Evidence that consumers are suffering from subscription fatigue is mounting. Most worryingly for streaming companies, not only does the phenomenon exist, but the current financial climate seems to be exacerbating things. Recent research from the analysis firm Park Associates revealed that 29 per cent of what it refers to as “US internet households” are cancelling at least one service to save some cash.
As the graph below shows, the second most cited reason for cancelling a service was a user finishing the content they wanted to watch. Production disruptions caused by the ongoing Hollywood strikes are unlikely to help with this. We know from other research that younger customers in particular are happy to chop and change which services they pay for, presumably depending on what content is available. Meanwhile, many streamers are introducing ad-supported tiers and price rises.
Ultimately, the annualised churn rate for subscription services now sits at 47 per cent. Here is how Sarah Lee, Research Analyst at Parks Associates, described the situation:
Consumer focus on price and content underscores the pivotal role of value in consumer decision-making. When high-quality content is absent, subscriber churn becomes inevitable, making content diversity a cornerstone of profitable growth, along with consideration of pricing.
It is worth noting that is far from all doom and gloom. Netflix’s latest set of results showed that it added 5.9 million paying subscribers in the second quarter of 2023 as it cracked down on password sharing.
I think ads are great, and appropriate, on various platforms - YouTube videos, podcasts and more. Equally, I have always thought that one of the fundamentals of streaming was a deal between provider and customer - for a not insignificant monthly fee the customer can watch whatever they want, whenever they want, uninterrupted. The lack of ads was a very visible break from cable television.
Keep reading with a 7-day free trial
Subscribe to The Addition to keep reading this post and get 7 days of free access to the full post archives.