Change is afoot in the world of TV.
Netflix has seen 970,000 subscribers cancel during Q2 – the first time the company had ever experienced two consecutive months of subscription losses. They’re not the only ones to have issues though. Even Disney+ has met challenges keeping subscribers. After the release of Hamilton in July 2020, they drew in new customers, only for almost 30% of them to unsubscribe just a month later.
So why are people dropping their subscriptions? And what might encourage them to reconsider?
1. Streaming is having to compete for people’s time
When the pandemic hit, being locked down at home led more people to spend time watching TV, causing a boom in the number signing up for streaming services.
Since then, however, the world has opened up again and people have more options for how to spend their free time than they did during 2020 and 2021.
On average, people spend as much time watching TV streaming every day as they did in Q2 2020, however other forms of media also made gains during the pandemic – like gaming. So streaming is competing with all other forms of media for the finite amount of time everyone has.
This could be why the average number of streaming services people subscribe to has gone down from 3.4 in 2020 and 2021 to 2.6 in 2022.
2. The cost-of-living crisis has people rethinking their outgoings
The rising cost of living is hitting people hard.
90% are feeling the impact of inflation right now, however small.
A quarter have started thinking about the cost of in-home entertainment, and potentially ways to cut back. That’s behind more pressing concerns like food, housing, and transport, but our data shows that consumers have been growing more concerned about the cost of streaming for some time.
In the US, the number who feel that streaming subscriptions are getting too expensive has grown by 50% since Q2 2020.
And right now, cost is a key factor driving people to cancel – whether the price is too high, they’re paying for too many, or they’re not using it enough to get value for money.
But there are things brands can do in response to keep their customers.
Something that might make subscribers more likely to keep their TV subscriptions is the option to pay less for an ad-supported tier. Almost half support this idea, and considering that only a fifth of consumers say they actively try to avoid ads, the trade-off is probably worth it.
This is something that Netflix is going to introduce – and has worked for many of their competitors like Hulu, Paramount+, and Peacock. If nothing else, it may also soften the blow of any further price hikes.
3. Some feel the binging model isn’t attractive anymore
We’re seeing attitudes shift in our data – the number in the US who prefer streaming services where episodes are released weekly has grown 31% since Q2 2020. It’s a sign that people are a little tired of the binging model and miss the excitement of waiting a week for the next episode to drop.
“Binging is, oftentimes, more of a solitary activity. Weekly drops feel more social because there’s more of a conversation that builds up, creating a sense of anticipation.”
says Myles McNutt, a Canadian TV critic and associate professor in the department of communication and theater arts at Virginia’s Old Dominion University.
Another issue with releasing all episodes at once is that the show can be viewed as disposable or forgettable, even when people love them. This can impact revenue, with consumers often buying a subscription for a few months, then unsubscribing. Viewers who join a service right after a big release tend to leave significantly faster than the average streaming customer.
While binge watching is a solitary activity, many feel that following a TV show can be a social activity – among those who use second screens while watching TV, around a fifth like to share their opinion of a show, something which is easier done while other people are tuning in at the same time.
Netflix has taken this into account lately and has been releasing episodes in batches for select shows, rather than releasing them all together for our binging pleasure. It’s a subtle way to encourage customers to subscribe for months, rather than watch all new episodes in one sitting, then cancel.
This method also helps bridge the gap between big releases and leaves fans less time to wait between the next season drop – making canceling less attractive.
4. Good quality content is better than lots of average content
The glue that holds this whole industry together is the content. Not enjoying content is one of the biggest factors driving cancellations. Over a quarter in the US feel that most shows on streaming services aren’t worth watching, with just over 1 in 5 of these consumers saying they mostly watch TV on services like Netflix and Hulu. So there’s a big customer base, but many are left feeling unsatisfied.
Streaming services need to look at which content gives people a reason to sign up, and existing customers a reason to stay. If it isn’t worth watching, then it isn’t worth paying for.
It’s all well and good to say consumers need good quality content, but we need to look closer at what content consumers are actually looking for.
One trend worth keeping an eye on here is the growing popularity of foreign content.
Since Q2 2020, the number in the US who watch subtitled or dubbed foreign language shows has grown 18%.
Anime, despite always having a strong foothold outside of Japan, is now one of the fastest-growing TV genres in our data, with the number who watch it growing 30% since Q2 2020.
This trend has been building for some time. You probably remember Parasite, the South Korean film that swept up at the 2020 Oscars. And in 2021 it took just four weeks for Squid Game to become the most-watched Netflix show ever released in any language.
The popularity of foreign content has led to predictions that at least half of European Netflix and Amazon Prime Video subscribers’ viewing time will be spent watching non-English language content by 2030.
Streaming services should take note – foreign content is only going to become more important down the line. As younger consumers’ content preferences continue to change based on the connections they make with others around the world, that’s going to do away with cultural barriers in media.
In turn, this may prompt a rethink of what “localization” might actually mean for international campaigns and distribution.
The streaming landscape in a nutshell
Change is afoot, but if streaming services do the right things, they can take advantage of the situation.
- People have less time to watch TV now and have become more selective. This means that the battle for their attention is likely to become more intense.
- The cost-of-living crisis is hitting people hard. Now is the time that people are looking to make cutbacks. Providing a cheaper tier of subscriptions supported by ads is likely to be popular right now.
- The binging model isn’t working for everyone anymore – many got that out of their system during various lockdowns over the last two years. The number in the US who prefer streaming services where episodes have scheduled weekly releases has grown 31% since 2020.
- Content is key. Potential subscribers need to have a reason to sign up and current ones need a reason to stay. In the last couple of years, foreign content has risen in popularity and is likely to become more important down the line.
