One would think a streaming service like Netflix (NASDAQ:NFLX) or Disney+ from Walt Disney (NYSE:DIS) needs a combination of quality and quantity to attract new subscribers. That is to say, not only do viewers want entertainment that keeps their attention, they want lots of it. After all, these streaming-video-on-demand (SVOD) outfits are competing with cable TV, which offers a small universe of channel choices.
As it turns out, however, this really isn't the case. A wide swath of TV fans sign up for a particular service to watch one specific show, and they didn't learn about it via an advertisement. Rather, friends and family probably recommended it. Once they're hooked on one particular program, though, they're far more likely to stick with that streaming service.
The implications of this nuanced consumer behavior are enormous for the on-demand video industry.
The survey says sizzle sells
Streaming players like Disney, Comcast's (NASDAQ:CMCSA) Peacock, and Netflix don't need a huge number of originals and exclusives. But what they do have should be highly engaging to as many different demographics as possible. A recent survey performed by Hub Entertainment Research suggests 74% of consumers who sign on to watch a specific show will stick with the service once they've watched all of that show's episodes.
So what does it take for a streaming platform to get watchers hooked on a series well enough to keep them interested until its finale? Most viewers are hooked on a show after watching just one episode. Hub Entertainment Research's report found that 74% of streaming customers watched an entire series once they watched the first episode of that complete, multi-season series. If a show was particularly well-hyped before its premiere, 95% of watchers stuck with the program after the first episode debuted.
There's a catch here though -- maybe. While fans of one specific show are likely to turn into fans of one particular streaming service, getting fans to watch that first episode is a challenge. Hub Entertainment Research found that only 34% of consumers subscribed to a specific streaming service like Disney+ or Netflix to watch one particular program. Presumably, the other 66% of new subscribers were more interested in a streamer's entire catalog. It's arguable, however, that more than 34% were primarily encouraged by one certain program and secondarily encouraged by the rest of that provider's content library.
This is telling. In a market where streaming services tout the sheer number of hours of programming offered while also touting the number of exclusives and originals they offer, a sizable number of consumers aren't impressed.
They're also not overwhelmingly impressed by a streaming company's promotional efforts. Of survey respondents, 33% of consumers who watch their favorite streaming program online heard about it through their friends and family -- that's advertising that cost nothing. Indeed, only 12% of them learned about their favorite streaming show through an advertisement.
Connecting the dots
The implication is clear: If streaming platforms such as Peacock or Disney+ want to continue adding customers, they must create organic, natural hype on a program-by-program basis. And they must do it in the first episode of a series.
That's not to suggest Netflix and Comcast should simply abandon lesser-watched series altogether, nor should they abandon advertising. These things still matter.
However, it wouldn't be a crazy idea to scale back on programming that doesn't create a buzz and scale up on franchises and topics that do. One only has to look at data collected by subscription analytics company Antenna to see the importance and impact of hype. Antenna observes that signups for Disney+ more than quadrupled their normal pace during the weekend that the second season of its lauded The Mandalorian series debuted.