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Is there a ceiling for streaming services?

Is there a ceiling for streaming services?

Insights from Magid’s most recent Video Entertainment Study (VES) highlight the increasingly uphill battle facing media companies weighing their chances of competing in the world of streaming.

Given the myriad reasons to create a direct to consumer content offering, the consistent parade of announcements for new services should come as no surprise. As my colleague Debby Ruth underlines in her commentary on churn and today’s dip-in subscribers, paid SVODs have done a great job of fulfilling consumer expectations with extremely high levels of satisfaction across service features.

Most consumers are satisfied, but churn is still high, which leaves many to ask just how many services consumers are willing to subscribe to at a given time. According to our 2018 VES, consumers capped that number at six services for a total spend of $38 per month. Currently, most consumers subscribe to fewer than six services, leaving room for new market entrants in terms of consumer willingness to add a service, though it puts pressure on pricing in an era of exploding content spending.

Magid SVOD Ceiling VES 2018

With churn high and acquisition costs steep, media companies must seriously consider how they can deliver something consumers can’t live without.

4 essential considerations for streaming success

  • Understanding dip-in subscribers and their propensity to churn: as Debby points out—this is a real pain point for SVODs and she provides great insights on ways to address and/or mitigate the impact of this new behavior.
  • Developing a truly human-centered experience: what must you deliver to attract and retain subscribers?
  • Presenting an attractive pricing structure: how does your service stack up in terms of its value proposition? Will you offer unique content exclusives versus an extensive library of series and movies, or both?
  • Considering your go-to-market strategy: VES found a quarter of Amazon Prime video users have added, on average, 2.7 subscription services through the Amazon storefront. How can you build your ideal mix of direct or indirect relationships?

 

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