Are you losing customers because of subscription fatigue?

The last few years have witnessed a rapid growth in subscription-based offerings in the market, the trend particularly marked by the onset of the Covid-19 pandemic. Consumers have subscribed to far too many services, which seems to now be taking a toll on them. Video streaming services are at the core of this market. The rising cost of various subscriptions is becoming a cause of concern, mounting household costs and burdening consumers' wallets. 57% of U.S. households have subscribed to more than four streaming services, with their monthly expenses on these platforms having almost doubled since 2020. Reports show that an average household is already overshooting its subscription budget by 10% and over half of these consumers are concerned about the rising cost of multiple subscriptions. 

Subscription fatigue and how it impacts businesses

As the number of their subscriptions increases, this exhaustion in consumers is commonly referred to as subscription fatigue. Conversely, it refers to a gradual decrease in consumer interest around subscription offerings. 

Most OTT media and entertainment companies and gaming organizations today function on the subscription model. Subscription fatigue will halt the growth of these industries because consumers are no longer looking to increase their list of already-overwhelming subscriptions. The large number of such services combined with subscription fatigue leaves little room for new and innovative players to enter the market.

Technology and collaboration to the rescue

Of course, there are several ways a subscription service can individually try to counter subscription fatigue. Extended trial periods, offering free add-ons, premium content, targeting a broader consumer base, free upgrades, innovative pricing models, and prioritizing retention over acquisition are some ways subscription-based businesses are going about it. However, these are relatively weak solutions considering the scale of the challenge. 

One of the biggest reasons for subscription fatigue is that consumers often pay far more than they consume. For example, they might sign up for a subscription service for one, two, or five shows and movies. But the packages they are forced to purchase offer far more than a consumer or a household can consume individually.

Therefore, we see two distinct ways to counter this challenge and the subscription fatigue it causes – technology and collaboration.

Media, entertainment, and gaming companies must first focus on trend forecasting and content differentiation. Data, AI and ML, will form the foundation of this exercise as media players look to truly understand their consumers and deliver the exact content they are likely to consume. This will enhance consumers' engagement with their subscription services, and they will consume more than they think they would. AI tools also help subscription-based services deliver timely notifications on new or relevant content, further enhancing engagement.

Collaboration is the second tool subscription-based businesses have at hand. Bundling services and partnerships with other offerings, platforms, and services gives subscription-based companies another tool to reach target customers without asking them to purchase and manage a separate subscription.

There are a lot of advantages to partnerships and bundling from both the customer and provider perspectives. Bundling increases the variety and value of services by diversifying offerings, complementing products, and filling in delivery gaps. For subscription providers, bundling and partnering will help in increasing the brands' footprint and visibility among customers. With the right set of strategic partnerships, subscription providers can acquire new customer segments and convert more users who might otherwise be difficult to engage.

Service bundles offer significant cost savings, enticing potential customers who may be on the fence about signing up for a standalone subscription.

Instead of every brand trying to solve the fatigue alone, subscription-based businesses must get together on a large forum to discuss their offerings, form strategic content partnerships, and learn from each other's best practices. Collaboration between industry players will go a long way in ending subscription fatigue with a fresh, consumer-centric lens.

In conclusion

Subscription fatigue is a serious challenge facing streaming services and gaming companies, among several others. We know for sure that this challenge cannot be addressed by a single business alone, no matter how much they innovate their pricing models. The challenge can only be resolved sustainably if subscription services work together to offer persona-based bundles to consumers and households to solve for their most significant subscription-based entertainment needs. Technology-led deep consumer insight and industry-wide collaboration are the only tools to solve subscription fatigue. Are you ready to wade your way out of this phenomenon?

The article has been written by Saurabh Tandon, Board Member, President Americas at Affine