Ad-supported video is continuing to pick up steam, with Netflix and most recently Disney debuting their first ad-supported tiers. But the rise of ad-supported content is also driving churn for subscription-based streaming services, according to data from Parks Associates and SymphonyAI Media.
The companies found nearly half of OTT subscribers hop from one streaming service to another multiple times over a 12-month period. Netflix carried the highest average subscription length of 48 months, despite the streamer’s subscriber declines this year. Amazon Prime Video, in fact, recently overtook Netflix as the most subscribed-to streaming service in the U.S., per Parks Associates data.
The increase in overall churn is perhaps unsurprising, as a TiVo consumer survey in October revealed viewers use on average up to 10 different streaming apps, with nonpaid services accounting for around 32% of that figure.
The reason consumers are constantly switching between services, according to Parks Associates, comes back to content, with nearly half (48%) of consumers citing content or a specific program as the primary motivation to subscribe to a new service.
For ad-supported streaming, niche content is key. Parks Associates indicated roughly 65% of viewers are looking for specific content that can only be found on a particular service. Just this month, The Roku Channel unveiled a free ad-supported streaming TV (FAST) channel for the NHL, the league’s first-ever linear channel that’s exclusive to the platform.
Thomas Schaeffer, senior contributing analyst at Parks Associates and author of the report, said in a statement as consumers continue to experiment across services, streamers should ensure they’re providing relevant and engaging content to subscribers.
"The lack of insight into content performance is a major hindrance to monetization, and the ability to get that insight has implications for an offering's bottom line,” Schaeffer added.
As the OTT space grows more competitive, Parks Associates suggests streaming services can give themselves an edge by leaning into a hybrid business model that blends AVOD and SVOD content. TelevisaUnivision’s ViX is one such example, with separate free and paid tiers falling under a single product offering.
The report added that while a hybrid streaming approach can appeal to more consumers and potentially offset slowdown in SVOD revenue growth, that model also makes it more complicated for streamers to collect user data, as they have to analyze multiple distribution channels.
"The rapid adoption of hybrid ad-supported and subscription revenue streams forces media organizations to reconcile complex data sources, formats, and requirements," stated SymphonyAI Media CEO Mark Moeder. "Deriving insight from this new data ecosystem gives content sellers and service providers clarity around the value of the content they seek to monetize."