Loyalty becomes a “sticking point” in a competitive streaming environment
Much of the coverage on streaming services focuses on total Subscriber growth. Often, total Subscribers is the only publicly available metric for subscription media businesses.
But much of the value created is by subscribers who stick around, paying their monthly subscription fees over and over again.
New Subscribers Still Subscribed After 12 Months
Our data shows that, in today’s competitive environment, retaining users has become more difficult than ever.
- While Netflix remains best-in-class at their ability to retain users, the % of new Subscribers still Subscribed after 12 months dropped by 5 percentage points between 2017 and 2019.
- The only increase in 12-month retention was for new Hulu Subscribers in 2018, primarily due to a deep discounting strategy ($0.99 / month Black Friday promotion) which had a hugely positive impact on loyalty.
New Subscribers who Cancel Within 3 Months
Our data confirms this trend when we examined Churn Rate for new Subscribers. The % of new Subscribers who cancelled within 3 months of Subscribing also increased meaningfully for many services in 2019.
- HBO Now 2019 spike was content-driven (Game of Thrones, final season).
- Showtime and Starz 2019 spikes were promotion-driven (Amazon Channels offered a 50% off promotion for these services).
- Netflix 2019 spike was driven by its Q1'19 price increase. See our full analysis of Netflix Churn Rate here (LINK).
The takeaway: Subscriber growth will always be worthy of attention but the bulk of value is created by retaining those new Subscribers. Understanding how different behaviors correlate with loyalty may be the single most important driver of value for subscription media businesses today:
- When did my most loyal users sign up?
- What else are they subscribed to?
- How much are they paying for those services?
- What type of content are they consuming?