A quarter of American TV viewers say they can’t add another streaming service or content source to their plate
TV viewers are increasingly unwilling to juggle more subscriptions than they already have — calling into question what new entrants to the streaming landscape, including Disney and Apple, will need to do to pull eyeballs away from stalwarts like Netflix.
According to a new study from Hub Entertainment Research, about 25% of American TV customers believe they already have “too many TV services,” marking a 10% spike from the same time last year. Another 36% of respondents said they’d need to ditch at least one of their current services before considering adding a new one.
“People are hitting a [streaming] plateau,” Hub analyst Jon Giegengack told TheWrap. “This suggests new platforms that enter the market are going to have a higher bar to clear than maybe they had in the past, where people only had Netflix, so adding Amazon or Hulu wasn’t a big deal. Now, people are at a point where they think they need to cap [their total services.]”
Video subscriptions have started to level off in recent years, Giegengack said, with respondents using a total of 4.5 content sources on average. That includes cable or satellite services, free ad-supported services like Pluto TV and streaming services like the “big three,” as Giegengack refers to the triumvirate of Netflix, Hulu and Amazon Prime Video. Americans ages 18-34 are predictably using even more services, averaging a total of 5.5 content sources. Altogether, of Hub’s 1,631 respondents, viewers are watching 22 hours a week of content.
Put another way — there isn’t much room to simply fit in more services. That’s especially true for upcoming paid subscription services like Disney’s Disney+, as well as WarnerMedia and NBCU’s as-yet unnamed services.
“People are now at a saturation point where, to add something new, it’ll have to be more valuable than one [service] they’re using already,” Giegengack said.
So how do the new entrants overcome the first-mover advantage and carve out their own spot? Raymond James media analyst Justin Patterson thinks Disney might have found the right solution — with an initial $7-per-month subscription cost that’s significantly lower than competitors and the option of bundling its multiple streaming services.
“Disney has a pretty pragmatic strategy,” Patterson said. “Not only is Disney+ being introduced at an interesting price point, but Disney also alluded to bundling with Hulu and ESPN+. Right now we’ve had that initial phase of products entering the market by themselves, and I think bundling is the next opportunity to happen.”
Disney chief Bob Iger vowed back in 2017 that the Mouse House’s streaming service would be priced “substantially below” Netflix, and he stuck to his word. Disney+, when it launches in November, will cost $6.99 — or less than half of Netflix’s top membership plan. Disney’s ability to offer a bundle package that includes Hulu, which it now controls, and ESPN+, will also be a strong selling point, Patterson said.
Hulu has already experimented with a bundle package, offering a joint Hulu-Spotify subscription in the last year. Given the glut of new services, bundling may provide consumers more convenience. “There’s just a limit to how many services people are willing to spend on, and there’s even efficiencies in having one user name, one password, one bill for a variety of services,” Patterson said.
Another key to grabbing viewers will be “unique content,” Patterson said. Netflix has set itself apart with its slew of big-name originals, from “House of Cards” to “Stranger Things.” Hulu has Emmy winner “The Handmaid’s Tale,” as well other shows like George Clooney’s “Catch-22,” miniseries. Amazon has plenty of Emmy-winning originals as well, including “The Marvelous Mrs. Maisel” and “Transparent.”
For new entrants, having trademark shows will be key to not only grab viewers’ attention, but to keep them from quickly “churning” — dropping their subscription once they’ve binged a show — a move Netflix has mastered.
“Without a doubt, streaming fatigue will become a thing and churn will likely become a yet bigger issue,” former Warner Bros. exec Paul Hardart said. “The loyalty for consumers could potentially start to be more to specific shows than to the platforms that run them.”
Again, Disney might be best positioned among the newbies here, with an array of content that spans “Star Wars,” Marvel movies and TV shows and kid staples like “Frozen.” It’ll have enough programming to keep Disney+ attractive, Patterson said. The others will need to score their own versions of “House of Cards” to grab viewers. That, along with a competitive price and a potential bundle package, may be the best bet to make wary streaming customers consider adding another service to their growing list of Apple TV choices.
“[Over-the-top] video is in such early innings that you’ve seen services co-exist,” Patterson said. “As the industry gets more crowded and consumers have more choice, budget constraints will set-in and differentiation, whether it’s through content or bundling, will start to matter more.”