Subscription Services Scramble to Keep Customers
Video streaming subscriptions is a growing business that experienced huge growth during the pandemic as people were stuck at home and entertainment offered a welcome escape from reality. According to the 14th Edition of Deloitte’s Digital Media Trends Report, subscribers now have an average of four paid streaming video subscriptions, up from 3 in the pre-COVID survey. While this is great news for popular streaming services such as Netflix, Disney+, Apple TV+ and HBO Max, competition is heating up with new providers coming onto the scene on a regular basis, which has put pressure on companies to keep their content and pricing relevant.
Despite being subscribed to multiple services, consumers regularly add and cancel new services, as they are on a quest for value. In an effort to lure consumers to subscribe, many providers entice them with free trials and low introductory rates hoping that they will try the service, have a good experience and then stay and pay. Some consumers, however, binge watch shows during this free trial period and then immediately cancel before being charged, which lowers the retention rate. So what can providers do to acquire and retain customers?
Providers must offer a broad range of programming
Deloitte’s survey identified that the best way to attract potential users is to offer a broad range of TV shows and movies, as well as original programming that can’t be found anywhere else. Here are the top reasons people subscribe:
Broad range of shows and movies (51%)
New original content not available elsewhere (45%)
Previously released content not available elsewhere (27%)
Free trial or discounted rate (24%)
Ad-free viewing experience (17%)
Shows and movies appropriate for children (16%)
Bundled with other services (15%)
Providers must offer competitive pricing
Often when consumers sign on for a free trial, they analyze whether the service is worth the money. In fact, cost is the #1 factor in determining whether or not someone sticks with a service, so providers need to make sure they are competitively priced. 36% of consumers surveyed said they canceled because it was too expensive and 35% canceled because the free trial or discount period ended. Other top reasons consumers cancel is that the content that motivated them to subscribe in the first place has been completed (24%), content disappears from the platform (17%) or they have subscribed to a new service (17%). If consumers don’t get entertainment that keeps them interested long enough, they will likely replace it with another service, which goes back to the original point about keeping content broad and fresh.
Include ad-supported streaming in the mix
Although streaming services in the US favor monthly subscriptions with no ads, this trend could shift, as 47% of US consumers currently use at least one free ad-supported streaming video service. On the other hand, 35% are willing to pay to avoid ads. Gen Z and Millennials are more likely than other generations to pay for ad-free services, while Boomers and Matures prefer the free ad-only options, which resemble the TV they are used to. However, in aggregate, 43% of consumers want ad-only streaming services. Providers will likely need a mix of both to stay in business.
What about video gaming?
Video gaming subscriptions are also gaining in popularity. 52% of Gen Z and 46% of Millennials said they binge game weekly for an hour or more in a single session. Deloitte reports that 29% of consumers say they are more likely to spend time playing a video game rather than watching a video. While only 7% subscribed to a gaming service for the first time during the pandemic, that number is certain to increase as time goes on. In addition to playing video games, people are watching video game content, such as how-to videos and game walk-throughs. Professional athletes have even been interacting on their own video game play.
What will happen post-pandemic
With anxiety and uncertainty prevailing about whether or not to venture back out to entertainment events, streaming services are likely to hold strong. Comfort levels vary by age, with nearly half of Gen Z and half of Millennials being more comfortable attending live sporting events in the next 6 months compared with 36% Gen X, 28% Boomers and 27% Matures. Regardless of who decides to get back out there, there is still a market for subscription services. During the pandemic, 38% of consumers tried a new digital activity or subscription for the first time and more than ⅔ plan to continue with the service. To stay relevant, providers will need to remain competitive on price and content.
How to manage subscription overload
For customers looking to cut back on costs, managing subscriptions can be a good place to start. ApexEdge can help your customers by cancelling their excess subscriptions and in many cases getting money back. Partner with ApexEdge to pass along this added value to your customers. Click this link to find out more: https://apexedge.com/subscription-cancellation.
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