As the pandemic subsides so does the and people return to their normal activities, streaming services will be forced to show they can still captivate audiences, even when they’re not stuck at home.
According to a study by Kantar, as of June 2021, over 95 million households in the US have at least one streaming subscription. That number has remained consistent over the past year, and is expected by industry experts to stay that way.
Consumers have grown comfortable with the VOD lifestyle. Los Angeles resident Wing Lam, co-founder of Wahoo’s Fish Taco, told the LA Times, “As long as we can get movies at home, at the comfort of your house without having someone breathing on you and telling me what to do — we might wait a little bit longer [before going back to theaters].“
The United Talent Agency (UTA) released their own report based on a study of 1,000 US consumers’ media consumption plans for post-pandemic life. Sixty-seven percent of the respondents, who ranged from age 18-54, stated that they “plan to continue to spend more time consuming entertainment than they did before the COVID-19 pandemic.”
If consumers continue to consume more media than before, and their preference for doing so is home, then streaming services are poised to own a good chunk of the entertainment market. Yet with a new streamer launching seemingly every minute, there’s a lot of competition. How are these VOD and SVODs going to prove to investors that they’re still capable of captivating audiences when they aren’t stuck at home?
There are a few metrics for following the race of the streaming services – although some companies are being more obscure than others.
The majority of American homes – 52%, according to London-based Ampere Analysis – have three or more streaming subscriptions, and more than a quarter of households (29%) can boast an impressive five or more services. That number includes paid subscriptions, bundled versions, free trials or accounts used on a borrowed password.
During the pandemic, when shelter at home orders were in place, stacking subscriptions wasn’t just logical; it was practically mandatory to pass monotonous days or have common conversing grounds with friends and family. Yet as “normal” life returns and revs its engine, consumers are ready to give some subscriptions the axe.
The Screen Engine/ASI General Entertainment & Technology tracker tracks about 3,000 U.S. general entertainment consumers. According to their surveys, 32% of consumers said they were planning to cancel at least one of their streaming services in the first half of 2021. The main reasons for cancelling are: to save money, favorite content leaving the service, or a specific show ending.
Luckily for streamers, most consumers don’t plan on sticking with just one service. The UTA survey noted that “seventy-one percent of those surveyed said they plan to use more than one subscription video streaming service” post pandemic.
This challenges the idea that consumers won’t invest in multiple services (although they might not keep five.) With so much competition between streamers, how can we know who is leading the pack?
There are two main statistics that are being used to measure a streamer’s success: total subscribers and average revenue per user (ARPU).
The problem lies in transparency – not every company is clear about their metrics. While Netflix is the most transparent – clearly breaking out paying subscribers and ARPU by region, some companies, such as Apple, have kept their numbers under wraps. Most believe that a lack of transparency is actually a clear signal of weak performance – although in the case of Amazon, who has been equally obscure about it’s Prime Video ARPU and member numbers, it’s more likely due to the fact that their memberships aren’t exclusively about the VOD service.
NBC Universal isn’t particularly transparent with Peacock. However, unlike other streamers, they still offer free versions. Likewise, ViacomCBS hasn’t separated Paramount+ subscribers from their other streaming services, although both the CEO and CFO have begun to make definitive statements about ad revenue and regional tendencies.
Clarity on numbers for smaller services can also have a dual meaning. For Discovery, who has recently announced their merger with WarnerMedia, streaming metrics won’t matter so much until the deal has been finalized (although they have been transparent, perhaps to garner more investor goodwill). Starz, an often forgotten streamer, might be using transparency as a way to attract interest in a potential acquisition.
The Kantar report noted an interesting deviation about subscriber numbers as well: According to their research, Netflix has the highest proportion of subscribers who say that someone else pays (27.4%), compared to Disney+ (26.3%) and Hulu (23.1%) suggesting a lot of account sharing may be taking place.
There’s also the questionable habit of app-hopping, or signing up for a service then cancelling it when a free trial, sports season or specific show comes to an end. The same consumer may sign up for and cancel a subscription several times in a year, somewhat confusing signup statistics.
These sorts of trends complicate streamer standings, which is why ARPU, or average revenue per user, may be a more meaningful metric than total number of subscribers.
Whatever happens in the future, it’s clear that the pandemic changes everyone’s entertainment consumption habits. According to the UTA study, “consuming more entertainment during COVID-19 led consumers to explore and adopt more platforms, genres, and perspectives at an accelerated rate.” There is an obvious desire for variety and openness towards experimenting with new content, one which ought to delight entertainment creators and producers.
Distributors, on the other hand, will need to ensure that content libraries are poised to sustain these entertainment explorers’ appetites for unique and varied content – it might just be the key to staying competitive in the streaming service marathon that’s to come.