Churn Rates Rising for Nearly All Streaming Services as Prices Increase Across the Board
It’s fair to wonder just how much streaming customers are willing to take in the way of price increases, especially as services cut content in order to reduce costs. Cord cutting is still on the rise, which means there are still some new customers out there for streamers to reach, but many users leaving cable were already streaming subscribers to begin with.
That has led to a shrinking customer pool for streamers to pull new subscribers from. Providers are already bumping up against their ceiling in terms of market penetration in the United States; those who want streaming services are mostly already signed up for them. According to new data from Antenna, the second quarter of 2023 saw fewer net additions to streaming services than any quarter since the start of 2022. The top 10 streaming services in the U.S. only added 2.6 million customers between them during the quarter, while cancelations grew to 38.4 million users.
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Essentially everyone in the industry bears some responsibility for the increasing level of churn. Peacock is the only service that saw its churn rate decline, seeing a reduction of 2.2% from the second quarter of last year. Overall, Weighted Average Category churn has increased +34.5% YoY from 4.6% in June 2022 to 6.1% in June 2023. Every premium streaming service in Antenna’s survey other than Peacock saw their rates increase in that time.
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What’s the reason for these higher levels of churn? As Antenna points out, eight of the top ten streamers have announced or implemented price increases since the start of 2022. In fact, Disney just announced its second round of price hikes in less than a year for its streaming services, which will take effect on Oct. 12.
Ad-free streaming has risen 25% in cost over the past year, as streamers try to drive users to ad-supported plans where they can be more effectively monetized. But with streaming services now faced with the possibility of shrinking content slates this fall thanks to strikes from the Writers Guild of America (WGA) and Screen Actors Guild - American Federation of Television and Radio Artists (SAG-AFTRA), churn data could get worse as users decide they don’t see the need to pay for a streaming service that doesn’t have new original content.
Churn is a complex metric, and there are more factors behind the rising rate of churn than just price increases. The saturation of the streaming market is another important piece of the puzzle, as users are finding it more cost-effective to sign up for streamers to watch a specific title, then cancel as opposed to stacking multiple streaming services they don’t watch all the time. Users are not leaving the streaming ecosystem altogether; the fact that streaming reached record highs of total TV viewing time in July attests to that. But price jumps are certainly contributing to rising cancelation rates around the streaming industry, as Antenna’s data points to.
Peacock
Peacock is a subscription video streaming service from NBCUniversal that includes original shows, blockbuster movies, and classic television series. Peacock is home to “Yellowstone,” and “The Office,” as well as original hits like “Poker Face” and “Bel-Air.” You can also watch live sports including NFL, MLB, WWE, Olympics, Premier League, NASCAR, French Open, College Football and Basketball, and PGA Tour. Premium Plus subscribers can stream their local NBC feed in all 210 markets.