Report: Churn is Highest Among Younger Viewers, Watching Less Streaming & More User-Generated Content
Competition in the digital entertainment space is heating up, and the race to engage younger audiences is getting more intense. Gaming, social media, and other user-generated content are capturing the attention of Millennials and Gen Z at a faster rate than traditional entertainment. So how does streaming video plan to keep up?
Deloitte’s 16th annual “Digital Media Trends” survey of 2,000 U.S. consumers was conducted over December 2021 and January 2022 and it shows how audiences are increasingly frustrated with subscription video-on-demand (SVOD) services with the average churn rate in the United States at a constant 37% across paid services such as Netflix, Hulu, HBO Max, and others.
The biggest demographic that are losing interest are Gen Z respondents, who prefer video games as their favorite form of digital entertainment. Churn is highest among this group, with over half of U.S. Millennials (52%) and Gen Z (51%) admitting to having canceled, or both added and canceled, a video subscription service within the last six months.
Younger generations who were raised around smartphones, social media, and video games prefer entertainment experiences that are more interactive and personable, turning to Twitch and other user-generated social media streams. Meanwhile, older generations prefer watching on-demand TV and movies on their home screen.
“While streaming video-on-demand business models look much the same as they did when they were created 15 years ago,” Deloitte Vice-Chair and U.S. Telecom, Media and Entertainment Sector Leader Jana Arbanas said, “social media and gaming companies have quickly evolved their offerings, leveraging technology, and capitalizing on behaviors. Social media is free and available anywhere, anytime, offering both passive and interactive experiences with endless streams of personalized content, without the cost of a subscription.”
“And more people are interacting and socializing in game worlds that host millions of users, brands and franchises, and major non-gaming events,” she added. “SVOD companies aren’t just competing with each other for audiences, they are also competing with different, more social and immersive forms of entertainment.”
Above all, user-generated content is increasingly popular, with 70% of Gen Z respondents saying that they always end up watching more user-generated content than they had planned. Meanwhile, 46% of U.S. respondents say they watch more user-generated content than they did six months ago.
Furthermore, 41% of U.S. respondents say they watch more user-generated video content than they do TV shows and movies on video streaming services; the percentage increases to around 60% when focusing on just Gen Z and Millennials. Also, 81% of social media users say they use social media services at least daily, whereas 59% use these social media multiple times a day.
Over 80% of both men and women in the U.S. say they play video games, and half of the smartphone owners say they play on a smartphone every single day. Gen Z and Millennials game the most, logging an average of 11 and 13 hours of gameplay per week, respectively. Whereas Gen X gamers have around 10 hours of gameplay weekly.
A Hub Entertainment Research study found that the average session for weekly console gamers in 2019 was about 90 minutes; in 2021, it was up to around 110 minutes.
Nowadays, audiences have tons of options and are more likely to subscribe and unsubscribe to services in order to get the most content at the least cost. Streaming services are challenged to offer enough engaging content while incentivizing subscriber retention with ad-supported options, bundles, and perks. Recently, Disney+ became the latest platform to prepare a cheaper, ad-supported tier in hopes of driving, and retaining, more customers.
The survey revealed that 25% percent of U.S. users have canceled a streaming video service and then resubscribed to the same service within the past year. This churn-and-return was either due to a new season of their favorite show coming out, a free or discounted rate, or the release of new content that they wanted to check out, according to respondents. Overall, Gen Z and Millennials are significantly more likely to churn-and-return.
In an interview with The Hollywood Reporter, Arbanas said, “I think there is two driving factors behind it…they are comfortable with it, they are digital natives. Signing up for and accessing something and then canceling and re-upping it is not daunting to them in the way that it is to some generations that are not digitally native. I can certainly think of my mom, who would have a hard time navigating that, whereas my son is happy to do that and manage his portfolio in a way that he can get the content he wants. The second part of that is cost, they are more cost-conscious in that generation.”
For a cheaper price, some consumers would be willing to sign up for an annual subscription, watch more ads, or even wait 45 days to watch a new hit release. Perks and VIP treatment could also retain many subscribers, as 37% of U.S. consumers would be convinced to stay if the service gave them access to first-run movies, while 34% would stay if a loyalty program was offered. There may also be a potential upside to bundling services as 51% of Gen Z and Millennials would stay if their subscription included gaming, music, or another video streaming service option.
To prepare for the next generation, media and entertainment companies should be taking notes about how consumers socialize around entertainment, which is inevitably becoming more personalized, interactive, and immersive.
Netflix may already be starting to crack the code as they release more interactive titles, such as the upcoming “Trivia Quest,” however, it remains to be seen if that will be enough to keep young consumers engaged with streaming services.