The Channel Flipping Conundrum: Can VOD Conquer Content Fatigue?
Image: Dima Solomin via Unsplash
The video-on-demand (VOD) landscape is in a state of constant evolution, marked by the influx of new streaming services and the dynamic behaviour of subscribers who frequently switch, replace, and stack services. This shifting terrain presents both opportunities and challenges for providers as they navigate a competitive and rapidly changing market.
Kantar’s recent Entertainment on Demand study, covering the USA, Australia, Great Britain, Germany, Spain, and France, revealed that more than half of Netflix households subscribe to four or more services. This trend highlights the increasing complexity of consumer behaviour in the VOD space, where multiple subscriptions are the norm rather than the exception.
Password Sharing Crackdown and Content Fatigue
In an effort to boost revenue, Warner Bros Discovery’s Max and Disney+ have followed Netflix’s lead by implementing password-sharing crackdowns. Disney+ is set to enforce its measures in Canada starting November 1st, 2023. Recent research from ScreenThink found that Netflix’s crackdown on password sharing led to a 10% surge in paying subscribers. However, this crackdown has also unveiled a significant challenge: content fatigue. Despite Netflix’s extensive library of nearly 8,000 titles, compared to Apple TV+'s less than 500, 60% of surveyed users reported feeling overwhelmed by the sheer volume of available content.
This phenomenon can be understood through the lens of decision fatigue, a behavioural science concept that describes how individuals' decision-making abilities deteriorate after a prolonged session of decision-making. With an overwhelming amount of content to choose from, subscribers may struggle to make satisfying choices, leading to a sense of fatigue and dissatisfaction.
The Challenge of Long-Term Subscriptions
Beyond Netflix, other services face the daunting task of converting initial interest in blockbuster titles into long-term subscriptions. Insights from MTM ScreenThink uncovered a trend of subscription-cycling, or toggle behaviour, where 12.5% of surveyed users reported feeling comfortable subscribing to and unsubscribing from services on a short-term basis. This trend is driven by 'boomerang subscribers,' who rotate between services that fail to capture sufficient household viewing time.
The concept of hedonic adaptation, which refers to people's tendency to return to a baseline level of satisfaction despite positive or negative events, plays a role here. Subscribers quickly adapt to the content on a new service, and without continual novelty or engagement, their satisfaction diminishes, prompting them to seek out new services.
Netflix's Foray into Gaming
Netflix is strategically expanding its offerings beyond traditional video content by making a significant push into video games. The company began with interactive titles like Black Mirror: Bandersnatch and a Carmen Sandiego game, but in 2021, they hired a former EA executive to spearhead its gaming initiatives. Subscribers can now play a selection of mobile games for free as part of their subscriptions. Netflix’s gaming portfolio continues to grow, with notable titles like Hades launching on iOS mobile and the company testing direct game streaming to TVs and PCs in the UK, Canada, and select users in the US.
In 2023, Netflix Games downloads increased by over 180% year-over-year, according to Sensor Tower estimates. This expansion into gaming serves as an additional lever to drive both subscriber and revenue growth. The diversification strategy aligns with the behavioural economics principle of the endowment effect, where providing more value within a subscription increases perceived ownership and reduces the likelihood of churn.
Photo by Tech Daily on Unsplash
Sports Rights and Ad-Supported Tiers
Streaming services are also investing heavily in acquiring sports rights, challenging traditional Cable/Pay TV. The migration of sporting content to streaming platforms reflects the broader shift in viewing habits, where TV is no longer confined to the living room but follows the viewer wherever they go.
Additionally, the introduction of ad-supported tiers offers a more affordable subscription option, appealing to cost-conscious consumers. This strategy leverages the concept of price anchoring, where the availability of a lower-priced option makes the standard subscription seem more valuable, potentially increasing overall subscriptions.
The VOD landscape is marked by rapid change and fierce competition, driven by evolving consumer behaviours and technological advancements. From the challenges of content fatigue and subscription cycling to innovative expansions into gaming and sports, streaming services are continually adapting to capture and retain subscribers. As the industry evolves, understanding and leveraging behavioural science concepts will be crucial for providers aiming to navigate this dynamic market successfully.
