Analysis: Services That Don’t Bundle Risk Massive Churn in 2024
New forecasts from Magid reinforce the notion that streaming platforms that decide not to bundle with competitors next year could face dire consequences.
There’s a new wave of cooperation making its way through the streaming industry these days. It’s come none too soon, as new data from the business analytics firm Magid makes very clear. That company predicts that churn rates across the streaming industry will continue to rise in 2024, besting the churn rate of 47% that was measured in August 2023.
- Several factors will lead to an increased churn rate, and the best way to churn-proof streaming services is through bundling.
- Bundling allows customers to subscribe to multiple services through one purchase point at a lower price.
- Streaming services like Max, Netflix, Disney+, Hulu, Paramount+, and Apple TV+ are in the process of bundling or discussing a potential bundle.
Is a Wave of Churn About to Hit Streamers?
As noted, 47% of adults admitted to canceling at least one streaming service thus far in 2023. Churn rates have risen for essentially every subscription video-on-demand (SVOD) service except Peacock in 2023, and price increases at each service are a big factor in cancelation.
The problem for streaming services is, that those price increases will only continue in 2024. Executives at several companies have already confirmed they will raise prices for their streaming platforms within the next year, and that essentially guarantees rising churn for those streamers when prices do increase.
One recent survey found that almost 30% of users who canceled a streaming service this year did so because of price considerations. That was the most-given answer, and it shows there is indeed a plateau for consumers to spend on streaming, despite the fact that a combination of two to three streaming services is still remarkably less than a cable subscription.
Which Streamers Will Weather the Storm?
There is a way for streaming platforms to avoid seeing their churn rate skyrocket next year: bundling. Magid also predicts that bundling will be much more common in 2024 than it has been so far in 2023, and recent moves in the streaming industry seem to back up that prognostication.
Netflix and Max are now available for just $10 per month total to select Verizon Wireless customers, and Apple has held talks with Paramount about offering their two services at one price point as well. Bundling creates a greater value for the two services in the minds of customers and makes them much less likely to cancel since they’ll be losing access to two services instead of one.
The streamers that choose not to bundle are at the greatest risk of seeing their churn rates climb. This will become all the more true as more streamers decide to bundle, creating more of a stark divide between themselves and the streamers who offer their services solo. That’s a big part of the reason Warner Bros. Discovery CEO David Zaslav said this spring that services who don’t bundle voluntarily will see it done to them; streamers that don’t risk losing big portions of their customer base.
The future isn’t set in stone, and these predictions could turn out to be nothing more than flights of fancy. But they’re based on current customer trends and hard data from 2023, and it seems highly likely that 2024 will bring massive waves of churn to streaming platforms that choose not to bundle with the competition.
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