The pandemic influenced business and consumer ecosystems worldwide. New behaviors include wide spread adoption of cashless transactions, contactless shopping, Zoom calls, and virtual conferences. Today’s world differs significantly from the pre-pandemic norms of 2019. Deloitte’s new Technology, Media & Telecommunications (TMT) Report looks at our transformed landscape and offers insight into consumers’ TV viewing habits and video consumption and predictions for 2022.
While overall television viewing increased during the pandemic, that growth did not occur on linear TV. Deloitte’s report sees this year’s impact on TV broadcast as a tipping point. It attributes this to the changing television landscape to new platforms and rich content. The report cites declines in the U.K. and forecasts further decreases in 2022 across TV broadcast live, time-shifted, and on-demand. In all, the share of viewing in the U.K. for TV broadcasters will account for only 50% of video viewing on all screens.
As a result of declining viewership, broadcasters and cable networks are launching streaming businesses (i.e., Discovery+, Disney+, and Paramount+) to add reach and compete for viewers’ attention. Approximately 80% of U.S. households now have a paid streaming video-on-demand (SVOD)subscription, with roughly a 35% churn rate this year. Deloitte expects the younger European SVOD market to replicate the US model.
Consumers are price-sensitive and likely to find less expensive ad-supported offerings to manage their wallets. Deloitte estimates that at least 150 million paid subscriptions to SVOD services will cancel worldwide. However, Deloitte forecasts that consumers will add more subscriptions than cancel in markets with high churn. In fact, the average number of subscriptions per person will increase. Deloitte sees churn rates at 30% in the U.S. for 2022 compared to 35% in 2021.
Attracting and retaining audiences
Deloitte forewarns publishers that content development and acquisition costs are likely to increase. Therefore, the pressure to attract and retain audiences is a top priority. Their recommendations include:
Multiple tier offerings
Multiple pricing tiers will help protect against churn. Asia/Pacific offers multiple tiers from free, ad-supported video-on-demand (AVOD) to premium. They also provide service bundles with video, gaming, and music. Bundling different services allow providers to aggregate large audiences for advertising and helps prevent churn. Deloitte expects to see more multiple-tier and bundled offerings in the U.S. and European markets.
Partnering with telecom and cable TV operators offers access a sizeable mobile market. Partnerships can help SVOD providers with distribution, customer costs and offers a compelling bundled choice. Partnering with studios can help manage content development and attract a broader audience.
Better data usage
Use data to understand a customer’s lifetime value can develop more enduring relationships, especially with more-profitable age groups. Identify and track customer segments to create compelling content personalization, acquisition, and retention tactics. Establish a strong understanding of price sensitivity and content preference to find valuable subscriber segments.
Learn from the experts
Telcom and MVPDs spend years learning and managing churn. Leverage and learn from their expertise in maximizing customer lifetime value.
Manage a positive experience
Publisher SVOD services must deliver a valuable and positive user experience. It’s crucial to offer a good user experience from sign-up to cancellation.
Deloitte also reminds publishers to be flexible, be the prized alternative to the constraints of cable subscriptions and pay-TV. Churn is inevitable but controllable as competition grows in the marketplace.