Welcome, winter 2025. Determined early risers will bundle up in their warmest gear to catch first tracks and have a celebratory beer in the lodge at the end of the ski day. But that’s not quite what this Industry Voices column is about. We’re back in this new year, talking streaming video and what’s in store for our industry.
If you’re reading this, it’s likely no surprise to you that 2025 will be the year where Subscription Video On-Demand (SVOD) bundles and partnerships proliferate within and beyond media. The streaming providers and partners that catch first tracks will have a clear edge. But the real keys to success will be trial, measurement, and the ability to iterate until a winning formula is uncovered. Here’s some fresh data and perspective on what consumers say will keep them from cancelling their subscription when the show ends.
Appealing to the cost-conscious subscriber
As the inflationary economy perpetuates, there remain many cost-conscious consumers who are focused on managing their expenditures. To put the situation in perspective, the average price of groceries is 36% higher than it was before the pandemic. And according to the U.S. Bureau of Labor Statistics, housing prices are up nearly 5% in the 12 months ending October 2024 compared to the prior year. This is a significant contributor to budget concerns as housing alone makes up about one-third of the consumer price index. Unfortunately, these economic realities will continue to impact discretionary spending in 2025.
Streaming is not immune to these economic pressures.
According to Circana’s latest TV Switching Study, 14.2 million households reported cancelling an SVOD service after the TV series or movie they signed up for ended. The three most common cancellation reasons were all cost related. That is, not wanting to pay for services they don’t use, saying they would keep it if it was less expensive, and cancelling to manage expenses. This demonstrates the importance of strategies to mitigate subscriber churn through delivering incremental value or discounts in return for larger and/or longer subscriber commitments. So, it should be no surprise that 23% of households already subscribe to one of the currently available discounted SVOD bundles, and 25% say they are likely to sign up for one in the coming six months.
When developing a product strategy, it’s important to note that the key features and messages that resonate with consumers are saving money, a customizable bundle, and only paying for what you want.
But this will quickly become table stakes in 2025. There are multiple subscriber cohorts and addressing value seekers alone only speaks to the average consumer. There are numerous reasons to look beyond the simplicity of bundling multiple SVOD services. We’re going to focus on two: Casting a wider subscriber acquisition net and satisfying the needs of heavy subscribers so it disrupts their impulse to cycle subscriptions.
Retaining the multi-channel subscriber
Households with an above average number of subscriptions cycle them much more frequently and are looking for more than just a discount.
This highly engaged viewer accounts for 15% of SVOD households. And they have an exorbitant number of subscriptions, specifically nine or more. These viewers are up to three-times more likely to subscribe and then cancel right after the program they signed up for ended. They also cycle subscriptions more frequently as they are tuning in and out of platforms when they air the show they want to watch. In contrast to the average subscriber, these highly engaged consumers are less cost conscious; they are looking for more TV series, movies, and sports.
For many providers, producing and licensing all that programming will not be financially feasible. That’s where partner benefits come into play. As bundles evolve, there is an opportunity to offer additional benefits such as free sporting event tickets, early event access, and free movie rentals. Indeed, these are the kind of perks that these subscribers say would keep them from cancelling.
Partnerships beyond media
Remember that grocery statistic from a minute ago - the average price paid is 36% above 2019 prices? That may lend some perspective into why Walmart, Kroger, DoorDash, and Instacart all launched SVOD partnerships. These grocery outlets are adding benefits to a financially stretched consumer base in the hope of creating greater shopper loyalty.
Now that the incidence of subscribing to an SVOD service has reached near ubiquity (90% of homes), the streaming market is looking to reach a broader audience. And they see these grocer partnerships as a way to ensure their subscriber has a reason to stay during gaps in programming. As such we expect distributors to test more partnerships like this in 2025.
Bundle up, evaluate new partnerships, and if you’re lucky, catch first tracks. But more importantly, determine the KPIs that matter most for your business, so that you can measure and iterate on new strategies until finding the mix that works best for your viewer.
And more than anything: think wide and broad about what you could bundle. If 2024 saw the return of the bundle, 2025 will prove that it won’t just be your parents’ cable TV channel package.
Appeared as part of Industry Voices in StreamTV Insider, Jan 8, 2025.