Streaming services are finding it harder to keep their subscribers, according to the latest data from Parks Associates. This tallies with another report from earlier this week which suggested that higher prices were resulting in more people canceling more streaming services more often.
According to that earlier report, the number of cancelations across popular streaming services in November 2023 was higher than in the same month in 2022. Furthermore, around one-quarter of U.S. subscribers had canceled at least three major streaming services over the past two years.
The latest data from Parks Associates suggests the average annualized industry churn rate for streaming services was 50% in Q3 2023. With this being higher than the churn rate for Q3 2022 (46%) and Q3 2021 (47%), the takeaway is that more streaming services are finding it increasingly harder to keep their customers.
The data also suggests that pay-TV companies might be faring the worst overall, with just 5% of US internet households having only a pay-TV service. As Parks Associates explains, “legacy pay-TV companies continue to lose subscribers to streaming video services.”
In addition to the escalating cost issue, competition appears to be playing a factor here. With so many services to choose from, it would seem consumers are becoming more selective on which ones they remain with. A trend which now seems likely to result in companies looking for alternate ways to remain relevant in 2024 and beyond.
According to Eric Sorensen, Director, Streaming Video Tracker, Parks Associates. “Competition for attention is extreme, while the continued rollout of the ATSC 3.0 standard gives viewers even more options, so in 2024, we will see increased consolidation, mergers, and acquisitions as all providers must find ways to innovate alongside the greater emphasis on profitability.”
One of the ways some companies are already approaching this issue is through a greater focus on personalization. Specifically, a greater focus on hyperlocal content.
“The hyperlocal approach clearly attracts interest from consumers,” Sorensen said. “With the increase of AVOD business models, consumer adoption indicates that relevance is a key factor, namely consumers are likely to turn off services if the service and messaging are repetitive and irrelevant to them.”
An example of this hyperlocal approach is Neighborhood TV. A new streaming service from Cox that operates at the neighborhood level to offer users access to really local news and content. An approach that’s likely to become even more common in the future.
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