Streaming Subscriptions Are Up—But So Is Churn

Nearly one-quarter of U.S. consumers added a new video service during the pandemic

a tv set on an orange and purple striped background
Consumers are canceling and trialing different streaming platforms more in quarantine. Getty Images

Key insight:

It’s well documented that the ongoing Covid-19 pandemic led to record-breaking streaming viewership as U.S. consumers spent more time watching programming at home under widespread lockdowns. The ongoing pandemic has also intensified adoption of streaming video subscriptions, according to new data from Deloitte. But it may also be intensifying churn rates for streamers as consumers examine their discretionary spending.

In May, 80% U.S. consumers subscribed to at least one paid streaming video service, Deloitte reported in the 14th edition of its Digital Media Trends report, released today. That number of is up from 73% at the end of 2019, showing just how much the pandemic has affected the subscription streaming video landscape.

Overall, 23% of U.S. consumers say they’ve added a streaming video service since the Covid-19 pandemic began. However, 9% of those consumers both added and canceled at least one new paid streaming video service, the highest percentage for other paid subscription categories like news media or streaming music services. Since the pandemic began, 17% of subscribers have canceled a streaming video service.

The new data offers a clear picture of the effects of Covid-19 on the streaming video landscape because it pulls data from right before the pandemic’s beginning and just as some states began to reopen. The report was intended to be released in March with survey results from late 2019, but Deloitte held the results until it could complete a May survey to compare the effects of the pandemic on consumer behaviors. It’s an indication both of the opportunity for new streamers and the new challenges those businesses must adapt to as consumer viewing behavior and economic concerns continue to shift.

“Generally, everything that we saw happening before the pandemic accelerated,” said Kevin Westcott, Deloitte’s vice chairman and U.S. telecom, media and entertainment sector lead. “We saw the acceleration of people using streaming services, which is probably obvious because we had more time, and as we saw more use of streaming services, we saw an increase in overall subscriptions. But we also continue to see more churn. As people continue to add more subscriptions, they’re replacing them, not necessarily just adding and adding.”

Overall, subscribers now have an average of four paid streaming video subscriptions, up from three average paid streaming video subscriptions in 2019. The rise in streaming adoption is highest among boomers (consumers born between 1947 and 1965): 69% of boomers subscribed to at least one paid streaming video service in May compared to 54% prior to the pandemic’s start. Other age groups, with higher instances of having at least one paid streaming video subscription, saw low single-digit increases in the survey’s timeframe.

The continued economic effects of Covid-19 may apply pressure on streamers looking to keep customers around. Thirty-six percent of consumers said their reason for canceling a paid streaming video service was because it was too expensive. One-quarter of consumers said a free or discounted rate was a major factor in choosing a paid streaming video service, while 35% of consumers who canceled a subscription video service said they did so because a free trial or discount ended.

Thirty-nine percent of consumers said they had seen a decrease in their household income since the beginning of the pandemic, and Westcott said discretionary spending like in-home entertainment may come under more sustained consumer scrutiny if the economic recovery is anemic.

That economic pressure, though, may end up working in free ad-supported streaming’s favor. Nearly 50% of U.S. consumers said they use at least one free ad-supported streamer, and 43% of them said they’d prefer a free ad-supported streaming service. Less than a quarter (22%) said they’d prefer a subscription fee and limited ads.

But there’s still a place for ad-free subscription video services: 35% of consumers don’t want ads and will pay to avoid them. Gen Z and millennial consumers were more likely to prefer subscription-only services, while older consumers preferred free ad-supported options.

“We were predicting that this was going to be the year of ad-supported streaming in the industry, and what we’re seeing is an acceleration of that trend as well,” Westcott said. “And the No. 1 reason is economics and the fact that consumers can watch for free.”

That’s some good news for ad-supported streamers, many of which are presenting to marketers during the Interactive Advertising Bureau’s virtual NewFronts this week.

@kelseymsutton Kelsey Sutton is the streaming editor at Adweek, where she covers the business of streaming television.