The global subscription streaming market should brace for a massive wave of customer cancellations in 2022, according to media analysis firm Deloitte Global.
International expansion coupled with a wealth of new streaming service options is giving consumers more choices, which Deloitte predicts will raise churn rates as high as 30% in some markets and cause 150 million SVOD services to be canceled next year.
However, it doesn’t mean the sky is falling.
“That’s the bad news. The better news is that, overall, more subscriptions will be added than cancelled, the average number of subscriptions per person will rise, and, in markets with the highest churn, many of those cancelling may resubscribe to a service that they had previously left. These are all signs of a competitive and maturing SVOD market. As SVOD matures, growth across global regions that may have different cost sensitivities will likely require different business model innovation and pathways to profitability,” wrote Ariane Bucaille, global technology, media and telecom industry leader for Deloitte.
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Deloitte estimated that in 2021, approximately 80% of U.S. households had a paid SVOD subscription with a churn rate around 35%. In Europe, where many U.S. SVODs have expanded service, churn ranged from 7% to 23% as of mid-2021 but next year, as the European market becomes more competitive, higher churn could be a result, though Deloitte expects it to remain well below 25%.
At the same time, in markets including Latin America and Asia Pacific, free or lower cost ad-supported streaming options have grown in popularity and that those services are focused on offering multiple pricing tiers and upselling free ad-supported users to paid tiers. Deloitte estimates India’s Hotstar has 300 million active users but only 46.4 million are paid subscribers China’s iQiyi has 500 million viewers but only 100 million paid.
“The Asian model may inform how U.S. services can expand globally and how providers in Europe, Latin America, and Africa can grow their own offerings. As SVOD matures in multiple markets, we predict that their growth will be increasingly based on ad-supported models, and that the metric for SVOD success will be less about subscriber count and more about overall revenue from all services and sources. This may favor media companies that offer more than just streaming video,” wrote Bucaille.