Have you signed up for Netflix, Disney Plus or HBO Max just to watch one new show or movie — then canceled for a few months until the next must-see thing comes out?
Now there’s a name for this behavior: “churn and return,” a term coined by consulting firm Deloitte. It’s most common among younger generations: Nearly half of millennials (47%) and 34% of Gen Z in the U.S. canceled and then resubscribed to the same streaming video service within the following 12 months, according to Deloitte’s latest “Digital Media Trends” study.
Among Gen X consumers, 25% say they’ve engaged in “churn and return” in the last year, while the rates are even lower among Boomers (6%) and Matures (3%), Deloitte found.
The relatively high churn-and-return rates among younger generations means subscription VOD services are losing out on revenue they might otherwise have been able to capture, said Kevin Westcott, vice chairman of Deloitte and the firm’s U.S. technology, media and telecom leader.
According to Westcott, subscription VOD providers need to develop growth strategies that include both social video and social gaming to minimize churn rates. Netflix, for example, has launched an effort to expand its SVOD service with video games — bundled into the core subscription — and recently acquired its first gaming company, Night School Studio.
“While streaming video will continue to gain momentum… these companies will also need to address churn and retention among diverse segments in different markets,” Westcott said.
On average, the six-month churn rate for SVOD services in the U.S. has remained stable at between 36%-38% throughout the pandemic, according to the Deloitte research. The top reason consumers say they dropped an SVOD service was due to the price; No. 2 was because they finished a specific show they signed up to watch, the study found.
The latest Deloitte “Digital Media Trends” study is based on a survey of 1,102 U.S. consumers 14 and older, conducted in August 2021.
Other findings from Deloitte’s most recent survey:
- 84% of U.S. consumers say they’re still spending more time on online entertainment activities and less on in-person entertainment outside of the home; 48% say they spend more time on online entertainment versus six months ago.
- 84% of respondents say they have a subscription VOD service; the average household has four SVOD services, largely unchanged during the past year.
- 65% of U.S. consumers say they watch free, ad-supported video services.
- Gen Z consumers still rank “playing video games” as their No. 1 preferred form of entertainment, whereas Boomers and Gen X still say “watching TV shows or movies at home” is their favorite entertainment activity.
- 65% of respondents say they are frequent gamers, playing an average of around 12 hours per week. Gen Zs and millennials on average play 13-14 hours weekly.