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State of the Screens

Does More Content Actually Mean Less Churn?

By June 25, 2021January 19th, 2022No Comments

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?

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.

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