So, Deloitte caused a stir in streaming ranks this week with a report that suggests 2022 will be “The Year of The Churn,” as customers flit between services like hungry hummingbirds working a botanical garden. The result: a projected 150 million service cancellations and an industry-wide churn rate of 30 freaking percent. 

That’s more churn than a butter factory, likely to be matched only by its similar impact on the stomach juices of marketing executives. Undoubtedly, it’s a big number designed to grab a lot of attention, and well, mission accomplished. 

But it also suggests that churn — particularly the kind Deloitte cites, where a significant part of the audience signs up for a month or two to watch a particularly buzzy show before cancelling and moving on to another intriguing show elsewhere — will require new thinking for services that still rely too much on programming strategies left over from the broadcast and cable eras.

The only two companies relatively immune to the churn concerns are Netflix and Disney Plus, Deloitte said, for very different reasons. 

Netflix plays flood-the-zone at an epic scale, offering so many shows of every kind that most audiences treat it more like a pay-TV smorgasbord, but for far less. Netflix, of course, is freed of legacy requirements and headaches, and makes everything available everywhere at the same time for the binge consumption lots of audiences love. 

Disney, by contrast, has the kids, or more precisely, their parents wanting repeat-worthy, family-safe programming. They won’t cancel until the kids discover Fortnite, Roblox and League of Legends. 

Unlike Netflix, most streaming services have legacy outlets that they keep feeding. But they also stretch out streaming releases of their best shows over many weeks, hoping audiences remember to come back the following Tuesday (or was it Thursday?) instead of watching 15 other interesting things somewhere else. Just keep paying the subscription fee. 

That approach is a leftover of the programming grid. It may make some sense when you have a show unspooling on NBC or CBS that run the next day on Peacock or Paramount Plus, but also diminishes the stickiness of the steaming service.  

Traditionalists say weekly releases allow shows to find an audience, and have a bigger cultural impact. But how many streaming-first new shows the past two years can claim that kind of zeitgeist payoff? I can only think of a handful: Mare of Easttown, Squid Game, Bridgerton, The Mandalorian, Hacks, The Flight Attendant, maybe WandaVision. 

Companies are trying other tactics to keep audiences around, including old-fashioned discount deals. Hulu sold one-year subscriptions over Black Friday weekend for 99 cents a month. Paramount Plus used corporate sibling CBS to advertise a one-month-free deal. They’re also creating tiers with cheaper or free ad-supported offerings, which seems like the worst of old and new. 

More bundling is likely too, even between services not owned by the same company. Expect more tie-ups like the European deals between Comcast and ViacomCBS involving Sky, Showtime and Paramount Plus

But traditional media companies also will need new strategies for programming and operations if they want to survive a time of omnipresent churn. The continuing fast decline of the traditional movie business only makes it more important. 

A new study by three marketing and branding agencies says roughly half of pre-pandemic moviegoers still aren’t going back to theaters. One in 12 likely will never return. Uncertainty over the omicron variant will only extend those sentiments well into 2022. 

“Before, maybe you went every now and again — overlooking the drawbacks,” said David  Herrin of film research company The Quorum and a former UTA head of research. “Now you add safety concerns to that mix, and you suddenly become a former filmgoer.”

That likely represents a fundamental reset of one of Hollywood’s financial bulwarks, with implications for all the home-entertainment outlets further down Hollywood’s elaborate distribution ladder. But it’s also an opportunity for streaming services that can feed an appetite for satisfying one-night watches featuring big stars, stories or franchises. 

For instance, HBO Max recovered nicely in 2021, boosted immeasurably by WarnerMedia CEO Jason Kilar’s audacious and hugely controversial decision to release all the Warner Bros. slate on the streaming service the same day they hit theater screens. 

That steady stream of more than 20 top-notch movies (Dune, Zack Snyder’s recut of Justice League, In the Heights, Wonder Woman 1984, The Matrix: Resurrection, etc.) made HBO Max a far more attractive proposition, especially given its steep price, lack of initial original shows, and audience confusion over the brand. 

“It was great for the service, especially during a time where schedules were not fully populated because of COVID-related production delays,” said Casey Bloys, the HBO/HBO Max chief content officer, speaking recently to Vulture. “It was just a great steady source of movies that people loved. Going forward in ’22, hopefully we’re going to be in a world where people are going back to theaters and not worrying about the pandemic.” 

Next year will still feature a planned 12 Warner movies made for direct release on HBO Max. And output deals from Universal and Fox will end over the next two years, sending their movies to competing services (Amazon/Peacock, and Disney Plus/Hulu respectively).    

