engaging with at least one social media service several times a day.

Younger generations are more likely to churn and return to SVOD services—47 percent of millennials and 34 percent of Gen Z consumers canceled and then resubscribed to the same streaming video service later that same year. Price was the leading reason to cancel an SVOD service, followed by the fact they finished the show they signed up to watch. In addition, 65 percent of consumers are using AVOD services, as compared with 84 percent paying for an SVOD platform. The average household has four subscriptions. Churn rates are stable at about 38 percent.

“For streaming video providers, keeping subscribers is harder than ever as people—especially younger generations—are managing costs by adopting ad-supported options, looking for discounts and bundles, and moving on and off services to satisfy their content needs,” the study notes. “But Covid-19 could be ushering in a permanent shift in entertainment, where it’s not just about streaming or the number of subscribers, but also importantly about how platform providers are responding to subscriber churn by providing enhanced experiences and the ability to connect with others on their platforms.”

Kevin Westcott, vice chairman of Deloitte LLP and U.S. technology, media and telecom leader, noted, “We’re seeing an important shift in what consumers are paying attention to and how they are choosing to engage and be entertained. While streaming video will continue to gain momentum, especially with leading services now pursuing global markets, these companies will also need to address churn and retention among diverse segments in different markets and shift from merely measuring subscribers to understanding how to unlock the lifetime value within their customer bases. It will serve them well in the future to develop growth strategies that include both social video and social gaming, whether through partnerships, acquisitions or simply establishing a really effective social media department.”

Jana Arbanas, vice chairman of Deloitte LLP and U.S. telecom, media and entertainment sector leader, added, “It’s clear people still want to enjoy socializing with friends and family, even if that means the experience is online and the interaction is from within their homes. Streaming video in its current form doesn’t satisfy this social desire, so to meet this need, consumers are spending increasingly more time on other forms of online entertainment. Given this reality, streaming companies need to evolve their offerings into connected social experiences in order to keep subscribers interested and engaged, ultimately positioning their businesses for future growth amidst changing behaviors.”