How Will Streamers Fight Churn as They Continue to Raise Prices?
How Will Streamers Fight Churn as They Continue to Raise Prices?
Samba TV’s new “State of Viewership” report shows that churn continues to be a problem for major streamers, and price increases won’t help.
When Disney announced yet another round of price increases this week, many subscribers likely reacted the way The Streamable's Jared DiPane did: by canceling their subscriptions, or planning to at any rate. Industry wags and observers alike have dubbed the rising cost of streaming video “streamflation,” and the term is quite apt. Rising prices have led to an increased willingness by customers to cycle through streamers, picking up a subscription to watch one piece of content and then canceling before they get billed for another month of service. Samba TV’s new “State of Viewership” report covering the first half of 2024 quantifies this problem, and also holds solutions for streamers that are looking to fight back against churn even as they raise prices.
Key Details:
- Of the nearly 100 million streaming households in the U.S., 44% watched two or fewer streaming services in the first half of 2024.
- Max, Disney+, Hulu and Paramount+ all saw more than half of subscribers watch just one original before canceling their service.
- Bundles and strategic programming decisions are the best tools streamers have to combat churn.
The data from Samba shows that cycling has become a way of life for most customers. Its report cites data from Antenna, which shows that of the 99 million households in the United States which viewed content from streaming services in the first half of 2024, 44% watched just one or two streamers. That speaks to the high and rising costs of streaming, and the pinch consumers are feeling on their entertainment budgets.
The numbers also show that collectively, streamers have not had more than 10 million net new subscriptions in any quarter since 2022. Gross streaming subscriptions and cancelations have both grown precipitously since then, demonstrating beyond a doubt how willing customers are to sign up for, then cancel a streaming subscription in short order.
Graphics courtesy of Samba TV
Worse yet for many streaming services, the expensive original content they shell out billions every year to create isn’t doing a good enough job at engaging customers. Samba’s report shows that Max, Disney+, Hulu and Paramount+ all saw customers cancel their subscription after watching just one original title at a rate of 50% or higher during the first half of this year. Unsurprisingly, Netflix was the leader in this category, but even it saw 30% of viewers cancel their subscription after watching just one original.
What Can Streamers Do to Cut Down on Cycling?
As should come as no surprise, bundling has a marked effect on churn. Streaming bundles help customers think of services as a better value, since they can often save 30% to 40% by purchasing bundled subscriptions to services they would have subscribed to anyway. Disney+ and Hulu launched a new bundle with Max this summer, and Netflix joined with Peacock and Apple TV+ in the StreamSaver package that’s available now to Comcast internet and TV customers.
Samba makes use of Antenna data once again to show how drastically bundling can reduce churn. The cancelation rate for the Disney Bundle hovers between 2% and 3% on its charts, outperforming each service within the bundle when measured independently. Similarly, Apple TV+ cancelation rates are markedly lower when customers are getting the service through the Apple One bundle as opposed to signing up for the streamer on its own.
Being strategic with the release of new content can also be of great help to streamers in fighting churn. Samba’s data shows that subscription cyclers are likely to return to a streaming service in order to watch big-name originals, such as “Shōgun” on Hulu or “House of the Dragon” on Max. By spacing out these originals, streamers can do a better job of keeping viewers engaged.
The data seems to have particular relevance for Disney+. It has seen two of its most popular franchises — Marvel and Star Wars — stagnate in recent years, as many of the streaming original titles from both have failed to meet audience expectations. Despite this fact, Disney saw its streamers achieve profitability one quarter early when it released its quarterly earnings report on Wednesday.
If Disney wants to continue building profits from its streaming segment, it has to start making better content choices, particularly in light of its recent price increases. Deciding when to release “Deadpool & Wolverine” on Disney+ takes on a whole new significance given the facts stated above; it’s Disney’s most successful piece of content in years, and could be a massive driver of new subscriptions for the service. Disney has to ensure it has other releases in the pipeline to keep viewers attached to their accounts, such as the planned launch of an ESPN tile on Disney+ this December to bring live sports to the service.
Churn is a problem all streamers have to deal with, and it won’t be solved overnight. Even Netflix has work to do to continue improving customer engagement, and if streamers are going to continue asking customers for more money, they must ensure they’re keeping pace with new content additions, strategic release schedules and bundle options to help consumers keep budgets under control.
Disney+
Disney+ is a video streaming service with over 13,000 series and films from Disney, Pixar, Marvel, Star Wars, National Geographic, The Muppets, and more. It is available in 61 countries and 21 languages. It is notable for its popular original series like “The Mandalorian,” “Ms. Marvel,” “Loki,” “Obi-Wan Kenobi,” and “Andor.”