Cord cutting is one of the biggest shifts in consumer spending since the advent of online shopping. More and more people are canceling cable and satellite subscriptions and using streaming services for their home entertainment. Based on recent reporting and anecdotal evidence, that trend is accelerating. The last two times I was in the UPS Store three sets of customers were in line to return their DirecTV receivers – This is the place AT&T tells customers to return their equipment.
(Personally, I cut the cord months ago, after I realized that the only reason I was subscribing to satellite TV was for live sports – mostly college football. When the last season was over, I jumped to streaming.)
Years ago, cord cutting in the US was a simple choice – there were only a handful of major streaming services to choose from. The 800lb Gorilla was (and still is) Netflix, and this was the de facto service for most consumers. In recent months, this choice became a lot more complicated. You now have services from CBS, Disney, Apple, Hulu, and more… and in 2020 you will have new services from NBC/Universal and HBO/Time Warner.
What these entertainment providers don’t understand is that people don’t want choice – at least, they don’t want TOO MANY choices. While people tend to think that having choices and freedom is a good thing. After all, who doesn’t like going to a restaurant to see a multitude of options to choose from? Except… When there are too many choices, people tend to use factors such as price and tend to repeat previous decisions and choices.
This is a key challenge in user experience design known as the “paradox of choice”. Too many options available to the consumer means consumers have to spend MORE cognitive effort on deciding what they buy – Basically, more is less. This article has a good overview on the phenomena and how to design experiences that keep this in mind.
A real world example: The past few years cereal and yogurt sales have declined. General Mills, the owner of Cheerios and Yoplait, reported another drop in sales in its last earning report. Lots of reasons for this decline in sales noted in the linked article, but an obvious one tome is the paradox of choice. There are WAY too many products in both categories. Many people decide to not buy anything.
Now… Back to streaming services (and you can see where I’m going with this): If you have too many streaming services, guess what happens? Many consumers either choose one, or none… Or are much more cost-conscious and selective. Especially when you look at one of the key motivations regarding cord cutting: Cost.
Cord cutters tend to be FRUGAL. This is why they went from one $100 subscription to one to three services… Because even with multiple services, the combined cost is still less than their previous cable bill. Will they subscribe to all these new services? Probably not. Their baseline regarding the cost of home entertainment has been reset, and many will hesitate before increasing their out of pocket spend.
However, some consumers sign on to a service just to watch ONE show or IP. Case in point: The Mandalorian, on Disney Plus. LOTS of Star Wars fans signed up for and subsequently loved the show. They raved about the program and posted countless #BabyYoda memes in the months after it debuted. However, once that first season was over, guess what happened? Many of these fans… Canceled their Disney Plus subscription.
“They’ll resubscribe when S2 is available,” many stated on social media. Again, frugal… Or cheap, if you want to use a harsher term.
This doesn’t even cover to multitude of people who will now do a 7-day trial, watch The Mandalorian, and never sign up for a full service. Anecdotally, I’ve seen numerous comments online saying similar things about Star Trek Discovery, Star Trek Picard and For All Mankind – all high budget series intended to attract new subscribers. People who will just sign up for a trial, binge-watch, and then cancel. Not a good sign for Hollywood, when companies are spending like drunken sailors on content and talent to draw people to their service.
Such a thing can’t be avoided. The streaming services HAVE to offer free trials, to lure subscribers “in the door” (due to the increasing competition). But this has and will backfire. People always game whatever system exists, especially when it comes to saving money. There WILL be a reckoning. The #Hollywood corporations and #Netflix cannot continue to pump money into original programming when they are only so many entertainment dollars to be had. The bubble will burst, and a LOT of the talent in fronty of and behind the camera will be out of a job.
Not to mention the abundance of content that is available on each one of the service. For users, the paradox of choice is a daily issue. What to watch? If I were one of these companies, I’d invest HEAVILY in user experience design and personalization, and focus on creating a recommendation engine be so good it’s like mind reading. Take away the choice challenges, and provide a bespoke experience.
In the end, people will always make choices based on their own self-interest. And many of them will decide that they don’t need nine or ten content services. They need… One. One that provides multiple channels, DVR storage options, and the ability to watch live TV.
Like… Cable.