Throughout 2020, families across the U.S. gathered in their living rooms to watch theatrical releases from the comfort of their homes. Consumers found that uncomplicated and welcomed the at-home streaming experience of highly anticipated films.
But as an industry professional, I knew that this release model was a glaring example of how the entertainment industry was undergoing a massive change. And that much of this change had only been accelerated by streaming.
During the past several years, industry incumbents have been joined by an array of new streaming providers. U.S. consumers are expected to pay upward of $41 billion for streaming services by 2024, a demand that seemingly justifies each new service launched.
Yet, reaching profitability was never expected to happen overnight.
Increased competition has forced providers to keep prices low even as they continue to pay top dollar to secure content. In 2020 alone, the combined number of U.S. subscribers for the major streaming services increased more than 50% year on year. Streaming releases of major films further supported subscriber growth.
Yet, with loosened restrictions and more vaccinations administered in the U.S., we are already seeing early signs of a return to pre-pandemic norms. How can streaming services succeed in an increasingly saturated market when people aren’t spending as much time watching TV?
Conquering the “Binge and Ditch” Mentality
Historically, streaming providers we’ve worked with have largely focused investments on acquiring new users or top-of-the-funnel tactics. Organic, unpaid strategies were relied on to drive retention. This was a sustainable approach when there were only three or four major players.
But with the increase in options, people are markedly less loyal to each provider. Employing a “binge and ditch” approach, consumers are willing to try — yet prepared to cancel — any service. It doesn’t help that acquisition tactics don’t allow existing customers to understand the full suite of content available. According to a Kantar Profiles and Facebook study, 57% of respondents say “It’s hard for me to remember which content (e.g., series, movies) is available on which streaming service.”
Consumers are constantly reviewing their subscriptions and are willing to cancel. To retain customers, providers should consider using engagement messaging to show subscribers content they may not be aware is available to them.
Retention to Reach Profitability
Today, businesses must not only acquire new customers but also retain them. This requires streaming services to rethink their marketing model. Owned and earned tactics will not be enough to maintain user loyalty, especially given the lack of awareness and loyalty across subscribers.
Rameez Tase, CEO and co-founder of Antenna, says, “Across the streaming landscape, a premium has been placed on overall subscriber growth. While acquiring new users is an important piece of the puzzle, it can become an unsustainable endeavor if a company struggles to retain its existing subscriber base.”
To remain competitive, businesses should shift their mindset away from just acquisition to a life cycle marketing approach.
How Facebook Can Help
With competition increasing in the streaming landscape and consumers starting to embrace a new normal, now is the right time to prioritize retention efforts to keep consumers engaging with a company’s service. While acquisition will remain a key strategy to continue growing a service’s subscriber base, implementing engagement and retention strategies will help improve profitability in the long run.
Facebook’s goal is to support our streaming partners to redefine the relationship they have with their users and develop a life cycle marketing strategy that focuses on sustaining growth for the long term. With our signal infrastructure and full-funnel solutions, we are equipped to support and drive measurable results at each phase of the subscriber life cycle.
Streaming Video User Journey Survey by Kantar Profiles (Facebook-commissioned online survey of 984 respondents 18-64, United States 2020) Base: Streaming Trialists.