Analysis: Hybrid Video-On-Demand Services Retain Users at Higher Rate Than SVOD, AVOD Services
With churn rates nearing 50% across the U.S. streaming market, all streaming providers are scrambling to find ways to retain the subscribers they already have. Customers have more choices than ever before, and media companies are being forced to compete hard for their eyes.
A new survey from Samsung Ads, as reported by Media Post, shows which services are most likely to be successful in retaining customers going forward. The survey found that “hybrid” video-on-demand (HVOD) services that offer both ad-supported and ad-free streaming are the most likely to retain customers once they’re signed up. Sixty-three percent of users subscribed to an HVOD service retain it, whereas ad-supported services see only 49% of customers stick around.
Samsung’s insights show just how important retained customers are to streaming services. Across apps of all sizes, 53% of content consumed is streamed by customers that have never left the service. That indicates that retained customers are consuming the most content on streaming platforms by far, with just 24% of content being consumed by returned users, and 23% viewed by new users.
The numbers from Samsung illustrate the power of HVOD platforms. By offering different features at varying price points, they allow customers to better tailor their subscriptions to their budgets. Customers who may not be able to afford a price increase for an ad-free tier can simply subscribe to the ad-supported tier, instead of feeling they have no other choice except to leave a service entirely. That flexibility is expected to lower churn rates for both Disney+ and Netflix, each of which launched ad-supported streaming plans this fall.
The data from Samsung also offered insight as to just how saturated the streaming market has become. Although time spent streaming video was up 31% in 2022, the percentage of new users among active subscriber bases is down 12% year-over-year. Those numbers indicate that there are simply not that many customers who have yet to adopt streaming as part of their entertainment habits.
Overall, the survey from Samsung demonstrates why every major streaming service will likely be offering an ad-supported video-on-demand (AVOD) tier before the end of 2023. Such price plans are important tools for retaining customers, which will be key as streaming services attempt to monetize their platforms going forward.