Streaming companies like Walt Disney Co (NYSE: DIS) Disney+, Paramount Global (NASDAQ: PARA) Paramount+, Hulu, and Netflix, Inc (NASDAQ: NFLX) are facing increasing challenges in retaining customers due to rising prices and cost-of-living concerns.
Consumers like Crystal Revis from Florida are canceling subscriptions to manage expenses, with customer defections across premium streaming services rising to 6.3% in November from 5.1% a year earlier.
About 25% of U.S. subscribers have canceled at least three primary streaming services in the past two years, a significant increase from 15% two years ago, the Wall Street Journal reports.
In response to these trends, streaming services deploy various strategies to retain customers. They are introducing lower-cost ad-supported tiers, bundling deals with rivals, and offering discounts or free months of service.
For instance, Hulu kept providing six months of its ad-supported service at a significantly reduced rate. Similarly, to control costs, a user from Texas downgraded his Netflix plan and canceled sports add-ons to his YouTube TV subscription, WSJ writes.
Many customers who cancel a service often resubscribe within a few months.
For instance, one in four customers who cancel a premium service typically return to it within four months.
Streaming companies focus on retention strategies, targeting ads and marketing efforts at specific times of the year to win back customers.
The introduction of ad-supported plans has proven effective, with many new or returning customers opting for these more affordable tiers, according to WSJ.
Disney+ and Netflix have seen substantial uptake in their ad-supported options, suggesting a shift in consumer preferences towards more cost-effective streaming solutions.