Cost, Content Drive Consumers’ Media Choices

Today’s consumers have an abundance of entertainment options and may quickly drop one streaming media service for another. For providers, attracting and retaining subscribers requires offering the right mix of experience and value

Consumers are managing – and paying for – a growing number of entertainment services. As they chase their favorite content and seek to contain costs, people are showing strong interest in ad-supported options. At the same time, subscription fatigue and suboptimal user experiences are causing some consumers to cancel their subscriptions and jump to competitors – or to other forms of entertainment. All these issues are driving subscriber churn and posing challenges for media companies vying to retain audiences.

Of the more than 2,000 consumers Deloitte polled for its annual “Digital Media Trends” survey, 46% say that a low enough price is the most important factor in deciding to subscribe to a new paid streaming video service. This is a significantly higher percentage than those who list content as their main consideration. While some consumers have lost income or employment because of the COVID-19 pandemic, many are looking to balance costs across multiple paid entertainment services.

Eighty-two percent of consumers subscribe to a paid streaming video service. When asked which factors would motivate them to cancel a paid video, music, or gaming service, respondents most often cite an increase in price, although interesting nuances emerge among different media types.

This cost sensitivity is driving more consumer interest in ad-supported entertainment options that subsidise or remove subscription fees. Among survey respondents, 55% say they now watch a free, ad-supported video service.

The survey also polled consumers about their frustration with media services. Sixty-six percent of people say they are dissatisfied when content they want to watch is removed from a service, and 53% are frustrated by having to subscribe to multiple services to access the content they want. Consumers also face difficulties finding content – a challenge for providers spending billions on new productions. Among respondents, 52% find it difficult to access content across so many services; 49% are frustrated if a service fails to provide them with good recommendations.

These challenges reinforce subscriber churn, which from October 2020 to February 2021 held at a rate of approximately 37% for streaming video services. Churn erodes ROI and customer value, making retention essential. Consumers with greater cost sensitivity may want subscriptions with more pricing options based on usage and ad tolerance as well as an easy way to move between tiers to meet their needs and level of engagement. Meanwhile, a stronger, more customised user experience could make it easier for subscribers to find content that fits their interests.

As they determine their next steps, media companies can ask the following questions:

• How can we get closer to customers to deliver engaging content, pricing, and advertising?

• Can we predict churn better, and then use membership perks to entice hesitant subscribers to stay?

• If younger people are engaging less with traditional video formats, does this represent a potential sea change for our business?

• How can we best leverage our intellectual property to engage with audiences on other entertainment platforms and attract them to our services?

Entertainment leaders who consider such strategic questions may be better positioned to respond as the industry continues to evolve. By understanding what people’s needs and preferences are now – and where they might be headed – providers can determine the most effective ways to create lasting consumer engagement and fuel long-term growth.

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www.deloitte.com/mt/consumer