Can Bundles Tackle the Streaming Churn Dilemma?

As the streaming industry continues to evolve, the phenomenon of subscription churn has emerged as a pressing concern for providers. According to a recent study by Ampere Analysis, a staggering 42% of U.S. consumers engage in what’s termed as SVoD resubscription—subscribing to streaming services to catch specific shows, only to cancel and then return later.

The Shift to Bundling in Streaming Services

The Bundling Advantage

What stands out from Ampere’s research is the stark contrast in churn rates between standalone service subscribers and those opting for bundled packages. For instance, subscribers who had previously churned from Disney+ but later returned to the Disney+/Hulu/ESPN+ bundle showed a 59% reduction in their likelihood of cancelling again within 12 months compared to those who merely subscribed to Disney+ alone. This reinforces the hypothesis that bundling services can significantly mitigate churn.

Recent trends indicate that providers like Disney, Warner Bros. Discovery, and Comcast are increasingly embracing service bundling, offering multiple platforms under a single subscription. This approach not only makes it more convenient for users but potentially saves them money as well.

Consumer Insights on Churn

Ampere’s findings reveal that consumers demonstrating this resubscription behavior tend to be younger—specifically, individuals aged 18-44—often residing in family households and consuming media at a much higher rate than the average viewer. However, this demographic also exhibits signs of subscription fatigue; they are 40% more likely to feel overwhelmed by the array of services available and 21% more inclined to seek unified access to content across different platforms.

Understanding Media Consumption Trends

The Upsell Opportunity

Ampere’s analysis highlights an interesting consumer landscape, suggesting that only 15% of subscribers for Disney+, Hulu, or Max engage with all three platforms simultaneously. Similarly, a mere 10% of Comcast’s mobile, broadband, and TV customers subscribe to all three services among Peacock, Netflix, and Apple TV+. This indicates a substantial upsell opportunity for the streaming industry as providers can tap into a discouraged audience eager for consolidated viewing options at more attractive prices.

The Business Case for Bundling

As the Streaming Video on Demand (SVoD) market becomes increasingly saturated, acquiring new subscribers presents a greater challenge, making retention strategies critical for service profitability. “As the SVoD market in the U.S. has become increasingly saturated, new subscribers are harder to find, which makes retention all the more important,” shares Daniel Monaghan, Research Manager at Ampere Analysis. He highlights the substantial potential for income growth if companies can curb resubscription behaviors among their user base.

“Reducing this behavior would boost platforms’ top and bottom lines,” Monaghan emphasizes.

Ampere’s research indicates that bundle-takers experience significantly lower churn rates than non-bundle resubscribers. In fact, resubscribers who opted for the Disney bundle in early 2023 were less than half as likely to churn within a year compared to those who only subscribed to standalone Disney+. This trend is likely to influence future strategies as more platforms recognize the benefits of collaborative offerings.

Conclusion: A Path Forward for Streaming Services

The growing prevalence of streaming bundles may provide a viable solution to the pervasive problem of subscription churn. While individual services may draw viewers initially, the benefits of comprehensive packages that offer diverse content could prove instrumental in retaining customers long-term. As we navigate a landscape characterized by rapid shifts in viewer preferences, the industry’s commitment to recognizing and adapting to consumer needs may ultimately determine who thrives in the competitive streaming space. The need for industry players to stay attuned to these trends has never been more crucial, and the future of streaming may well hinge on the adoption of bundling strategies.

In a period where consumer choice is at its apex, facilitating easier access to diverse content through bundled offerings may be the key to turning the tide in streaming service success.