At least the pandemic gave WarnerMedia the market leverage to permanently shift its movie releases to a 45-day theatrical window before sending them straight to Max audiences.

“That is a massive shift because the pay-one window — which is what HBO typically got —  was eight months after release,” Bloys said. “So you’re going from eight months to 45 days. That’s huge. So I believe it’s going to work really well because people who want to go to theaters and experience a movie theatrically get to do that— and then 45 days later, it’s on Max. That, to me, seems like a really great situation.”

As WarnerMedia continues to ramp up its originals production, and adds Discovery Plus in some manner (bundle? new hub in a renamed HBO Max?), the company will have a better chance at attaining the goal all the services are seeking, even as they grapple with The Year of The Churn. 

“So my hope is that, a year from now, we’re cementing our place as one of the must-have services,” Bloys said. “Because we’re all in this race to end up as one of the top streaming services. It is a race. Not everybody’s going to survive, and my hope is that our programming makes us one of the must-haves.”

If the media companies behind all the new streaming services thought it was a challenge just getting their pricey platforms launched and shows produced amid the pandemic, just wait. A new Deloitte study suggests the real headaches are just beginning. 

Users are subscribing to more services than ever (though slightly fewer than during the depths of lockdown), but also are ditching services regularly to watch a hot show somewhere else. That’s sent churn rates soaring 85% over the past 14 months, said Deloitte Vice Chairman Kevin Westcott, who oversees the company’s annual Digital Media Trends Survey. 

“Before the pandemic, churn rates were around 20%, and they actually went down early in the pandemic,” said Westcott, practice leader of Deloitte’s technology, media and telecommunications segment. “Now, we’re still seeing churn rates above 35% (actually 37%). What we see people doing is they’re signing up for a specific series or show they want to watch, then cancelling and signing up for other services.”

The good news amid the churn, Westcott said, is that “only 3% (of those cancelling) aren't replacing one service with another.”

People seem to be settling into a “budget” for subscription services of around four at a time. That’s slightly above the pre-pandemic rate, but actually down from mid-pandemic when the average household had five subscriptions, Westcott said.  

And it’s not going to be the same four or five services year-round. Audiences are taking full advantage of the increased ease with which they can cancel and move on. 

That’s bad news for streaming services trying to make back the billions they’re spending launching their shiny new services. In response, they’ve been ending free service promotions (except in bundles with carriers or handset sellers) while pushing discounted annual subscriptions. 

It’s a big shift from the heyday of pay TV, when cable providers reaped billions of dollars while making it notoriously difficult to cancel service, return the cable box, and all the rest (not to mention the lack of competitive alternatives).

The SVODs can’t afford to mimic that transactional friction in an era of higher expectations and wider options. 

Nearly half the survey respondents said they’d cancel a video service over rising prices, for instance. That’s easily the biggest reason for service cancellation among the survey’s nine possible reasons across film, music and game subscriptions. 

So, streaming services will need some other tactics. 

One, the study suggests, is consistently pumping out high-profile shows that can attract and retain subscribers. Nearly a third said they’d cancel a service if another had content they were more interested in. And one of the biggest reasons to stick around: the prospect of more good stuff soon. 

That has lots of implications. As just one example, what’s it mean for the WarnerMedia decision to end its experiment after this year with releasing Warner Bros. films day-and-date on HBO Max and in theaters? 

At $15 a month, subscribers may stick around to watch those first-run movies on top of the other offerings, but might be less forgiving once those movies don’t show up for weeks more. 

CEO Jason Kilar is already talking publicly about 2022’s release strategy, telling Recode’s Peter Kafka in a recent podcast that big films like The Batman will go to theaters exclusively for 45 days, while other films will stay there only 30 days, and still others will go straight to streaming. 

The industry has long needed a more nuanced approach to its movies, given the mounting costs for both production and marketing (“prints & advertising”) of even mid-tier movies. 

Will other studios follow suit? And what’s that mean for the battered theatrical exhibition industry, which won’t have as long to make money from blockbusters, and won’t get many of the lower-end movies that filled smaller screens in a megaplex? 

Regardless of those questions, the survey suggests there’s definitely appetite among subscribers for more nuance. 

The survey found overwhelming support for so-called premium VOD releases, at a surprisingly high level. 

“For those customers who've tried PVOD, the overwhelming majority, 91%, said they'd do it again,” Westcott said. “I've never seen a reaction that strongly on the positive side for an entertainment experience.” 

But there’s plenty else that needs cleaning up. 

