36% of SVOD consumers say the content available is not worth the price, according to a study by Deloitte. Streaming providers are experiencing continued disruption, and redesigning past models may not be working. Streaming video services still suffer from high costs, churn and competition from other kinds of media.
The report also shed light on the future trajectory of streaming video business models, highlighting the challenges of rising subscription costs and the diminishing impact of traditional advertising. Despite price hikes, nearly half of surveyed consumers indicate willingness to cancel their favorite paid streaming service if faced with further increases.
User-generated content (UGC) on social media platforms is emerging as both a fuel and a competitor to traditional streaming video, particularly among younger demographics. Gen Z and millennial audiences, in particular, gravitate towards social media videos and live streams, which they perceive as offering greater value and authenticity.
Furthermore, there's a growing demand for inclusivity and diversity in entertainment content. Nearly 70% of consumers enjoy watching TV shows or movies that expose them to different cultures, and an expectation exists for content to reflect the racial and physical diversity of the real world.
Deloitte's Vice Chair, Jana Arbanas, said: “Streaming services have reached a pivotal moment. Delivering great content is no longer enough — curating a more personalized experience designed to better match content with personal preferences and interests is the next step. And it's important to recognize that social media is the primary way people discover and get excited about entertainment. For content to resonate and drive engagement with consumers, streaming video providers should work to ensure their content connects with their diverse audiences and fosters a sense of community and social connectivity.”
To combat churn, which has softened a bit to 40% (down from 44% last year), and enhance engagement, providers are exploring innovative strategies, including tiering, bundling, and personalized content recommendations. However, there's a recognized need for improved content discovery mechanisms, with half of consumers expressing a desire to spend more time on streaming platforms if content search were easier.
Kevin Westcott, Vice Chair at Deloitte, added: “Our research underscores a fundamental shift in the media landscape. Social media platforms are not merely competitors; they can be influential collaborators for media companies as they aim to captivate and maintain audience engagement. The power of social media and content creators extends beyond content dissemination — they are often the new vanguards of taste, influencers of choice and architects of community engagement. As we delve deeper into this era of digital entertainment, the synergy between traditional media and emergent digital platforms will likely be paramount in shaping a business model that resonates with an ever-evolving, diverse audience base.”
Gen Zs and millennials, often the early adopters of new trends in social media, video games, and streaming video, bring with them a demand for content that is inclusive and reflective of the diverse society they inhabit. This demographic expects representation across various forms of media, challenging industries like gaming, which are perceived to cater predominantly to men and boys.
The importance of diversity extends beyond on-screen representation to behind-the-scenes involvement. Deloitte's findings indicate that a significant majority of black consumers, as well as a substantial portion of Asian, multiracial, and Hispanic and Latin consumers, value having diverse creative teams involved in the production of TV shows and movies. Furthermore, there is a perception among diverse audiences that social media videos offer more diversity compared to traditional TV shows and movies. This sentiment is particularly pronounced among Gen Zs, Black, multiracial, Hispanic and Latinx, and LGBTQIA+ respondents, indicating a preference for platforms that embrace inclusivity.