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Why Consumers are Cutting Subscription Services and What Companies Can Do to Keep Them

kokou adzo

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For a while, cord-cutting and streaming services were all the rage. However, in the last half of 2023, the Wall Street Journal reported that 6.3% of streaming service subscribers had ended their subscriptions.

So, what happened, and why are these streaming services — once hailed as the future of media — faltering like never before? The truth is that the business model, once designed to be disruptive itself, is now ripe for disruption.

Many streaming services have resorted to increasing prices as a last-ditch effort to compensate for the lost income from hemorrhaging subscribers. For example, Amazon’s Prime Video recently announced that its base plan would convert into an ad-supported tier, and users who wanted to avoid ads would have to pay an extra $2.99 a month. Netflix also increased prices again in the last quarter of 2023, along with increasing measures to combat password sharing.

The key to a successful streaming service is convincing subscribers to repeat paying for another month. According to Rohan Nayak, the founder of the revolutionary new audio content platform Pocket FM, this is where many platforms needed to build stickiness to their content. Many streaming services are struggling to maintain or grow their subscriber bases — especially in light of current economic conditions, inspiring consumers to cut costs wherever possible — but with its freemium model, Pocket FM has found the key to success in the streaming market.

What went wrong with streaming

Nayak has noticed several crucial characteristics that users are looking for in their streaming services, whether they offer audio or video content:

  • Storytelling’s ability to engage audience: The first and foremost consideration for audiences in subscribing to streaming services is the quality of the content. Put frankly, if a service’s content is not particularly engaging, those subscribers are unlikely to re-up when their billing period comes to a close. Thus, one of the best investments an early-stage streaming service can make is in creators who can give the service the high-quality content it needs to survive.
  • Library’s robustness: Subscribers are looking for a robust library with a solid diversity of content. If a service is too dependent on one or two “flagship” series, subscribers will cancel soon after they finish watching the show. To maintain subscribers, services must refresh their content regularly with appealing new choices. Alternatively, streaming services can be successful with subscribers by offering a curated collection of niche content. For example, some services have found great success by catering specifically to audiences interested in horror films or anime.
  • Audience choice: One of the pivotal factors holding back streaming services today is that audiences do not have a choice of what content they pay for. With how massive streaming service libraries have become, subscribers only watch a small percentage of the content they have access to, yet their subscription fee essentially forces them to pay for even the content they don’t watch. As users begin to catch on to how much money they are wasting, they will start to cut their spending on streaming services.
  • Exclusivity and originality of the content: Streaming service subscribers want to see high-quality content that is exclusive and original, or they will be motivated to seek out alternative methods of consuming content — such as linear television reruns or physical media. The success of the USA Network drama “Suits” on Netflix over the service’s original content indicates that the streamer’s original content may need to step up, as users are instead turning to a decade-old show that is available to watch elsewhere.
  • Audiences’ stickiness to the storytelling: Surveys show that streaming service subscribers are significantly more likely to finish series they can binge in bulk than those released with multipart or weekly drops. However, with many streaming series being canceled after only one or two seasons, many subscribers find it hard to fully invest in any of the most mainstream, popular shows. They want to know that there will be some consistency in the content available, and quick cancellations do not provide that.

How Pocket FM addresses the challenges of streaming with its audio series app

On the Pocket FM app, limited free episodes are made available to users daily, and they can continue their binge by purchasing additional episodes through in-app purchases.

“With our microtransaction model, users can explore different series they are curious about through their daily limit of free episodes, and if (or when) they love it, they can start to binge-listen by paying for additional episodes,” explains Nayak. “While the revenue from microtransactions may seem small, these purchases can quickly add up — especially when you have a large listener base. Because of this, micropayments have widened the scope of our monetization.”

With this philosophy, Pocket FM approached a similar realm of non-music audio streaming. The result is an innovative, disruptive business model in a mostly unexplored market that gives users a robust library of high-quality content and allows them to access it via an innovative microtransaction-based model that only requires them to pay for the content they want to enjoy. With this approach, Pocket FM pioneered the global audio series category while offering a valuable lesson for other streaming services.

 

Kokou Adzo is the editor and author of Startup.info. He is passionate about business and tech, and brings you the latest Startup news and information. He graduated from university of Siena (Italy) and Rennes (France) in Communications and Political Science with a Master's Degree. He manages the editorial operations at Startup.info.

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