Young “power users” turn to ad-supported video, user-generated content, and gaming as their frustrations with SVOD persist.
Streaming video-on-demand (SVOD) providers are in a battle to attract new subscribers and retain the ones they have. Meanwhile, consumers have a seemingly endless array of digital entertainment options at their fingertips—all vying for their attention, time, and dollars.1
To better understand this battle for consumers, we examined a subset of our Digital Media Trends study sample—the most voracious of consumers who might be considered digital media power users.2 Power users are those who use social media services at least daily, are frequent gamers who play daily or weekly, and are subscribed to six or more paid streaming video services. This cohort of power users are more likely to be young, have higher levels of education and income, and have children at home—making them high-value customers for SVOD providers.
But these providers may have a problem. Consumers have frustrations with their SVOD experiences, and they are turning to alternative digital media activities like free ad-supported and social video, and gaming.
Still, these consumers spend heavily on SVOD—with the average power user subscribing to nine different services—but they have frustrations related to cost, experience, and value. More than 60% of power users say they pay too much for streaming video services (compared with 40% of nonpower users3), and about half have plans to reduce the number of streaming video service subscriptions they have (compared with 29% of nonpower users). They also say it’s difficult to find the content they like to watch across different services and that SVOD content recommendations are often off the mark.
Power users are so frustrated with these issues that they’re nearly twice as likely as nonpower users to say they’d be willing to share more personal data about their interests to get higher-quality content recommendations on streaming video platforms.
All these factors may be contributing to the substantial subscriber churn among these digitally savvy consumers.4 In fact, the churn rate among power users is 58%, nearly double that of nonpower users (33%).
But they aren’t abandoning video content entirely: Power users seem to be leaning into ad-supported video on demand (AVOD) services and user-generated video content (UGC) online. The average power user has four AVOD services in the household (compared with nonpower users who average two), and nearly 70% say they watch more ad-supported streaming video services now than they did a year ago. Similarly, most power users (72%) say they spend more time watching UGC than TV shows and movies on streaming video services. The social feeds that power UGC are highly attuned to user preferences, which may be meeting power users’ desire for a more customized and tailored content experience.
Other video formats aren’t the only rivals: Power users are spread thin in terms of their digital entertainment preferences. They are more likely than their nonpower user counterparts to follow online influencers, use social media for shopping inspiration and purchasing, subscribe to a streaming music service, and value the social aspects of playing video games. Nearly 70% of digital media power users say gaming has taken time away from other entertainment activities.
So how can streaming video service providers stay in the good graces of these power users, increase time spent on their platforms, and reduce churn?
Digital media power users show clear interest in AVOD services and UGC for video consumption. SVOD providers might consider adding ad-supported tiers to their overall strategy, and reexamining their content offerings, to keep these power users in their orbit.
For power users, relevance equals retention. These consumers show a preference for more relevant content recommendations and tailored ads, and they’re more willing to give up their personal data to have it. If they consent, build out the mechanisms to analyze user preferences and surface better, “stickier” suggestions. For streaming video providers, this means more engaged viewers and more data for potential monetization strategies.
Streaming video providers have stiff competition for audiences—across both big and small screens. Much of this competing content is free of charge. How can streaming video companies make their subscriptions competitive and make sure consumers get high-quality content in exchange for their money? Streamers might also consider bundling more video, music, and gaming services with their subscriptions to keep consumers on their platforms and give them the added value they are seeking.
Deloitte’s Technology, Media & Telecommunications (TMT) industry practice brings together one of the world’s largest group of specialists respected for helping shape many of the world’s most recognized TMT brands—and helping those brands thrive in a digital world.