Deloitte’s latest survey of digital media trends revealed that video-on-demand (SVOD) streaming services are under greater pressure to attract and retain subscribers who have become more cost-conscious and subscription-savvy.
Over the past 15 years, screen entertainment has expanded beyond TV and movies as streamers and studios struggle to attract and retain younger generations who flock to their smartphones, networks social media and video games for immersive experiences. Although SVOD has disrupted television and movies, the medium itself has not evolved enough to attract the new subscribers needed to continue growing like social media, according to Deloitte discoveries.
Social media has evolved into a form that offers a range of personalized content in various forms. It’s also purchasable, playable and, perhaps most attractively, free. As if social media weren’t engaging enough as it is, the best services are constantly generating new revenue streams, driving functionality and innovation, and, in turn, increasing consumer engagement and money.
As more and more major media providers launch their own video streaming services, two things have happened: competition between them has intensified and their value proposition to audiences is deteriorating.
Subscriber growth for major SVOD services has slowed in the North American market, something these services may experience as they tackle ever-changing global markets. Meanwhile, consumers face their own challenges – as they get their entertainment across the increasingly fragmented SVOD landscape, the amount of effort and money to do so increases. For example, consumers in the United States reported being frustrated when they have to manage multiple subscriptions, receive poor recommendations, and lose content to other services.
And that’s when consumers unsubscribe: they cancel or add and cancel, a paid SVOD service. The average churn rate in the US has remained constant at around 37% for all paid SVOD services. In the UK, Germany, Brazil and Japan, the overall churn rate is around 30%, Deloitte found.
Despite people’s attraction to SVOD content, they often leave because of the cost, especially Gen Z users. And because it costs money to acquire subscribers, losing them too quickly hampers the ability of suppliers to recover acquisition costs. Still, losing them doesn’t mean it’s permanent – around 25% of US consumers and around 22% in the UK, Germany, Brazil and Japan resubscribed to a previously canceled streaming video service within 12 months. Younger generations are more prone to churn and revert than older generations.
Deloitte says the reasons for this phenomenon vary by age; for some, a new season of their favorite show was released or desired content was moved to the service, and for others, a free period or a discounted rate lured them in. About 25% of respondents to the Deloitte survey cited cost as a consistent cause of their cancellation and renewal.
Many respondents who are considering canceling a paid SVOD service around the world say they are likely to keep their subscriptions if they could get a discount. In the United States, respondents considering canceling a paid SVOD service say they would stay if they were offered access to first-run movies (37%) or a loyalty program (34%) . For Gen Z and Millennial subscribers, around 51% say they would stay if the subscription included an additional game or music service or SVOD service.
According to the survey, watching movies and TV at home continues to be respondents’ favorite entertainment activity, especially for older generations. In the United States, United Kingdom, Germany, Brazil and Japan, playing video games was ranked as the favorite entertainment activity.
Although SVOD audiences are bigger than they have ever been, the social, interactive and shoppable experiences are taking consumers more time and money. Retention for SVOD services is also tested by social media and games. For many, social media is a form of entertainment, a way to connect with others, and a source of information.
Social media content, unlike SVOD, is bite-sized, can be highly personalized, and easy to interact with for a minute or an hour. In the United States, for example, almost 80% of social media users say they use social media at least daily, and 59% use it several times a day.
About half of US respondents watch more user-generated content (UGC) than they did six months ago, while half say they still end up absorbing more UGC than they used to. had planned. For Gen Z consumers, that number jumps to 70%. Additionally, approximately 40% of US respondents and 60% of Gen Z and Millennials watch more UGC than TV shows and movies on video streaming services.
The game also competes for screen time. More than 80% of men and women in the United States report playing video games, while 50% say they have taken time out for other forms of entertainment. Half of smartphone owners report playing games on their phone daily and these numbers are increasing for younger generations.
Games and music also seem closely related. About half of respondents to Deloitte’s survey said they discovered new music while playing video games. Part of that discovery involves the rise of in-game live events, such as when rapper Travis Scott performed in Fortnite for tens of millions of viewers around the world.
In-game live events provide unique opportunities for brands and artists to reach fans in countries or socio-economic conditions that would otherwise prevent them from attending. A Deloitte study found that up to 25% of US gamers, especially millennials and men, have attended an in-game event in the past year.
As vast global audiences connect to top gaming platforms, advertisers strive to reach and influence them through greater personalization. As Deloitte notes, digital clothing, skins and gestures increasingly include branded virtual goods. For example, as the metaverse expands, the ability to upgrade your avatar’s appearance with a pair of sneakers from your favorite brand or buy a designer handbag that you’ve always looked up to will be a real possibility. .
On the direction digital media is taking, the report says:
“A major shift is underway that could radically reshape the internets and economies. . . For now, video streaming, social media, and games are all very successful without full immersion, token economies, and universal interoperability. But the twin engines of capital and human behavior can drive irrevocably toward this type of limitless reality. Media and entertainment companies may need to collaborate more to create a future where they remain at the center. »