The COVID-19 pandemic lockdowns have had a rather lasting effects on the streaming behaviour of Australians – half of the subscribers surveyed indicated streaming for longer than prior to the pandemic. However, signs of subscription fatigue are starting to show. The Global Streaming Study by strategy consultancy Simon-Kucher & Partners shows that over one third of Aussie users (35%) are likely to cancel a subscription in the next 12 months.
“Streaming subscriptions are price-sensitive products. We do see customers cancelling their subscriptions because they don’t have time, but in a lot of cases, they have multiple subscriptions running in parallel, and the total cost of this gets expensive“ explains Lisa Jaeger, Partner and Global Head of Technology, Media & Telco at Simon-Kucher & Partners.
“Inflationary pressures and increasing saturation of the local streaming landscape is pushing many Aussies to reconsider their selection between subscription tiers and services. With an average of 2.8 paid subscriptions, 27% indicated the need to cut back on a streaming service as a key cancellation reason,” said Istvan Kovacs, Consultant at Simon-Kucher Sydney.
What were the findings of the study?
Of the respondents surveyed, 44% would reconsider keeping their subscription if offered at a lower fee, even if advertisements are shown. This opens the door to innovation within traditional streaming monetization, with hybrid models (subscription fees + ads) emerging as a promising solution. Key insights from Simon-Kucher’s Global Streaming research Study:
- One in five Aussies report finding it hard to manage the number of subscriptions they have.
- Price is the most common reason for cancelling a subscription. 44% cancelled to save money, and 31% cancelled because the price was too high.
- Despite making up a smaller portion of the total subscription pool, older users are far less likely to cancel a subscription. While approximately half of users under 30 have cancelled in the last 12-months, only 18% of user aged over 50 have indicated the same.
Users increasingly open to hybrid subscription models
Subscribers in the United States, India and China indicated the highest level of openness to advertisement monetization models, with at least two-thirds of users likely to stay if introduced. However, Australian and European subscribers were observed to be more conservative, averaging between 35% and 52% acceptance. Netflix dominates the Australian streaming landscape, with 79% of respondents indicating subscription to the platform.
Specifically, these users display an above-average acceptance for a hybrid model between subscription fees and ads. Over 70% of respondents would not necessarily cancel their subscription if ads were shown. However, of these users, 14% would expect no price increases for the next year and 31% would expect a lower price in return for accepting ads.
“New monetization models can be a way for providers not to lose even more customers. A monthly subscription fee plus advertising, or completely different hybrid models which have been known for a long time from music streaming, such as Spotify, are also conceivable. This is at least from the user’s point of view, for streaming films, series and so on. Advertising is not necessarily a reason for termination, but prices that are too high are,” says Jaeger.
Opportunity for regional customization of portfolios
While all content types have become more popular, most streaming time is spent watching TV shows. 48% now spend more time streaming TV shows than they did pre-pandemic.
Another avenue for improvement to user experience lies in regional streaming portfolio customisation. Although films are the most popular in all countries, there are differences in the second and third most watched categories; Documentaries are more popular in Brazil Germany, and Netherlands, while drama and comedy TV shows score higher in Australia. These differences in the categories indicate different user segments between countries.
“In addition to television shows, sports remain a crowd favourite amongst Australian viewers, and global streaming providers will need to ensure regional customisation efforts target these potential subscribers with relevant and innovative content,” Kovacs concluded.