Earnings season is officially underway, and Eunice Shin is concerned about the streaming service owner’s ability to retain subscribers.
“In a world where economic uncertainty remains and content quality continues to be based on hits and a lot of bombshells, how we think about customer churn and how these streaming platforms retain their hard-earned customers is under increasing competition. In a world that is increasingly competitive with price?” Shin, a partner at strategic consulting firm Prophet who has advised companies such as Disney, Warner Bros. and NBCUniversal, said on the latest episode of the Digiday podcast.
That’s a big question, and one that’s all the more urgent now that the streaming market’s focus has shifted from subscriber growth to profitability. After a pandemic-induced surge in streaming subscribers, that growth started to slow in 2021 and slowed further in 2022, to the point that Netflix actually lost subscribers. Then, with the looming threat of a recession and a potential recession, investors turned their attention to the company’s spending on streaming — and often at a loss — questioning whether streaming’s subscriber numbers were commensurate with its programming costs.
That’s why Shin keeps a close eye on streamers’ subscriber churn.
“If you think about all these streamers that have launched – most of them during the pandemic – because people have spent a lot of money to acquire these customers, that means not only marketing dollars, but also content invested in content Funding to be able to lure people to these platforms, how do they retain them… Although you think about user growth, if you have high churn, it’s like one step forward and one step back two steps,” she said.
Below are some highlights from the conversation, edited for length and clarity.
That’s always been Netflix’s strategy, to give you a sense of volume. Once you’ve watched “Emily in Paris,” it’s really important what happens next and what gives you, “Am I coming back tomorrow or am I going to feel like I don’t need this streaming platform this month?
ideal churn rate
Everyone has been trying to keep it under 5%. That’s the ideal state.
The Rebundling Era of Streaming
We are once again entering a world of rapid aggregation. Everything we’ve seen before in the cable world, I think we’re going to find ourselves in a streaming aggregation world of, “How do we show incremental value to consumers by signing up for something that’s more expensive, but that gives you more ?
Free, ad-supported alternative to streaming TV?not so fast
I don’t know if it’s too much dagger throwing, but I think [free, ad-supported streaming TV] Service will only resonate with a certain number of generations in our population.If you look at Gen Z behavior, none of them turn on Pluto [TV] Watch old reruns of “Gilligan’s Island” or whatever. That type of content doesn’t resonate.