In recent months, several streaming services, including Netflix, Disney+, and Paramount+, have raised their prices in an effort to turn a profit. However, a new analysis has found that more than half of consumers have canceled a streaming service due to increasing prices. Millennials, in particular, are less tolerant of rate hikes, with 53% saying they have given up a service after a price increase.
This study, conducted by TransUnion, highlights the growing demand for ad-supported tiers, which offer lower-priced options compared to standard subscriptions. Consumers are looking for ways to keep prices low or reduce what they pay. According to Julie Clark, Senior Vice President of the Media & Entertainment Vertical at TransUnion, these findings support the case for ad-supported tiers with lower pricing options. While offering lower prices may seem challenging in the short term, ad-supported offerings can provide longer-term benefits for streaming platforms and content owners.
For example, Netflix's ad-supported tier costs $6.99 per month compared to $15.49 per month for the cheapest non-ad plan. Consumers seem to be accepting of ads if it means saving money, despite one of the initial appeals of streaming platforms being the lack of ads compared to traditional TV.
Aside from pricing hikes, other reasons for canceling streaming services include finishing a specific show or movie (cited by 29% of respondents) and a lack of new content (cited by 28%). Streamers should take note of these concerns, as some have already canceled completed productions and removed old episodes of shows from their platforms to cut costs.
Looking ahead, the streaming experience is expected to continue evolving, with fragmentation being a part of it for the next few years. Consumer choice and flexibility in accessing desired content will be key. While the future may resemble the cable model to some extent, the primary focus will be on empowering consumers to curate their own media environment.
Overall, as streaming service prices rise, consumers are becoming more selective and cost-conscious. Ad-supported tiers and lower pricing options may be the solution to retain subscribers while still generating revenue for streaming platforms and content owners.