Subscription Fatigue: How Streaming Services Can Keep Customers Happy Street Fight

Subscription Fatigue: How Streaming Services Can Keep Customers Happy

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Streaming is big business, and looks to only keep expanding in 2024 and beyond – with more players, more dollars to win, more subscribers, and a proliferation of new ad tiers.

Eighty-three percent of Americans have at least one streaming service subscription and the average American subscribes to four services. For streaming platforms at first glance, this looks like good news. For consumers, it can lead to subscription fatigue — the overwhelm felt by subscribers of multiple products and services. This can leave streaming platforms with a fight on their hands to hold on to their paying users and protect their revenue.

In a study completed in Q1 2023, data revealed that the annual churn rates averaged more than 52%, which has risen quite a bit since November 2022. But why are consumers canceling their streaming subscriptions, and what can streaming platforms do to prevent or reduce churn and retain customers?

Getting to the crux of cancellations

Consumers are feeling the pinch of rising inflation and trimming extra streaming subscriptions has turned into an easy way to cut costs. Assuming you’re eschewing the ad-free plans and paying full-price, a standard Netflix plan costs $15.49 per month, a Hulu plan with ads costs $7.99 per month, ad-free HBO Max costs $15.99, and an Apple TV+ plan costs $9.99 per month. That’s already nearly $50/month, not including other subscriptions or taxes.

With the ‘growth by any means necessary’ approach, eight out of the 10 Premium SVOD services have announced or implemented price increases since the start of 2022, with most of these coming in 2023, prompting many customers to vote with their feet.

But it’s not just about cost. With so many subscriptions, viewers may struggle to get the most value out of all of them – or simply become bored sifting through the content on offer. Users, depending on their preferences, have access to a list of over 800,000 unique titles on streaming platforms in the US alone. Data suggests that streaming viewers spend up to three hours a week looking for content and that almost half of respondents (48%) have canceled a service if they couldn’t find something to watch.

The challenge of “switcher” mentality

Viewer loyalty is shaky. The ease of canceling a subscription, alongside the offers or free trials available through competitors has meant consumers are increasingly staying light on their feet. Data from 2023 revealed that 22% of subscription video on demand (SVOD) subscribers fell into the category of “serial churners” — those who canceled any premium SVOD service three or more times in the previous two years. Roughly 28% of those who canceled their subscription then switched to a competing streaming service. There is some consolation that a significant 35% of those who canceled their service re-subscribed after 12 months.

The range of choice has also left viewers more savvy and selective about their subscription choices with some only subscribing for a month at a time to binge-watch the new season of Stranger Things or Reacher. This complex user behavior ups the ante for streaming platforms. What can they do to combat subscription fatigue and churn and make sure they engage potential switchers before they even consider jumping ship?

Curbing the churn

There are strategies at hand for streaming platforms keen to combat subscription fatigue and churn, and these can be summarized into three main categories.

  • Value: Streaming platforms can augment customer value by offering bundle deals or discounts for long-term commitments. Disney+, for example, offers a deal that includes Hulu and ESPN+ for a lower price than subscribing to each platform separately. Netflix also offers a range of plans that vary in price, quality, and number of screens that can be used simultaneously.
  • Personalization: Streaming platforms can tailor recommendations to user preferences and behavior, creating a sense of connection for their customers, as well as keeping them entertained. This is the holy grail for most users, with over four fifths (81%) of viewers expecting streaming services to provide highly personalized experiences. Spotify, for example, uses algorithms and human curation to create personalized playlists and podcasts for users, based on listening history and preferences. Similarly, Amazon Prime Video uses machine learning and user feedback to recommend content that suits its users’ tastes and preferences.
  • Uniqueness: Streaming platforms can create original content that attracts and gives customers a sense of exclusivity, augmenting engagement and loyalty. Netflix, for example, distributes original and exclusive content across different genres and formats, such as Stranger Things, The Crown, Black Mirror, and The Queen’s Gambit. Similarly, Apple TV+ focuses on content that features high-profile celebrities and creators, for example, The Morning Show, Ted Lasso, and Oprah’s Book Club.

With challenge comes innovation

Dollars are at stake, with the streaming market predicted to grow annually by over 7.5% until 2027. New players entering the streaming industry must adapt and innovate at breakneck speed to keep up with the changing landscape, and the rising expectations of their customers. Subscription fatigue and churn are not going away anytime soon, and they will continue to challenge streaming platforms’ performance and profitability.

However, subscription overwhelm and churn also represent opportunities for streaming platforms to improve and enhance their offerings, enriching customer experience and winning loyalty. Those that understand customer behavior, provide personalized and original content, and value support for their customers, will find a competitive edge.

Alex , Product Strategy and Ops at AppsFlyer. Built on the idea that brands can increase customer privacy while providing exceptional experiences, AppsFlyer empowers thousands of creators and 10,000+ technology partners to create better, more meaningful customer relationships.
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