Study: More Than 150 Million People will Cancel a Paid Streaming Subscription in 2022

HOLLYWOOD, CA - AUGUST 17: Guests attend Netflix's "Stranger Things" Celebrates 12 Emmy Nominations at Hollywood Forever on August 17, 2018 in Hollywood, California. (Photo by Emma McIntyre/Getty Images for Netflix)
Emma McIntyre/Getty Images for Netflix

Hollywood is staking its future on digital streaming entertainment, but now that future looks increasingly like its being built on shifting sands. A new study predicts more than 150 million people will cancel a paid streaming subscription, like Netflix or Disney+, in the coming year, signaling greater financial uncertainty for studios looking to grow their subscriber bases.

Consulting firm Deloitte said it predicts that more than 150 million people will cancel a paid streaming subscription in 2022, creating a global churn rate of 30 percent. In the U.S., the churn rate is 38 percent, the firm said in its annual report of tech industry predictions.

Churn occurs whenever a subscriber cancels his subscription. “This can be highly problematic for [streaming] providers, which may spend up to $200 to acquire each subscriber, though acquisition costs vary by market,” Deloitte said.

As the number of streaming services continues to grow, “the pool of untapped consumers declines, acquisition costs may rise higher still, making retention even more important.”

For streamers like Netflix, subscriber growth is the key financial metric by which Wall Street measures the company’s financial health. Subscriptions represent Netflix’s main revenue stream, needed to pay off the billions of dollars it has borrowed to fund its movies and TV shows.

Tiger King star Joe Exotic posing with a tiger. (Netflix)

Disney Plus original series The Mandalorian Season 2 poster. (Disney)

Deloitte said American consumers have the highest churn rate, in large part due to the maturity of the U.S. streaming market, which continues to offer ever more streaming options.

As a result, “many have become overwhelmed by managing and paying for all those subscriptions, and they have become more sensitive to their cost,” Deloitte said. “These conditions can drive customers to cancel subscriptions and/or seek less expensive ad-supported offerings.”

The silver lining is that Deloitte predicts more subscriptions will be added than cancelled, causing the average number of subscriptions per person to rise.

“In markets with the highest churn, many of those cancelling may resubscribe to a service that they had previously left. These are all signs of a competitive and maturing [streaming] market.”

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