After a wave of new streaming services have crowded consumers’ Roku screens and spurred requests for shoppers’ roommate’s cousin’s girlfriend’s father’s password, have we finally hit a saturation point for streaming services?  Two recent consolidations suggest that we may have, with HBO Max and Discovery+ to merge into one service and Walmart (which sold its Vudu service to Fandango) to partner with Paramount+ by offering the service free for Walmart+ customers.  In today’s Insight Flash, we look at growth in the total number of streaming subscriptions  per individual, churn rates by service, and the demographics of each of these new partners to better understand the potential benefits of consolidation.

In December, the average Video Streaming transactions per individual reached 2.0 for the first time in our data history.  This is up from 1.5 streaming services paid for per user in August 2019.  That number has come down slightly since the December holiday movie binge, suggesting that shoppers may finally have reached enough content to resist paying for an incremental streaming service.

Transactions per Individual

Note:  February dips may represent billing anomalies due to shorter month

One reason for partnering is to increase services offered and reduce program churn.  Although established players like Netflix and Hulu have lower monthly churn rates than others (services with annual subscriptions may appear to have higher churn due to the once-a-year payment), even Netflix has recently struggled with subscriber churn.  For services like HBO and Discovery+ with higher rates, combining may increase stickiness.  And for Paramount+, bundling with all of the Walmart+ shopping benefits provides a much stronger customer value proposition.

Churn Rates

Note:  February spikes may represent billing anomalies due to shorter month; HBO numbers for direct services only not including payments through cable providers

One of the arguments for consolidating HBO Max and Discovery+ is that their content appeals to different demographics, and a combined entity could satisfy multiple user segments.  Of the tracked streaming services, HBO appeals to the youngest group (among those paying for the service themselves), with 44% of subscribers under the age of 35.  In this sense, Discovery+ may be complimentary, with only 29% of paying subscribers under 35 and an overindexed 34% of subscribers aged 55 or older – twice the percentage of HBO subscribers.  HBO also skews higher income with 42% of subscribers making over $100K per year, versus 36% for Discovery+.  Interestingly, however, the two services have the lowest percentage of paying households with children out of the five tracked in this report, which means that HBO’s cutting of several animated programs may limit audience expansion.

For Walmart, Paramount+ may attract more shoppers to its Walmart+ program, as the overall store skews older and lower income than the Paramount+ subscription base.  20% of Walmart customers are under the age of 35, versus 33% for Paramount+.  Additionally, 47% of shoppers make under $60K per year and only 27% make over $100K, versus 35% and 40% (respectively) for Paramount+.

Streaming Service Demographics

Note:  91 Days Ended 8/17/2022; shoppers who made at least one purchase at listed brand; HBO numbers for direct services only not including payments through cable providers