Two-thirds of respondents said they’re “frustrated when content they wanted to watch is no longer available on their streaming video services,” the survey says. 

I can’t help thinking of the near-comical shuffle last year that saw Warner’s eight Harry Potter movies join the HBO Max debut, then slide back to Peacock by late summer. More recently, they’ve started leaving Peacock for still other destinations. 

That’s a temporary artifact of lingering (and lucrative) content-licensing agreements, but consumers don’t like it as much as company shareholders and accountants. 

Other frustrations include figuring out what service has a given show, the quality of recommended shows to watch, and the need to even have multiple subscriptions to see a broad range of programming. 

Streaming services need to be aggressive about showing new subscribers what else they can watch beyond that show that enticed them to subscribe. Westcott said that window of assisted discovery is all too brief.  

Services must do a better job “finding content (the consumer) wants, and figuring out how to expose the consumer to all the entertainment options I have on my platform,” Westcott said. “Am I doing a good job introducing them to other kinds of content that may be of interest?”

In the future, Westcott suggested recommendation systems could improve by relying on other indicators than just what other shows someone has watched on a service. 

Particularly, he said, knowing what games, books, audiobooks and music a customer also likes could provide far more relevant content recommendations. 

Tapping that information will be far easier for streaming companies including as Amazon, Apple and the sleeping giant, Alphabet, which already sell, stream or rent vast amounts of those other kinds of entertainment content (not to mention all the other things Amazon in particular sells).  

Westcott said the good news for all the streaming providers is that a majority of customers, especially younger ones, are open to mid-tier offerings with partly subsidized subscription costs. More than three in five respondents said they’d be interested in a service with a light ad load of no more than six minutes for hour. 

Paramount Plus, Hulu and Peacock are already there, and HBO Max plans to offer that sort of mid-price hybrid tier later this year.

More worrisomely for the long haul, for the first time the survey found a generation, the teens and 20-somethings of Gen Z, that prefers games, music, internet browsing and social media over TV and movies. 

Every other generation, especially Baby Boomers, said watching TV and movies at home is their No. 1 entertainment option. 

Among other responses, that suggests Hollywood’s new streamers will need to find more game- and music-related programming, and crossovers (think Taylor Swift making-of documentaries and Netflix’s hugely popular adaptation of The Witcher games and books).

The Metaverse being built by companies such as Epic Games, Facebook’s Oculus and Roblox (and Alphabet, Apple and Microsoft) will almost certainly be where Gen Z and its successors spend more of their time. 

That Metaverse in the making surely will have places to jointly and virtually watch long-form and episodic video programming. But it’s hard to see Hollywood studios being the center of that looming virtual universe. 

In the meantime, the streaming companies and their parent companies have plenty of work to do, making what they already have built more attractive, useful and sticky to all the customers they already have. 

The services most likely to thrive in the months and years ahead “aggregate a lot of entertainment, not just their own, and offer different models to different kinds of subscribers,” Westcott said. “I think that's the direction we're going to go.”

Mediacom Communications was one of 49 businesses selected by Deloitte Private and The Wall Street Journal as one of 2021’s US Best Managed Companies. 

The program recognizes outstanding U.S. privately held companies with at least $250 million in annual revenue and the achievements of their management teams.  Awardees are selected based on their performance in four key categories: strategy, execution, culture and financials. Program designees join the global network of Best Managed Companies, which consists of more than 1,000 organizations in 30 countries. 

“After a challenging year for many businesses, it feels more important than ever to recognize the outstanding achievements of our 2021 US Best Managed Companies honorees,” Deloitte LLP vice chairman and U.S. Deloitte Private leader Jason Downing said in a press release. “These businesses are led by visionary and innovative management teams throughout the country and across industries. Their resilience and sustained commitment to their purpose, particularly throughout the COVID-19 pandemic, is inspiring. We welcome them into the program and look forward to their continued success.”

According to Deloitte, a panel of judges reviewed applications in March and selected this year’s honorees based on strengths across the four core criteria, and whose management teams excel amid change. Benefits of the program include access to a global community of peer business leaders and marketplace recognition.

“For over a quarter of a century, the dedicated men and women of Mediacom have worked tirelessly to ensure the smaller markets we serve receive the same or better telecommunications services as America’s largest cities,” said Mediacom founder, chairman and CEO Rocco Commisso in a press release. “During this past year, the team at Mediacom has gone above and beyond for our communities by rapidly connecting thousands of homes with low-cost internet services, supporting local food banks and preparing our advanced broadband network to meet the demands of more people than ever before working and studying from home. To be recognized as a 2021 US Best Managed Company in the midst of the economic and operating challenges caused by the coronavirus pandemic is a testament to our employees’ steadfast commitment to the core tenets of our business, and I thank them for making this honor possible.”

