Streaming churn

Does More Content Actually Mean Less Churn?

Estimated content spend according to Wells Fargo:

1) Disney – $31B

2) NBCUniversal – $18B

3) Netflix – $17B

4) WarnerMedia – $17B

5) ViacomCBS – $15B

6) Amazon – $9B

7) Discovery – $7B

8) Apple – $6B

9) Sky – $6B

10) Lionsgate – $2B

estimated content spend

Big question #1: Why are streaming services spending so much on content?

Quick answer: The goal is to add subscribers and reduce churn.

 

Big question #2: Why is reducing churn so important?

Quick answer: Streaming services are paying $50+ to get new customers (CAC) and don’t break even for at least 5-10 months.

 

Monthly churn rate according to Antenna:

1) Apple TV+ – 16%

2) Peacock – 10%

3) Showtime – 9%

4) Starz – 8%

5) HBO Max – 7%

6) Paramount+ – 6%

7) Hulu – 5%

8) Disney+ – 4%

9) Netflix – 3%

monthly active churn rate

Quick math for Apple TV+ churn:

1) Monthly churn – 15.6%

2) Average subscription length – 6 months

3) Monthly subscription fee – $5

4) Lifetime value (LTV) – $32

5) Apple can’t spend more than $32 to acquire customers (CAC)

 

Quick math for Netflix churn:

1) Monthly churn – 2.5%

2) Average subscription length – 40 months

3) Monthly subscription fee – $14

4) Lifetime value (LTV) – $570

5) Netflix can’t spend more than $570 to acquire customers (CAC)

 

Why this matters: Netflix currently generates 18X the revenue/user compared to Apple leading to more revenue and the following cycle:

More revenue → more content → more customers → lower churn → more revenue

 

Big question #3: Why do people churn?

Quick answer: 37% of consumers sign up to watch a specific piece of content, and then ≈ 60% cancel after watching that piece of content.

churn around specific title svod

Top 5 events for net new streaming subscriptions in 2020 according to Antenna:

1) WW84 (HBO Max)

2) Hamilton (Disney+)

3) Black Friday promo (Hulu)

4) Greyhound (Apple TV+)

5) EPL + US Open (Peacock)

 

acquisition the biggest signup event

More #1: Netflix Strikes Deal With Filmmaker Steven Spielberg

More #2: Your streaming bill is about to get more expensive as platforms look to gobble up libraries of exclusive content 

More #3: Is rewatching old TV good for the soul?

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