Consumers are juggling more subscriptions today than ever before.
Across certain categories, ownership is slowly becoming a thing of the past. This was highlighted when Microsoft revealed all ebooks purchased will be deleted in July 2019.
Today, it’s about gaining access to media, rather than purchasing it.
The growing list of subscription services is probably most notable in the entertainment industry, dominated by Netflix, Amazon Prime Video and Hulu.
But competition is heating up with heavyweights such as Apple, Disney and WarnerMedia preparing to launch their own TV streaming services with an abundance of original content up their sleeves.
But some big questions remain: how many subscription services can users viably take on? And how can streaming services lock consumers in?
Our research sheds light on consumers’ subscription behaviors and uncovers whether subscription fatigue really is on the horizon.
Entertainment is the sweet spot for subscriptions
One of the reasons online TV gained momentum is because consumers gradually moved away from traditional TV in search of more flexibility and choice.
But the idea of “cord cutting”, or moving away from cable, should really be taken with a pinch of salt. We’ve seen a gradual decline in those who pay for a traditional TV subscription.
From our global research, 69% of U.S. and UK internet users paid for a traditional TV subscription in Q1 2016 compared to 62% in Q1 2019. So it’s not that consumers have “cut cable” completely because many consumers actually want and use both, moving between the two simultaneously.
There’s demand for subscription services with around 80% of internet users in the U.S. and UK paying for at least 1 subscription per month.
The greatest appeal lies in online TV subscriptions and it’s not hard to see why. Access to a variety of on-demand, fixed-rate content is very tempting. Especially as consumers have greater freedom and choice when it comes to where, when and what they watch.
Our data shows interest in subscription services isn’t the same across all categories though. Around half of internet users in the U.S. and UK pay for a recurring subscription for films/TV (e.g. Netflix), making it the top subscription category.
The demand for entertainment subscription services is clear to see, with music and gaming also having a place here too. The only non-entertainment category that really makes a splash is shopping, which services like Amazon Prime have pioneered. The categories that struggle are dating, education and children’s products.
With over 300 streaming video services to choose from, consumers have some choices to make.
We know unlimited access to content (55%) and getting access to content they can’t get anywhere else (40%) are primary motivators for using entertainment subscriptions.
Streaming services recognize this and that’s one of the reasons they’re investing heavily to produce award-winning entertainment. Over the past few years, Netflix has built out its original content offerings, whilst Disney is now taking full control of Hulu, all in a bid to make their streaming services more compelling for viewers.
With the good, comes the bad
Despite the huge uptake of subscriptions services, consumers still express some dissatisfaction.
The biggest frustration is the sheer cost of managing multiple services (36%).
Even though some subscriptions are modestly priced, it all adds up. As more services enter the mix, how far will consumers be willing to stretch their wallets to get the content they want?
The second biggest peeve for consumers is their favorite shows disappearing from platforms (29%). This is happening more frequently as studios pull content from major streaming services to launch their own.
For example, Disney plans to pull all of its movies from Netflix in 2019.
We’re likely to see this become more commonplace as more studios develop their own subscription services, creating even more fragmentation. For some consumers, this might reduce the value they receive and they’ll have to decide if they can live without their favorite shows or go elsewhere.
Bundling services together at a discounted price is one potential way of keeping consumers engaged and creating more value. Disney, for example, could offer a bundle for their Disney+, ESPN+ and Hulu services.
Building on the issue of fragmentation, just over 1 in 4 consumers say they’re frustrated because the content they want to watch is spread across different services.
Many consumers are essentially building their own content bundles using a variety of different streaming services. In turn, this frustration might actually encourage users to turn toward digital piracy to get the content they want.
Additionally, around 1 in 5 say the choice of content is overwhelming. There’s an interesting tension here for consumers because they value unlimited access to content, yet struggle with the vast amount of content available to them and how to navigate it. Personalization is crucial here to help consumers access the content they want, quickly.
Is subscription fatigue becoming a reality?
To address the question on everyone’s lips, is subscription fatigue really an issue or is it all hype?
The answer isn’t straightforward.
We can see there’s an appetite for content as around 47% of consumers say they would pay for another entertainment subscription service if it was something they were interested in. However, we’re also seeing red flags; 33% of consumers say they wouldn’t pay for another because they have enough and a further 10% say they would cancel an existing subscription first before subscribing to another.
To top this off, around 3 in 4 consumers feel they have just the right amount of subscriptions while close to 1 in 5 say they have too many subscriptions.
The main challenge facing streaming services is the need to demonstrate value to consumers, to the point where consumers feel they simply must have it.
We know consumers might only adopt a new subscription by dropping another, which puts even more pressure on services to show value. Consumers will have to choose which services are worth footing the bill each month.
Although the subscription model gains a lot of attention, it’s not suited to all industries. A key determinant of this in film/TV streaming services is the recurring value created in the breadth of content appearing on the services.
The fragmentation of the film/TV streaming landscape and the withholding of content across services threaten to undermine that recurring value, unless the substance of that value can move from diversity of content to a larger catalog of shows. For example, will a large catalogue of Disney content prove as valuable to consumers as a large body of content from different media and entertainment companies?
The big players are well aware there’s a chance fatigue could set in. They’re trying to overcome this by focusing on content scale, exclusive content and competitive pricing to win over consumers. Disney, for example, went for a modestly priced $6.99 per month, a price that undercuts Netflix. It remains to be seen how these newer streaming services will fare with consumers, so watch this space.