Remember when everyone was obsessed with Tiger King? Or, more recently, as friends and family exhorted that you must start watching Yellowstone? Perhaps you, like millions of others, started Googling the cost of Peacock and Paramount Plus subscriptions (and possibly shopping for Stetsons). It’s happening again this month as the Oscar bump surrounding Everything Everywhere All at Once is driving a surge in streaming across Showtime and iTunes platforms.
While the fervor surrounding these breakout hits has helped catapult more than a dozen different streaming services into the spotlight almost overnight, there are a couple of big problems hanging in the balance that should be keeping the purveyors of today’s hottest content awake at night. The hit show halo doesn’t last very long. Once the must-see mania surrounding the latest pop cultural phenomenon dies down, many streaming customers are left with a clunky, disjointed user experience that is widely perceived to be too expensive.
User data confirms this. According to J.D. Power data, many streaming-service customers pick and choose their subscriptions based on the content available. Nearly one-third (29%) of live TV streaming customers said they selected the provider because they had content they wanted to see compared with only 8% for cable/satellite TV subscribers.
That’s fine when a highly anticipated original series like 1923 premieres, or when a box-office darling like Top Gun: Maverick is finally available at the push of a button, but it leaves streaming platforms susceptible to a wide ebb and flow in their subscription numbers when the content luster loses its shine.
Streamers Don’t Stick
While streaming customers are generally more satisfied with their experience than cable or satellite customers, these subscribers aren’t quite as likely to stick around for the long haul. This was clear when we asked why consumers subscribed to each individual service.
Overall, 61% of Paramount Plus subscribers, 55% of Discovery Plus homes and 52% of Peacock subs said they chose these platforms because they had content they wanted to see. These percentages were also high for Starz (49%), HBO Max (46%) and Netflix (45%).
In comparison, just 29% said the same of Amazon Prime Video and 35% of ESPN Plus. These two services could be outliers for many reasons, specifically how subscribers interact with them. Prime Video is given free of charge to all Amazon Prime subscribers, a rite of passage for most households. And ESPN Plus is part of the Disney bundle that includes Disney Plus and Hulu, so many subscribers purchase all three for the monthly deal.
For others, it’s a tenuous position in which no one — not even a platform as ubiquitous as Netflix — is exempt from widespread subscriber volatility. Between paying for content — both legacy and original — customer acquisition, infrastructure and a host of other unseen costs, most services are squarely in the red. The only antidote to those losses is padding the subscriber count, and with customers constantly being swayed by the latest hits, the recipe for steady, consistent growth remains unclear.
Meanwhile, the very business model that gave birth to many of today’s biggest hits is being challenged as streaming services and Hollywood studios cut back on programming and shelve many small-to-mid-budget projects. Together, the simultaneous trends of streaming service proliferation and austerity measures in Hollywood are putting an increased reliance on a handful of blockbuster hits that is likely to severely limit the number of streaming services who can survive for the long haul.
Earning More Loyalty
The nature of streaming isn’t likely to change all at once, but there are incremental steps services can take to combat some of this volatility.
For starters, user interfaces need to be more intuitive and universal. According to our data, the user interface is exceedingly important to live TV streaming customers, consistently ranked among the top three most important key performance indicators. Eliminating the steep learning curve that comes from getting acclimated with a new streaming service would go a long way to addressing some of customers’ most common pain points.
Even more than a clean interface, streaming services need to find a way to provide value at their price point. A la carte television hasn’t quite lived up to the promises of a decade ago, where customers would be able to pick and choose their content and save money along the way. More than half (56%) of live TV streaming customers in the U.S. say they choose their plan because of price, and it’s not uncommon for streaming customers to have more than one subscription. As these platforms contemplate a crackdown on password sharing and continue to make content decisions that are grounded more in their bottom line than making compelling television for their customers, services run the risk of leaving those customers feeling like their dollar isn’t stretching quite as far.
Back to the Future
As the industry is inching to a tipping point, it feels like the future of streaming is in transition. As parent companies quickly try to recoup losses by propping up ad-supported models — making the future of television look an awful lot like the past — customers may become more discerning about their monthly streaming allotment.
That means that a competitive field is going to get a lot more cutthroat. While content will always be king, the platforms that listen to their customers and meet them where they are will have an easier time navigating the uncertainty. And in an era of consolidation, that might make all the difference between existing five years from now and not.
