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There’s no question that streaming services are very hot right now. No matter if you are talking about Netflix, Hulu, Disney+, Amazon Prime, or any one of a number of other services, people seem to be signing up for these new services in droves. Sure would be good to be a product manager for one of them. However, it turns out that there is a downside to this job. People sign up very quickly, but then they seem to also leave very quickly. What’s going on here?
Where Are All The Subscribers Going?
Product managers know that streaming-video services get a surge of subscribers when they launch a hotly anticipated show or movie. But many of these new customers end up unsubscribing within a few months, according to new data that has been gathered. This creates a challenge even for the product managers at the industry’s deep-pocketed giants. Collected data illustrates the extent to which the streaming wars require all product managers to consistently churn out popular and often expensive programming to keep their fickle subscribers satisfied.
What product managers are realizing is that you constantly need new content. Streaming service product managers not only have to build vast libraries of old shows and movies, but they also need a couple big, nice theatrical movies every quarter to make it feel like the service is valuable to subscribers. Major releases have been a reliable driver of new customers for streaming subscriptions, particularly for newer services. Walt Disney’s Disney+, for instance, won far more new U.S. subscribers when the popular musical “Hamilton” came out than they did on any other day since early 2020, when the service was still getting off the ground. AT&T’s HBO Max saw a jump in U.S. sign-ups when “Wonder Woman 1984” was released on Christmas Day in 2020. So did Apple’s Apple TV+ on the day that “Greyhound,” a World War II movie that stared Tom Hanks, came out in July 2020.
The problem that product managers are facing is that many of these new subscribers don’t stick around very long. Studies show that roughly half of U.S. viewers who signed up within three days of the release of “Hamilton,” “Wonder Woman 1984” and “Greyhound” were gone within six months. The good news is that even if streaming services only retain half of the users they sign up during big bursts, that still translates into sizable numbers of longer-term subscribers. All streaming services will always see a portion of U.S. customers unsubscribe every month. They all have been signing up more users than they lose over time. However, the data shows that viewers who join a service right after a big release tend to leave significantly faster than the average streaming customer.
Solving The Streaming Customer Problem
Streamers’ product manager’s challenges are exacerbated by the fact that most services are available through a monthly subscription, making it easy for viewers to cancel when they are done binge-watching a specific show. The proliferation of streaming services has also ended up giving users an array of options. HBO Max, Peacock, Disney+, Apple TV+ and Discovery Inc.’s Discovery+ have entered the field since 2019. ViacomCBS Inc. has decided to rebrand and expand its CBS All Access service, now known as Paramount+. All of these product managers are fighting for market share with more established players including Netflix, Amazon.com Prime Video and Hulu.
American households subscribed to a total of 3.6 streaming services on average last year. At the same time the U.S. subscriber base of Netflix, the country’s largest streaming service, seems to have plateaued in recent quarters. Streaming service product managers spent about twice as much on content – both to create originals and acquire the rights to old movies and shows – last year than they did previously. Netflix alone planned to spend US$17 billion on content last year. This is important because more established services with larger libraries of content have shown higher subscriber-retention rates than new entrants.
Library titles tend to increase engagement and minimize churn. However, new titles, new content, whether they’re movies or series, add new subscribers. Product managers realize that not all successful shows draw spectacular subscriber numbers on day one. Data has shown that some of the most popular streaming programs of the past couple of years, including “Ted Lasso” and Netflix’s “Squid Game,” were sleeper hits that required weeks of word-of-mouth to gain a big following in the U.S.
What All Of This Means For You
Streaming video services are how many consumers now choose to get their video entertainment content delivered to them over the internet. The popularity of these services has resulted in a proliferation of new streaming services and more competition for the product managers who are involved. One of the biggest problems that these product managers are currently dealing with is that all too often new subscribers sign up for a short period of time and then drop the service. What’s a product manager to do about this?
The problem of unsubscribing customers is causing product managers to be forced to be constantly creating new content. Having deep libraries of content is good, but streaming services also have to have theatrical movies every quarter in order to retain customers. What product managers are discovering is that roughly half of the new subscribers who show up when they have a big release will end up leaving. Monthly subscriptions make it easy for subscribers to leave a service and the quantity of different streaming services makes it easy for customers to switch to a different service. Because larger libraries can result in more customers, product managers are having to spend heavily on obtaining more content. New content is what it takes to add new customers.
It is always great to have new customers using your product. However, when the success of your product relies on keeping those customers, it can be difficult to lose them. Streaming service product managers currently have the best of times / the worst of times. They have a rush of new customers every time they offer a new title; however, they end up losing many of these customers just as quickly as they got them. They need to find ways to get their new customers to stick around. It looks like having a deep library of titles that these customers would like to stay and watch might be what they need to do. Now all the product managers have to do is to get the right content.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: How do you think streaming service product managers can get their customers to not unsubscribe?
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What We’ll Be Talking About Next Time
Every product manager wants to be responsible for a successful product. In order to make your product be a success, you are going to have to get people to buy it. In order for that to happen, first people are going to have to know about your product. That is where advertising comes in. Right now the world of advertising is undergoing a major transformation that may impact how you can use it to reach your potential customers. Are you going to be ready?