Few companies in the cable and telecommunications industries have escaped the cyber attacks that continue to wreak havoc on just about every layer of the supply chain.

Varying degrees of security breaches at Comcast, Cox Communications, Time Warner Cable and other cable providers have raised the red flag in the cybersecurity space and prompted a new mantra: Now is the time to raise the level of security.

“A fundamental evolution is taking place and the security implications are numerous,” Michela Menting, research director at consulting firm ABI Research, said. “Above all are the issues raised by the transition to all-[Internet protocol] networks, which are already highly exploited by threat actors and will be a boon for malicious cyber-agents — and all sectors are vulnerable.

“Investment in security services and corresponding hardware and software is not something they can ignore or put off , except at great cost to their services, reputation and client base,” she said.

Cybersecurity concerns have become so paramount that in its Charter Communications-Time Warner Cable merger order, the Federal Communications Commission required Charter to submit a plan to manage its increasing security risks during the transition.

And according to the Hewlett Packard Enterprise/Ponemon Institue “2015 Cost of Cyber Crime” study, hacking attacks cost U.S. firms, on average, some $15.4 million a year. Globally, U.K. insurance firm Lloyds estimates that cyber-attacks are costing businesses a staggering $400 billion a year.

There’s also the shaken confidence of clients and subscribers about the safety of their data. And not everyone is convinced the cable industry is prepared for any attacks.

“Cable networks are archaic in many respects, as they extend the life of existing systems, and frankly, the security posture of networks and the less time spent on security leads to a lot of holes,” Chris Simkins, CEO and co-founder of supply chain analysis and risk management firm Chain Security, said.

PricewaterhouseCoopers (PwC), a consultancy moving deeper into the cybersecurity space, believes cable companies are getting the message that shoring up their networks should be of the highest priority.

“There’s a lot going on with MSOs and we’re seeing the awareness lev el rising,” Mark Lobel, a principal in PwC’s U.S. advisory practice and Cybersecurity Technology, Information, Communications & Entertainment leader, said. “But cybersecurity is like a chess game with no kings, and trying to stay ahead of who’s across the board.”

And just who is across the board?

“There are many threat vectors,” Irfan Saif, a principal in Deloitte’s Cyber Risk Services practice, said. “There are service-disruption actors, those looking at the backbone to propagate malware and those who want to compromise customers. It’s a broad range of threat actors and companies must be cognizant of them all.”

That will require a holistic approach, Saif noted. “You must understand what behavior is considered normal and what indicates a threat of attack and what are the crown jewels that require higher-grade protection.”

Cisco Systems, another player in the cybersecurity space, concurred with Saif’s assessment.

“The best approach is a holistic look at security and where each layer builds on top of each other — firewalls, advanced malware protection, email and core technologies like conditional access, DRM and anti-piracy technology — a breadth of security,” Cisco senior product and solutions marketing manager Sam Rastogi said.

Another less glamorous threat, but just as dangerous, comes from the inside.

“Employees or vendors with access to information is a growing concern,” Rastogi sad. “Who’s accessing information and how, and is there abnormal activity? A risk-based program with alerts, authentication measures and more will give companies more insight.”

CableLabs, the cable industry’s research and development consortium, is accelerating its cybersecurity activity with two initiatives: It’s working with the Wi-Fi Alliance to ensure links to hotspot access points are secure, and it’s reaching more deeply into home managed access points.

“The level of engagement is very high and there are real questions being asked,” The mindset is changing,” CableLabs principal security architect Steve Goeringer said.

That’s a good thing, said Rick Michaels, CEO of CEA, a cable industry-focused investment bank. “It’s one thing that cable is carrying 60% of the Internet traffic, but now there are data centers and multiple services with different touch points in cable. Cybersecurity should be of paramount interest to the cable industry.”

Most cable companies are understandably reluctant to discuss their cyber security strategies. Comcast, which in March hired Noopur Davis as senior vice president of product security and privacy, offered a statement from Myrna Soto, senior vice president and global chief information security officer: “We’ve committed extensive resources with a focus on risk management and built resilient and smarter networks with many security layers that are monitored continuously. Using automation, tooling and analytics is key.”

