The year 2023 saw a significant rise in the number of customers unsubscribing from major streaming services, with approximately a quarter of subscribers cancelling at least three services within the past two years.
According to Forbes, the overall attrition rate for premium streaming services stood at 6.3% as of November 2023, marking an increase from the previous year's rate of 5.1%. These figures were provided by Antenna, a market data platform that gathers third-party consumer information related to online purchases, bills, and banking, with the consent of the consumers.
Among the leading streaming services, which include Apple TV+, Discovery+, Disney+, Hulu, Max, Netflix, Paramount+, Peacock, and Starz, about 25% of American subscribers terminated at least three of these subscriptions over the last two years. This represents a substantial increase of approximately 10 percentage points from the 15% recorded two years prior.
In response to the rising trend of users opting out, streaming services have been employing strategies such as offering bundles and packages inclusive of ads to attract new users. This approach proved successful in 2023. For instance, nearly 60% of new Disney+ subscribers or those who had just completed a trial period opted for the package that included ads. Similarly, over 33% of new Netflix users in the United States in November 2023 chose a subscription with ads, a significant increase from the mere 11% recorded the previous year when the ad-inclusive tier was introduced, as reported by Forbes.
This strategy is particularly appealing to streaming services as it not only attracts customers with the prospect of lower fees but also generates additional revenue from advertisements.
Despite the increasing number of cancellations, not as many people remain disconnected from these major platforms as one might assume. Forbes noted that one in every four subscribers who cancel their premium streaming service resubscribe to the same platform within four months. Furthermore, 33% of those who cancel return within seven months, and if they do not return within this period, there is a 50% chance they will return within two years.
"Retention doesnt just mean holding on to a new subscriber the first time they get them. Its about managing a relationship over a true customer lifetime," commented Jonathan Carson, co-founder and chief executive of Antenna.
The report also highlighted that companies like Warner Bros. and Disney have a good understanding of their users' habits. They know that bundling packages and services is an effective way to retain users. Disney reportedly stated that customers are less likely to cancel a subscription when they pay for Disney+, ESPN+, and Hulu together.
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