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Source: www.nexttv.com, December 2021


Deloitte shocks–shocks!– the streaming biz by projecting a massive 150 million service cancellations next year

So, Deloitte caused a stir in streaming ranks this week with a report that suggests 2022 will be “The Year of The Churn,” as customers flit between services like hungry hummingbirds working a botanical garden. The result: a projected 150 million service cancellations and an industry-wide churn rate of 30 freaking percent.

That’s more churn than a butter factory, likely to be matched only by its similar impact on the stomach juices of marketing executives. Undoubtedly, it’s a big number designed to grab a lot of attention, and well, mission accomplished.

But it also suggests that churn — particularly the kind Deloitte cites, where a significant part of the audience signs up for a month or two to watch a particularly buzzy show before cancelling and moving on to another intriguing show elsewhere — will require new thinking for services that still rely too much on programming strategies left over from the broadcast and cable eras.

The only two companies relatively immune to the churn concerns are Netflix and Disney Plus, Deloitte said, for very different reasons.

Netflix plays flood-the-zone at an epic scale, offering so many shows of every kind that most audiences treat it more like a pay-TV smorgasbord, but for far less. Netflix, of course, is freed of legacy requirements and headaches, and makes everything available everywhere at the same time for the binge consumption lots of audiences love.

Disney, by contrast, has the kids, or more precisely, their parents wanting repeat-worthy, family-safe programming. They won’t cancel until the kids discover FortniteRoblox and League of Legends.

Unlike Netflix, most streaming services have legacy outlets that they keep feeding. But they also stretch out streaming releases of their best shows over many weeks, hoping audiences remember to come back the following Tuesday (or was it Thursday?) instead of watching 15 other interesting things somewhere else. Just keep paying the subscription fee.

That approach is a leftover of the programming grid. It may make some sense when you have a show unspooling on NBC or CBS that run the next day on Peacock or Paramount Plus, but also diminishes the stickiness of the steaming service.

Traditionalists say weekly releases allow shows to find an audience, and have a bigger cultural impact. But how many streaming-first new shows the past two years can claim that kind of zeitgeist payoff? I can only think of a handful: Mare of Easttown, Squid Game, Bridgerton, The Mandalorian, Hacks, The Flight Attendant, maybe WandaVision. 

Companies are trying other tactics to keep audiences around, including old-fashioned discount deals. Hulu sold one-year subscriptions over Black Friday weekend for 99 cents a month. Paramount Plus used corporate sibling CBS to advertise a one-month-free deal. They’re also creating tiers with cheaper or free ad-supported offerings, which seems like the worst of old and new.

More bundling is likely too, even between services not owned by the same company. Expect more tie-ups like the European deals between Comcast and ViacomCBS involving Sky, Showtime and Paramount Plus

But traditional media companies also will need new strategies for programming and operations if they want to survive a time of omnipresent churn. The continuing fast decline of the traditional movie business only makes it more important.

new study by three marketing and branding agencies says roughly half of pre-pandemic moviegoers still aren’t going back to theaters. One in 12 likely will never return. Uncertainty over the omicron variant will only extend those sentiments well into 2022.

“Before, maybe you went every now and again — overlooking the drawbacks,” said David  Herrin of film research company The Quorum and a former UTA head of research. “Now you add safety concerns to that mix, and you suddenly become a former filmgoer.”

That likely represents a fundamental reset of one of Hollywood’s financial bulwarks, with implications for all the home-entertainment outlets further down Hollywood’s elaborate distribution ladder. But it’s also an opportunity for streaming services that can feed an appetite for satisfying one-night watches featuring big stars, stories or franchises.

For instance, HBO Max recovered nicely in 2021, boosted immeasurably by WarnerMedia CEO Jason Kilar’s audacious and hugely controversial decision to release all the Warner Bros. slate on the streaming service the same day they hit theater screens.

That steady stream of more than 20 top-notch movies (Dune, Zack Snyder’s recut of Justice League, In the Heights, Wonder Woman 1984, The Matrix: Resurrection, etc.) made HBO Max a far more attractive proposition, especially given its steep price, lack of initial original shows, and audience confusion over the brand.

“It was great for the service, especially during a time where schedules were not fully populated because of COVID-related production delays,” said Casey Bloys, the HBO/HBO Max chief content officer, speaking recently to Vulture. “It was just a great steady source of movies that people loved. Going forward in ’22, hopefully we’re going to be in a world where people are going back to theaters and not worrying about the pandemic.”

Next year will still feature a planned 12 Warner movies made for direct release on HBO Max. And output deals from Universal and Fox will end over the next two years, sending their movies to competing services (Amazon/Peacock, and Disney Plus/Hulu respectively).

At least the pandemic gave WarnerMedia the market leverage to permanently shift its movie releases to a 45-day theatrical window before sending them straight to Max audiences.

“That is a massive shift because the pay-one window — which is what HBO typically got —  was eight months after release,” Bloys said. “So you’re going from eight months to 45 days. That’s huge. So I believe it’s going to work really well because people who want to go to theaters and experience a movie theatrically get to do that— and then 45 days later, it’s on Max. That, to me, seems like a really great situation.”

As WarnerMedia continues to ramp up its originals production, and adds Discovery Plus in some manner (bundle? new hub in a renamed HBO Max?), the company will have a better chance at attaining the goal all the services are seeking, even as they grapple with The Year of The Churn.

“So my hope is that, a year from now, we’re cementing our place as one of the must-have services,” Bloys said. “Because we’re all in this race to end up as one of the top streaming services. It is a race. Not everybody’s going to survive, and my hope is that our programming makes us one of the must-haves.”

David Bloom

David Bloom of Words & Deeds Media is a Santa Monica, Calif.-based writer, podcaster, and consultant focused on the transformative collision of technology, media and entertainment. Bloom is a senior contributor to numerous publications, and producer/host of the Bloom in Tech podcast. He has taught digital media at USC School of Cinematic Arts, and guest lectures regularly at numerous other universities. Bloom formerly worked for Variety, Deadline, Red Herring, and the Los Angeles Daily News, among other publications; was VP of corporate communications at MGM; and was associate dean and chief communications officer at the USC Marshall School of Business. Bloom graduated with honors from the University of Missouri School of Journalism.