The not-so-great news: Streaming services’ churn rates — which averaged about 20% pre-pandemic and declined a bit early in the pandemic — are now at 37%.
The good news: Just 3% of those canceling video services are not replacing one service with another, according to Deloitte’s latest annual Digital Media Trends survey.
Also falling in the not-so-great news category, at least for entertainment companies betting billions to launch and grow new streaming video services: Gen Z’s favorite entertainment activity is games (26%), followed by listening to music (14%), browsing the internet (12%), engaging on social platforms and in fifth place, watching TV or movies at home (10%).
Also, close to half (46%) of respondents across generations say that video games have taken away from other entertainment time.
“In a world of limitless choice, consumers can easily jump to competitors or other forms of entertainment as they weigh cost, content and ad tolerance, making it challenging for media companies to earn consumer loyalty and cultivate enduring customer relationships,” sums up the report.
Still, watching TV and movies at home remains the favorite entertainment option overall, with 57% ranking it among their top three out of 16 entertainment activities.
Also, 82% of U.S. consumers report subscribing to at least one paid streaming video service, and the average subscriber now pays for four such services. That percentage is up slightly from the pre-pandemic period, although down from five services in mid-pandemic.
Content (35%) and cost (46%) are the most important factors in deciding to subscribe to a new paid streaming video service.
Asked what factors caused them to cancel a paid video, music or gaming service, an increase in price was the biggest reason.
But 52% say they find it difficult to access video content across so many services, while 49% are frustrated when a service doesn’t make good recommendations for them and 53% say they are frustrated by having to subscribe to multiple services to access the content they want.
Two-thirds of consumers say they get frustrated when content they want to watch is removed from a service.
Premium video-on-demand — paying a separate premium fee for early home viewing of a new movie — is a bright spot. Among those who have tried PVOD, 91% say they would rent again.
“Media and entertainment companies with a deeper understanding of customer concerns about content, cost and ad tolerance across all entertainment options and generations can cultivate long-term relationships and reduce churn,” sums up Kevin Westcott, vice chairman Deloitte LLP and U.S. technology, media and telecom leader.