Streaming in a Global Cost-of-Living Crisis

A person holds a remote and watches a paused video on a TV, surrounded by a cozy living room. Text on TV reads: "1:04:09 / 1:55:32."

The Great Unsubscribe has hit many of the most well-known Subscription Video on Demand (SVOD) services. And while there are a range of factors that have contributed to these losses, some of which have even been recouped during Q3 of this year – the industry remains in a tenuous position.

Revenues are still down from their peaks, and with macroeconomic issues, such as ballooning inflation and the rising cost of living, people are being forced to choose between staying warm and being entertained.

Where’s all the money going?

There was a time when subscription services’ biggest competitor was, in fact, sleep. With so much quality content released regularly, people were going without shut eye to make sure they could catch it all. And, surprisingly, SVOD was winning.

The problem subscription services have now is subscription fatigue, which is at an all-time high. There are far too many options, with over 300 subscription services in the USA alone. With so many different costs and such a high number of services, customers are becoming overwhelmed.

This is then coupled with the ever-increasing number of people with financial worries. A KPMG survey revealed that inflation has already caused one in five of its respondents to cancel a subscription service. And, if the continuing upward trend of prices continues, up to 37% said they would drop one or all of their streaming subscriptions.

Finally, there is also service hopping to contend with. As many customers subscribe on a month-to-month basis, it is easy for them to switch between services to save money. For example, a premium show may appear on one service, and so they sign up briefly to watch it before canceling to sign up to a different service for another show. This means that subscription services must be careful when boasting about new figures as their spikes may not be wholly stable.

Adding ads to streaming

In a bid to stop falling revenues, a range of different models have appeared. Free Ad-Supported TV (FAST) services such as a Tubi and Freevee offer high-quality content that doesn’t require a subscription. Instead, customers have to watch unskippable ads throughout their programming. Fast by name, fast by nature, FAST models are some of the quickest growing on-demand services in the world right now.

Another alternative to SVOD is Advertising Video on Demand (AVOD). Similar to FAST models, AVOD is becoming a go-to for many of the larger, more well known subscription services. Customers pay a smaller subscription fee than they would normally, with the rest subsidized by the advertisers.

However, if the AVOD model continues to prove popular, and is profitable enough, it is possible that this could then transition into a FAST model. For years, streaming services were looking to gain subscribers rather than make profits. There has been a shift towards profits in recent years, but switching to a FAST model could be both lucrative and a way for some services to differentiate themselves to gain viewers.

The future’s alternatives

Another way streaming services are attempting to improve their finances is by offering bundles. This presents a great opportunity for those with subscription fatigue. Rather than sorting through a range of different options, they can instead get all of their entertainment needs from a single provider for a reduced price.

This option is still in its infancy, however. Some of the larger content companies own multiple subscription services, which makes it easier to bundle them together for a reduced price. It will take a while for smaller services to find ways to work together to deliver the synchronized delivery that makes the bundles worth the customers’ time.

Some thought the Great Unsubscribe was heralding the end for streaming services. While this has been revealed to not be the case, the industry has definitely entered a new era. But whether it will be AVOD, FAST or bundles that win out, we’ll just have to wait and see.

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