The honeymoon between the streaming industry and consumers is definitely over, with a new consumer survey showing deep dissatisfaction. Nearly half (47%) of those surveyed by Deloitte said they pay too much for the streaming services they use, and 41% believe the content available on these services isn't worth the price (up 5 percentage points from 2024).
Deloitte’s latest “Digital Media Trends” report also found that consumers are near the breaking point when it comes to further price hikes. After several years of the major service regularly raising the prices much faster than inflation, the survey found that a price hike of $5 would be likely to make the majority (60%) of consumers cancel their favorite service, the researchers reported.
That means M&E companies are at a tipping point. They must innovate to deliver more value or risk losing the next generation of viewers, the report concluded.
The “Digital Media Trends” covers the digital media landscape, including insights into the amount of time spent on social media compared to streaming services, especially for younger generations.
Overall, the report indicates that M&E companies are facing a pivotal moment: Younger audiences are spending less time with traditional TV and streaming and more time on AI-driven, social-first platforms. The rise of free, ad-supported content and creator-driven entertainment is forcing companies to rethink what drives value and engagement.
One key finding is that subscription fatigue is real: Younger audiences are increasingly selective about paid streaming and are embracing alternatives like free ad-supported services and social platforms. In addition, AI-powered social platforms are becoming the go-to discovery engines for Gen Zs and millennials finding social content to be more relevant than TV shows and movies. And, the creator economy is having a growing impact, with influencers and digital creators are shaping viewing habits and audience loyalty in ways Hollywood can’t ignore, the researchers wrote.
"The data is clear: Entertainment providers should embrace innovation and agility to help them thrive," explained Doug Van Dyke, vice chair, Deloitte LLP and U.S. telecom, media and entertainment sector leader. "This means understanding the nuances of younger audiences, leveraging technology to personalize content and advertising, and exploring new avenues for distribution and monetization. The status quo is likely no longer an option."
Other key findings indicate that:
- Consumers are increasingly dissatisfied with the value of paid streaming services. Even though 53% of consumers surveyed say that streaming video on demand (SVOD) services are the paid media and entertainment services they use most frequently, almost half (47%) say they pay too much for the streaming services they use, and 41% believe the content available on these services isn't worth the price (up 5 percentage points from 2024). A price hike of $5 would be likely to make the majority (60%) of consumers cancel their favorite service.
- Value-driven entertainment is surging, especially with younger generations. More than two-thirds of Gen Zs and millennials now subscribe to free ad-supported TV (FAST) services. Meanwhile, more than half of SVOD subscribers (54%) say that at least one of the services they pay for is ad-supported, an increase of 8 percentage points since 2024.
- Content on social platforms holds greater relevance for Gen Zs and millennials. 56% of Gen Zs and 43% of millennials surveyed find social media content more relevant than traditional TV shows and movies, and roughly half feel a stronger personal connection to social media creators than to TV personalities or actors.
- Social platforms have the power to sway purchasing decisions. Gen Zs (63%) and millennials (49%) say ads or product reviews on social media are most influential to their purchasing decisions. This contrasts with the influence of streaming video ads, which influence only 28% of Gen Zs and 25% of millennials.
Deloitte's 19th annual "Digital Media Trends" report stresses that these and other survey results detailed in the study indicate that the industry is at a crossroads.
Gen Zs and millennials are increasingly turning to social platforms for entertainment, drawn by data-driven personalized recommendations and a myriad of free, ad-supported content. the data in the report shows.
Meanwhile, the percentage of paid TV (like cable or satellite) or live-streaming TV subscriptions in the home remains relatively flat. This shift presents a challenge to traditional studios and streaming services, asking them to rethink their strategies to deliver both compelling content and value in a rapidly evolving landscape, the researchers wrote.
One of the key challenges, the researchers argue, is pricing and the cost of services.
With subscription prices rising on average to $16 per month for ad-free SVOD services, consumers appear to be feeling a pinch, and younger generations surveyed are especially prone to canceling services or choosing less expensive, or even free, ad-supported alternatives. While streaming services initially disrupted the cable model, they are now facing similar pressures as prices climb and perceived value diminishes, particularly among younger viewers.
Cable or satellite TV subscribers surveyed report spending $125 per month on average for that service, while the average SVOD subscriber has four paid streaming services totaling $69 per month—a 13% year-over-year increase overall and a 20% increase among Gen Z and millennial consumers.
The report also indicated that premium streaming services are struggling to find an ideal price point with little flexibility to raise prices without further alienating customers. On average, consumers consider $14 per month to be "just the right price" for their favorite ad-free streaming services, while the current market average is $16. Prices above $25 per month are seen as too high. For a favorite ad-supported service, the ideal price for respondents is around $10, with $9 being the current market average, and anything above $19 is considered too expensive.
Faced with high and rapidly rising prices, churn also remains a major issue.
Despite streaming providers' efforts to minimize churn, 39% of consumers have canceled at least one paid SVOD service in the last six months, a rate that has remained relatively stable in recent years. This figure jumps to over 50% for Gen Zs and millennials surveyed. Additionally, the phenomenon of "churn and return"—where consumers cancel and then renew the same subscription within the last six months—also remains consistent, with 24% of all consumers doing so in the past six months. This number rises to 40% for Gen Z and 35% for millennial respondents.
Financial concerns may be playing a role as ad-supported tiers continue to gain traction. 54% of SVOD subscribers surveyed have at least one ad-supported tier of a paid service, up from 46% last year. This rises to 58% among both Gen Xs and Boomers.
More information and data can be found here.
Source: tvtechnology.com