Deloitte study: consumers spend almost 30% more than last year on streaming video on demand services

Aurel Constantin 12/06/2024 | 11:32

Households’ average monthly spending on streaming video on demand (SVOD) platforms has increased by almost 30% compared to last year, from 48 to 61 USD, amount which covers an average of four subscriptions, according to the 2024 Deloitte Digital Media Trends study. Monthly costs vary strongly across generations, with Millennials reporting subscriptions worth 67 USD, almost in the same range as Gen Z (63 USD) and Gen X (62 USD), while Boomers (53 USD) and Matures (37 USD) are at the opposite end.

 

But consumers’ tolerance to price hikes seems to be approaching a peak, as almost half (48%) of the participants to the study would cancel their favorite paid SVOD service if monthly prices went up by 5 USD. Price is still the dominant factor in assessing a paid SVOD subscription, as 36% of those surveyed say the content available on streaming video services is not worth the price. In this context, ad-supported subscriptions, which are cheaper, attract more households (46% subscribe to at least one ad-supported version of a paid service).

For SVOD providers, the most important challenges remain acquiring customers, reducing churn (the percentage of consumers who have cancelled any paid SVOD service in the previous six months) and deepening retention on their services, the study points out. Among the solutions that providers use to combat churn, the study mentions using advertising revenues to reduce subscription costs, increasing bundles and offering reduced rates for year-long contracts. Average churn has softened to 40% from 44% last year, though it remains considerably higher for younger generations – 54% for Millennials and 52% for Gen Zs.

Social media are not only an increasingly stronger competitor for SVOD providers, but they also shape consumers’ expectations from digital media and entertainment. Thus, almost 50% of the surveyed viewers would spend more time on streaming video if it was easier to find content and more than half of those aged under 41 believe they get better recommendations for content to watch from social media than from streaming services, thanks to their data-driven and algorithmic approach. Also, 47% of Gen Zs and a third of Millennials say that their favorite form of video is user-generated content (UGC), such as social media videos and live streams on social media platforms, as well as content distributed by trusted online creators.

Audiences are becoming increasingly diverse and they actively seek out entertainment content that is inclusive and representative. Nearly 70% of all consumers surveyed say that they enjoy watching TV shows or movies that help them learn about cultures different from their own, and nearly half of all respondents say they expect TV shows and movies to show the same physical and racial diversity they see in the real world.

When it comes to gaming, which is described as another force that is shaping consumers’ expectations, the study highlights that, although this industry is often perceived to cater more to men and boys, in reality, just as many women play video games (60%) as men (62%). Gaming time has increased from an average of eight hours to nine hours per week.

“The study shows that streaming video services still suffer from high costs, churn and competition from social platforms and gaming. The costs that SVOD bear for acquiring subscribers are high, and the costs of reacquiring those who have churned can be even higher, so the solution is to focus more on retention. This objective could be achieved by increasing engagement through more personalized experiences, by expanding their presence and influence across gaming platforms and, especially, across social media. The growth of the creator economy and social entertainment is reshaping media and, although social media platforms compete for audiences’ attention, they also offer marketing channels to media and entertainment companies,” said Andrei Ionescu, Consulting Market Leader, Deloitte Romania, and Leader of the technology, media, and telecommunications industry.

The 2024 Deloitte Digital Media Trends report has been conducted on over 3,500 US consumers, aged 14 and older.

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Aurel Constantin | 28/06/2024 | 12:25
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