KeyBanc analyst Brandon Nispel shared his monthly analysis of the streaming industry. Key First Look Data showed monthly churn increased slightly Y/Y to 3.0% in May 2022, 2.5% in May 2021, and 2.8% in April.
He believes churn is the most critical metric for streaming services, where his Key First Look Data shows monthly churn worsened M/M and Y/Y to 3.0% for the industry on a weighted basis.
The most extensive services (Netflix, Disney+, Hulu) continue to lead with the best churn metrics based on one-year retentions, though they all increased M/M.
Hulu outperformed the industry while Disney+ fared slightly worse. Hulu exhibited more stable churn characteristics than Walt Disney Company DIS Disney+ though it ranks at the top of the peer group in retaining customers.
Netflix, Inc NFLX churn increased M/M modestly, placing it back toward prior highs. Netflix churn increased for the third consecutive month.
In contrast, other services are being challenged in their ability to reduce churn to his <3% threshold consistently. Subscription services require low churn for growth, and the businesses are showing churn characteristics much like Wireless Prepaid services, generally viewed as low quality.
He expects that until churn shows continued improvement, investors will likely keep a hesitant stance toward streaming providers.
Price Action: DIS shares traded lower by 0.75% at $95.92 on the last check Tuesday.
Photo by Anthony Quintano via Flickr
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