Arris, another key equipment supplier to cable networks, said in a statement (in part): “Security remains a top priority at Arris, as it does for all manufacturers of Internet and network-connected devices” and that it “employs a variety of protective measures to help ensure the safe and reliable operation of our devices including, but not limited to, DOCSIS compliance, vulnerability scanning, and monitoring programs.” It works “actively with security organizations and our service provider customers to identify and quickly resolve any potential vulnerabilities to protect the subscribers who use our CPE devices.”

Breaches cut across both residential and business markets, added Sander Smith, president of Sericon Technology.

“It’s clear that very soon we’ll see consumers filling their home networks with IoT devices, and these devices will be rushed to market with very little thought given to security.”

Yet even with the increase in cyber attacks (PwC reported a 38% increase in 2015 vs. 2014), there is cautious optimism that with emerging cybersecurity innovations, an expanding community of cybersecurity companies and a heightened awareness among service providers, security is being strengthened.

“We’re seeing various levels of maturity in cable and telecom and a raising of awareness in those organizations,” PwC’s Lobel said. “But they can’t lose focus.”

The National Cable & Telecommuications Association is focusing its cybersecurity attention on two areas, senior vice president, science and technology and chief technology officer Bill Check said.

“We are leading the industry’s Cybersecurity Working Group and working with the FCC’s Communications Security, Reliability and Interoperability Council (CSRIC), along with various cybersecurity-related working groups,” he said. “The challenge is to anticipate current and future threats and design systems of early detection and resistance, because cyber-criminals will always look for new exploits.”

Deloitte's 2015 "Technology, Media & Telecommunications Predictions"   foresees that  "the generation that won't spend" is actually "spending a lot on media content" and that "disruptive innovations with broadband delivery" will make higher speed services more widely available.

In its latest annual outlook, unveiled in mid-January, the global consultants examine an array of topics, from the Internet of  Things (one billion devices to be shipped this year, up 60% from 2014; predominantly used in industrial rather than consumer settings) to contactless mobile payment systems (should be integrated with other retail/financial applications; need strong security).

In its wide-ranging 76-page analysis, Deloitte paints a bullish picture for streaming media and equipment used to access it.  It expects that North America's 83 million Millennials (ages 18 to 34 years old) will spend $62 billion this year on media content, including video (pay TV, subscription VOD), music, games and other entertainment/information sources.

Overall, Millennials will spend about $3,000 per year on technology hardware and connectivity," including game consoles and portable devices on which they can receive and watch streamed video, Deloitte says.

The analysis contends that short form video has a strong future, but it is not the future of television."  It predicts that videos less than 20-minutes long) will represent  "under 3% of all video watched on all screens."  Although such short videos will generate $5 billion in global revenues, that sum will pale against the $400 billion from long-form TV content brought in by advertising and subscription revenues.

"Short-form should not be considered as a direct competitor to 'traditional' long-form content, but rather as an additional screen-based medium, addressing needs that were previously un-served or which were catered for by other media," Deloitte concludes.  

As for sports, the report notes that Millennials are "less devoted to major league sports than older generations," but that 86% of them watch live sporting events on TV and are many are "likely to spend $25 to attend a game."

In its Telecommunications forecast, Deloitte dwells on "haves" and "have nots," particularly  rural users. It concludes that, "There are evident implications for regulators" and "It may not be sufficient simply to call for broadband to be recognized as a universal service, in the same way as fixed-line telephony."  

The report suggests that the definition of broadband "needs to be updated regularly"; it predicts that rather than conventional downstream benchmarks, "in future, as broadband usage evolves, upstream speed will become increasingly important as users upload more content." 

"Regulators should also consider how price per megabit is affected by technology," according to Deloitte's assessment.   

As for over-the-top and VOD services, Deloitte recommends that providers may have to develop "alternative approaches" to reach customers who cannot access mainstream services. It cites "satellite caching" as a possible option.

The Deloitte study delves into some unusual territory, touching on topics that may be vital for cable operators looking at whole-home service, such as WiFi delivery.

For example, it acknowledges that WiFi can result in a 50% drop in speed.

"Providing a wired connection is too complex for most households," Deloitte observes, but it lists numerous barriers to wireless home service: older routers have less throughput; construction materials affect performance (thick walls in old home; foil-backed plasterboard/insulation in new homes); underfloor heating coils that deflect signal.

"The highest speeds within a WiFi home are generally closest to the router," Deloitte says, "but in some cases the device needing the fastest speeds (typically the television) may not be adjacent to the router."

Summarizing many of the challenges for these and other broadband installations, Deloitte concludes that, "In the long-term there is ample opportunity for more disruptive innovation with broadband delivery."

Gary Arlen analyzes broadband and media trends at Arlen Communications.