Is it too easy to cancel? – Industry Voices: Grebb

Industry Voices Michael Grebb

It seems like everyone has a story about canceling an SVOD service for a few months to save a few bucks before the next season of “The Mandalorian” or “The Handmaid’s Tale” comes out. Why not, when it’s so easy compared to many traditional video services? Try calling your cable company to jettison even one premium network, and you’ll likely end up in a verbal waltz with the script-armed CSR offering freebies and incentives to keep you on the sauce. Try canceling your entire video package, and you may be in for a long afternoon - and probably one helluva deal if you change your mind and stick around (or a painfully more expensive broadband package if you don’t). It’s all part of the endless customer-retention dance that has always been part of the business and generally is still going strong today.

But not with the streaming services. They’re different. Netflix makes it so easy to cancel that parting ways with its more than 53,000 TV episodes (per our latest VODTRAK audit) is literally a click away. Virtual MVPD YouTube TV even lets you “pause” your subscription for a few months and mosey on back whenever you feel like it. It’s a similarly easy experience with many other streaming services whose attitude amounts to: “If you want to leave, go ahead. We know you’ll be back.” And you know what, they are generally right if the sustained quarterly growth numbers are to be trusted.

Of course, a few hairline cracks are starting to appear. Variety’s VIP+ intelligence service, for example, recently discovered a growing and worrisome trend for SVODs and vMVPDs spending big on content and/or license fees, reliant almost entirely on recurring monthly fees to keep the lights on. People are paying for a month, bingeing the living daylights out of hot shows like “Squid Game,” and then peacing out before the next billing cycle and until the next big show convinces them to plunk down another few bucks to do it all over again. The services generally let this happen, perhaps out of fear that ever-fickle consumers will take their ball and go home if asked to sign a contract or display any sort of loyalty. They may be right, especially with more and more free AVODs and FASTs populating the content landscape. It’s a bit of a conundrum in a competitive environment.

One potential change that could happen faster than people think is lengthening the term of a single cycle beyond one month - something that sports-focused vMVPD fuboTV just implemented this month for new subscribers, who must now pay quarterly with no monthly payment option. Amazon Prime has let people pay annually for quite some time (and just raised its price for the first time since 2018), but there’s still a monthly option - and Prime Video is only an add-on to that larger online retail shipping membership, so it’s a bit of an outlier. Hulu offers an annual billing plan, but only for its ad-supported option, and even then, it doesn’t offer a discount over what you would pay monthly (Amazon Prime is only slightly cheaper if billed annually).

But these are all billing options designed around convenience. FuboTV’s move toward a quarterly cycle makes it impossible to just buy a month for, say, a critical sports event or tournament and then bail as soon as the crowds go home. Now you must commit to at least three months. Could other services follow, and if so - might they choose six-month or even annual plans with no monthly option?

In such a competitive environment, no service wants to burden cash-strapped consumers with sticker shock by requiring several months up front. And if you let people split an annual bill into 12 payments, then that’s just a contract. But look for more streaming services to play around with new billing options that increase retention, most likely offering discounts to incentivize people to commit to longer cycles. The days of fighting with a CSR to cancel service may be slowly coming to an end, but companies on the hook for billions in content spending are likely to do whatever they can to retain customers for the long-term despite consumers’ fickle moods and seemingly endless content options.

Michael Grebb is Vice President and Lead Analyst for One Touch Intelligence, which provides market intelligence and industry analysis services for leading companies in the media and telecommunications space. The One Touch Intelligence STREAMTRAK series is a complimentary service offering industry professionals insights and context around developments in the digital media sphere.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by Fierce Video staff. They do not represent the opinions of Fierce Video.