The acquisition of new U.S.-based customers for some streaming services is slowing considerably, according to estimates from broadcast research firm Magid.
Why it matters: People are streaming more digital video than ever before, but they are less likely to continue to buy into new or additional subscription video on demand (SVODs) due to growing competition in the space, seasonal content needs and technical work-arounds, like password sharing.
By the numbers: Of the roughly one third (32%) of adults (18+) who do not currently subscribe to any SVOD service, only 4% of that group plan to subscribe to a SVOD service in the next 6 months, per Magid.
Competition: The field of streamers is becoming very crowded and not all consumers can afford to subscribe to all services.
- Magid EVP Jill Rosengard Hill says part of this has to do with the fact that younger generations in particular do not budget for more than one streaming service at a time. Instead, they jump between services to meet their content needs (i.e. when they finish binge-watching their favorite show).
Password sharing: Netflix and some of the other SVOD companies like Hulu are vulnerable due to the 18% of consumers that Magid estimates engage in password sharing, most of which are young adults.
- This practice is less likely to occur in the traditional Pay-TV (MVPD) space because hardware relationships (returning cable boxes) and outdated customer management makes it more difficult for consumers to cancel subscriptions.
Cost and efficiency: Traditional Pay-TV from cable and satellite services are becoming more sophisticated and are adding streaming packages and integration into their set-top box deals.
- Comcast’s Xfinity X1 and Altice’s Altice One both now have streamers like Netflix and Amazon seamlessly integrated into their interfaces and packages, making it easier and sometimes more cost-effective for users to use individual subscriptions for these services, as opposed to many SVOD subscriptions.
The big picture: Overall, Hill sees a net decrease in subscription growth to some of the most popular SVOD services.
“If you look at acquisition vs. retention, we saw in our study that when we asked the percentage of Netflix subscribers planning to cancel service in next six months vs. the number of people in next six months there was a negative 2% net change in subs.”
What’s next? Hill says younger people are less loyal to all subscription services overall, not just video: “Boxed services with easy technological sign-ups for food, clothing, etc., make it easier for consumers to dip in and out over these services. They will instead opt to have their needs met by different services in a seasonal fashion.”
Check out these other Magid articles:
- Subscriptions demonstrate momentum – but also pitfalls
- Millennials are going to extreme lengths to share streaming passwords, and companies are missing out on millions
- Cord cutting accelerates with millions more expected to leave pay TV for Netflix, Hulu, Amazon
- Netflix only takes up 8 percent of the time you spend watching video, but the company wants to change that