How will Apple, Disney, AT&T and Netflix retain streaming subscribers?

Nov 5 (Reuters) – When Apple Inc’s AAPL.O video streaming
service made its debut on Friday, it came with $2 billion worth
of original programming – a feature widely considered to be the
most powerful magnet for new subscribers.*:nL2N27F2CV

But for Apple TV+ and its rivals, whose monthly
subscriptions are cheaper than traditional cable packages,
keeping viewers is a huge challenge.

Streaming providers like Netflix Inc NFLX.O , Apple TV+,
Walt Disney Co’s DIS.N Disney+ and AT&T’s T.N HBO Max tout
flexibility: sign up to watch a new show, cancel when you want.

Besides spending millions of dollars on library content,
media companies are using programming, promotions and other
strategies to avoid cancellations, or “churn” in industry
parlance, and retain subscribers who are costly to acquire and
easy to lose.

“Churning off of a service once meant finding the phone
number of your cable operator, navigating an automated menu and
waiting on hold,” said Rich Greenfield, an analyst at LightShed
Partners. “We now live in a world where with a couple of clicks
of your finger on your phone, all of the friction from
cancellation is gone.”

Disney is the only streaming provider that has used a
multi-year promotion to lock in subscribers. In August, the
company offered new and existing members of its D23 fan club an
annual rate of $47 for a three-year commitment to Disney+ – 33%
off the standard price.

Disney has the advantage of making content for children, who
watch the same movies and TV shows again and again. Netflix, HBO
Max and Apple TV+ have invested in kids’ content to keep
subscribers from canceling while they wait for the next
original, adult-focused show.

In May Netflix made a rare acquisition, of the children’s
media brand StoryBots, for an undisclosed sum. In July it
announced seven new series targeting preschoolers.

Apple TV+ programming includes two series from Sesame
Workshop, the nonprofit that makes “Sesame Street.” HBO Max is
airing new “Sesame Street” episodes and most of the show’s

Streamers are also being strategic about the number and
timing of new releases.

“There has to be a cadence to the release slate so there’s
something you want to watch coming out throughout the year,”
said Fitch analyst Patrice Cucinello.

HBO Max will air one new episode of its original series per

For most Apple TV+ drama series, including “The Morning Show”
and “See,” Apple will release three episodes at a time, followed
by one per week. Disney+ will unveil one episode per week for
new series such as “Loki.”

Hulu for years has been releasing weekly episodes of its
original series such as “The Handmaid’s Tale” and “Castle Rock.”
CBS Corp’s CBS.N CBS All Access, another streaming pioneer,
releases most original shows weekly.

CBS All Access and its sibling Showtime engage in campaigns
to win back subscribers who cancel, according to Marc DeBevoise,
chief executive of CBS Interactive. The services contact viewers
when a show they used to watch is back on the air, and often
offer a promotional rate.

Showtime is in active talks with Amazon Inc AMZN.O , Apple
and Roku Inc ROKU.O about creating bundles of two or three
services, said a source familiar with the premium cable and
satellite TV network. The combined services, with a diverse
menu, could replace the cable bundle as a one-stop shop for

HBO Max and Netflix are also investing heavily in broad
swaths of content. Netflix paid roughly $15 billion cash for
content in 2019, and AT&T will spend $4 billion over the next
three years building HBO Max.

Losing subscribers could cost more.
“If I were these companies I would plaster the word ‘churn’
in everyone’s offices,” said Greenfield. “Churn will kill.”

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