Streaming Services’ Subscriber Churn: New Data Insights

Streaming Service Customer Churn
Cheyne Gateley/VIP+

Any subscription service has a churn rate — the proportion of subscribers who cancel every year. In order to keep growing, a service must attract more subscribers than the ones leaving.

For subscription streaming (SVOD) services, churn is part and parcel of the game. A recent study conducted by Maru Group for Variety Intelligence Platform suggests that most major SVODs see 10%-20% of their subscriber footprint not currently subscribing to the service.

While these figures may seem large, it’s worth noting that SVODs mostly operate on a monthly subscription basis, with low barriers for consumers to exit their subscriptions. Audiences can be drawn to subscribe to watch specific programming, including cyclical (i.e., sports such as the NFL), movie title-driven (“Hamilton” on Disney+ or “Wonder Woman: 1984” on HBO Max) or feature stand-alone miniseries (“Little Fires Everywhere” on Hulu or “The Undoing” on HBO Max), only to exit shortly after they’ve finished what initially attracted them to sign up.

VIP and the Maru Group found that a fifth of adults 18+ had canceled a service after signing up to watch a specific title. With competition among streaming services growing, both in terms of more market entrants from major entertainment and technology companies and big-name movies and miniseries to attract viewers, the battle for viewers is heating up.

This is encapsulated by recent data from analytics firm Antenna, which shows the majority of major SVODs saw a churn rate in April of between 4% and 7%. The outliers on either side of that were Netflix, which saw just 2% of its U.S. subscribers cancel service, and Apple TV+, which saw 16%.

A major way to gain new subscribers is to offer a free trial, at least for those services that have one (Disney+, Netflix and HBO Max did not offer a trial in March, when Antenna collected this data). Antenna found this strategy had varying degrees of success for SVODs, with over 4 in 5 trialists going on to subscribe to Peacock and Discovery+ but fewer than 3 in 5 doing so for Apple TV+ and Showtime.

Getting new subscribers is expensive. SVODs are constantly airing ads on traditional TV in order to attract new subscribers or inform current subs of new content. Advertising analytics firm iSpot shared data with VIP+ for the estimated monthly spend across SVOD services. The first 24 days of May saw an estimated total value of $56.9 million for SVOD ads. But that’s far below the $160.4 million seen in December 2020, the month with the highest spend in the last year.

Discovery+ has the greatest spend estimate across the period, having only launched in January with $272.3M, but it should be noted most of that ran across its own cable networks. Discovery spent a far lower amount, $41.7 million, in April, the same month Antenna data had its churn rate pegged at 7%

With more services competing for subscribers, ad spend to attract them will increase and subscription cancellations should remain a factor. This may reduce if there are consolidated SVOD bundles in the future, like an HBO Max and Discovery+ bundle. Until then, it will remain expensive to attract new subscribers and churn will continue to be an issue without a real solution.