There is no one-size-fits-all approach to household budgeting, as every region and demographic faces unique pressures and circumstances. Despite this caveat, evidence still suggests a challenging landscape for media brands, as households around the world are more carefully scrutinising their budgets in light of several critical factors.
Chief among them is the rising cost of living, which is forcing many consumers - across demographics - to cut back on non-essentials, including some subscription video-on-demand (SVOD) services. In the UK, for example, where the cost of living has had an acute impact, evidence from TGI Global Quick View, surveying online consumers from 37 markets, found that only 4% of respondents would prioritise spending on online subscription services like Amazon and Netflix in the face of financial pressure.
However, the data also indicates that the likelihood of prioritising spending on online subscriptions varies by market, with Great Britain, Brazil, and the US showing a higher propensity, and China, Taiwan, and Indonesia showing the least.
Yet it’s not just rising costs that are a factor in waning media loyalty. Increased competition in the video market is also leading to subscription fatigue and fragmented engagement. Furthermore, it’s also now much harder for a platform to stand out with a vast library alone - user personalisation, quality, value, cultural currency, the flow of new content, and exclusivity are all deeper considerations as to whether or not a subscription is worth keeping.
Hybrid models
To address these challenges, streaming businesses are already adapting. Perhaps the most obvious strategy has been to offer lower cost subscription packages with ads - a particularly appealing prospect for those dealing with subscription fatigue and stretched budgets. Subscription advertising video-on-demand (SAVOD) - analysed in detail here - is thus poised to become a haven for cost-conscious viewers, offering access to content at a lower price.
There’s evidence this might work, and recent findings from the 2024 Kantar Media TGI Global Quick View study reveal that 59% of on-demand video users worldwide are open to advertisements if it means reducing the cost of their TV or video streaming subscriptions.
But again, regional variations are a factor. The acceptance of ad-supported subscriptions is particularly high in Nigeria and India, for example, where it exceeds three-quarters of consumers, in contrast to less than 30% in Norway, Denmark, and Sweden. This indicates that the deployment of SAVOD strategies needs to be tailored to reflect the specific preferences and dynamics of each local market.
It also means the price has to be worth it, and most ad tiers still come at a cost. Viewers may also be put off that licensing issues mean not all content is available on ad tiers, and the picture quality can also be lower.
Below the surface
Increased competition and content saturation has also meant subscribers increasingly require a deeper and more compelling reason to remain, and although price reductions and simplified subscription management are possible tactics to make this happen, tailoring the user experience and prioritising content quality and discovery will be just as useful. So too will understanding regional nuances - and providing content to match these tastes, as my colleague Mesut Sakal writes about in detail here.
That means surface-level knowledge won't suffice; nor will globally homogenised content strategies. Platforms will need to delve deeper, understanding their audiences’ attitudes and actual viewing habits – both within and beyond the confines of their own platform. This will involve not just understanding what content resonates, but also how it should be priced and the most effective ways to market it.
In essence, a strategy for customer loyalty demands a localised strategy. Streaming companies need to mould their offerings – from content curation to pricing to promotional tactics – to fit the distinctive features of each region's landscape.
Data and insight
Naturally, underpinning any strategy will be the requirement for robust data and insights - and with an eye on both the macro trends such as globally high inflation, and more detailed, individual factors at the regional or demographic level. Moreover, data can also help media businesses understand cultural distinctions, local events, and historical contexts - all of which significantly influence media consumption patterns and thus a reason to stick with a subscription when there is so much choice.
Simply put, the current environment demands a deep understanding of the intricate dynamics that affect consumer behaviours, attitudes, and values. This will help design the right pricing, content and user experience strategies to build lasting loyalty.