Why Are Streaming Churn Rates So High? Cost Is A Big Reason

If you’ve ever dumped a streaming service because you finished the show you wanted to see or your introductory pricing expired, you are not along.

With the number of streaming services going up—CNN+ is the latest to join a slew of others launched in the past few years—and consumer budgets struggling to account for inflation and rising gas prices, subscriber churn has become a major concern for the streamers. And it’s not going to change anytime soon.

The latest edition of the Deloitte Digital Media Trends Survey, now in its 16^th year, finds that streaming video on-demand (SVOD) services continue to see a healthy turnover rate among subscribers. And that rate is even higher among Millennials and Generation Z, so-called digital natives who grew up with email, smartphones and Netflix.

“In the United States, the average churn rate [when people cancel or both add and cancel a paid SVOD service] has remained consistent since 2020 at about 37% across all paid SVOD services,” notes Kevin Westcott, vice chair, Deloitte LLP and U.S. technology, media and telecom leader.

He says there can be many reasons why someone cancels their subscription or resubscribes to a service they previously stopped using. A lot of them are practical.

“Many consumers churn because a service was too expensive, the free trail or discount ended, or because a service lacks new content they are interested in,” says Westcott.

Pricing can be a big factor The survey found that some customers considering cancellation would stay if the cost of the service was reduced. They would take a lower price in return for:

· Signing up for an annual subscription.

· Watching more ads.

· Waiting 45 days to watch a new release.

Services often offer discounts to draw people in, and when those stop, the consumers cancel their subscriptions. For instance, Apple has given away free subscriptions to Apple TV+ with the purchase of an Apple device, but consumers can stop without penalty after the free period ends.

Content, of course, is another big determinant of subscriber churn. If someone has been waiting for season two of Bridgerton but doesn’t have interested in any other Netflix shows, they could get a one-month subscription to the service, then cancel after binging the show. That also allows them to skip from SVOD to SVOD to sample content without racking up multiple streamer fees at once.

Interestingly, the churn rate in the United States is higher than in many other countries. Deloitte notes that in Japan, the UK, Brazil and Germany, rates hover closer to 30%.

Higher Churn Rates Among Younger People

Among younger people in the U.S., churn is even more common. Fifty-two percent of Millennials and 51% of Gen Z have canceled or added and canceled an SVOD service within the past six months. Westcott notes this reflects both their digital prowess and their lack of disposable income.

“In particular, Gen Zs and Millennials, who are technologically savvy and may have budget constraints, are churning or ‘churning and returning’ at a higher rate than the average,” he says.

Still, SVODs could find other ways to retain them. The survey found just over half of these age groups said they’d maintain their subscription if could bundle with a gaming or music service or another video streaming service.