Call it the sequel to cord cutting: the streaming purge.
More and more Americans are cutting back on their subscriptions to streaming services amid high costs and content fatigue. According to data from subscription analytics company Antenna, monthly churn for major streamers including Apple TV+, Discovery+, Disney+, Hulu, Max, Netflix, Paramount+, Peacock and Starz reached 6.3% in November 2023, up 6.3% from a year earlier. Earlier it was 5.1%. ,
And according to Antenna data, over the past two years ending in November, about 25% of customers canceled at least three services. In November 2021, this share was only 15%.
Amidst many changes in the entertainment industry, customers are abandoning it. Gone are the days when companies would spend untold amounts of money creating content and paying top-tier talent in hopes of attracting new customers; Now they are really under pressure to make a profit. This means less new content, more ads, and higher prices.
“For many years, streaming services offered subscriptions at extremely low rates,” says Dan Goman, CEO and founder of production and distribution company Atelier Creative Solutions. But those rates were ultimately unsustainable. “Now we’re seeing the industry move toward familiar models—commercials and bundles.”
If price increases seem steep, Goman says, that’s because they’re bound to happen.
“It’s all moving very quickly. The industry is being forced to change overnight to survive,” he says. “Consumer demand for content will continue, it just depends on how they access that content going forward.”
Companies are making a number of changes to attract (or in many cases, re-attract) audiences, including offering cheaper, ad-supported streaming options and partnering with other companies to provide more content for a customer’s dollar. Involves combining.
All that said, while consumers are cutting back on some streamers, they aren’t cutting them off entirely: In fact, Americans are watching streaming services more than ever. According to Nielsen data, streamers accounted for a record 38.7% of Americans’ viewing time in July, with YouTube TV and Netflix leading the way. (Its lead over broadcast and cable has declined slightly since then.)
Still, audiences are becoming more selective about how they spend their dollars. That’s why some Americans are cutting back.
At a time when subscriptions were relatively cheap and content libraries were vast, streaming was an attractive proposition for viewers. But there are more companies with streaming platforms, and they are constantly raising prices, making it less affordable for those with fewer options. An example: When Disney+ was introduced in 2019, it cost $7 per month. Just a few years later, the ad-free version has grown to double that amount.
How much prices increase depends, of course, on the customer. But financial Times recently found that a viewer now pays $87 per month for top services, up from $73 in 2022. wall street journal Analysis for August 2023 showed that the price of ad-free streaming rose 25% in a year.
It’s an industry-wide crisis: In 2023 alone, Apple TV+, Disney+, Hulu, Max, Netflix, Paramount+, and Peacock all raised their prices.
The 2023 price increases include:
- apple tv+: Monthly cost increased from $3 to $7 to $10.
- disney,:Ad-free option increased from $11 per month to $14. The annual price also increased from $110 to $140.
- Hulu: Ad-free offering increased from $15 per month to $18.
- Max: The ad-free offering increased from $15 per month to $16 (this was previously HBO Max). The company has also added an Ultimate ad-free tier of $20 per month.
- Netflix: The premium offering increased to $22.99 per month, an increase of $3. Its Basic plan increased by $2 per month to $11.99. The company has also banned password sharing.
- paramount+: The price of the premium offering, which includes Showtime, has now increased from $10 to $12 per month; The cost of the ad-supported version also increased from $5 per month to $6.
- Peacock: The ad-free Premium Plus offering increased from $2 per month to $12; It also increased the ad-supported subscription by $1 to $6 per month.
Although some consumers may not have been concerned about cost when the services were cheaper, even news of a price increase may prompt them to reevaluate whether they are actually using a certain streaming platform and Are you getting value from it or not?
With Americans facing a general increase in the cost of living over the past few years, discretionary spending such as entertainment subscriptions are being cut back.
Many streamers, including Disney, Hulu, and Netflix, offer ad-supported and ad-free streaming packages, with ad-free options usually costing a few dollars more per month. But avoiding them is now becoming expensive.
Take Amazon, which recently announced it would begin inserting ads into Prime Video content later this month; Viewers can watch ad-free by spending an additional $2.99 per month.
Of course, ad-supported streaming is cheaper than its ad-free counterpart. Antenna’s data shows that more and more people are opting for less expensive plans (public statements from companies support this). This works well for entertainment companies; They earn more from ads than subscriptions.
“The subscription model is not economically viable at the current price,” says Keith Valory, CEO of streaming service Plex, noting that when cable reigned supreme, providers received their share of subscription costs and advertising revenue, and The churn was negligible. Now, when churn is high, they are relying more on subscriptions. “It’s not surprising that all these people are talking about or starting to include ads in their subscriptions.”
Disney CEO Bob Iger has said that the price increase in ad-free tiers is intended to push more people toward less expensive plans. “Even amid a challenging advertising market, we are very optimistic about the long-term advertising potential of this business,” Iger said last year.
“The industry knows that price increases will eventually lead consumers to reevaluate their subscription options and perhaps move toward some type of advertising tier or bundled deals,” Goman says. “Either way, both options are better for streaming services [and] Industry. Advertising tiers provide operators with greater revenue potential while bundles provide stability and predictability.”
As streamers have proliferated over the years, it has become increasingly difficult to find quality content. Some customers say that along with this, the overall business environment has become cooler and there is a shortage of things to see, which has reduced the monthly costs even further.
Some companies, including Warner Bros. Discovery and Disney, are removing shows and movies from their streaming services to avoid paying royalties and licensing fees. Even if a show or movie is advertised as original to a specific platform, that company may still pay to host it. When Warner Bros. cut back on its content offerings last year, it saved millions of dollars.
But this means viewers may miss out on some of their favorite shows or movies; Analysts say this could make consumers distrustful of streamers in general. Plex’s Valory says that even if a title moves to a different streaming platform, “app fatigue” is starting to affect customer retention. Who wants to pay for another new service?
“The streaming media experience is very disorganized…[it] There needs to be more cohesiveness,” says Valory. “As more streaming services emerge, finding content has become more challenging.” And when content becomes difficult to find, viewers cancel their subscriptions.
However, in some cases, consumers have exactly the opposite problem, says Ryan Janus, an Arizona-based certified financial planner who helps families budget. There is no dearth of content, but it takes time to sift through the content to find out what each individual user likes.
Janus says, “With all the different streaming services, they can’t even deal with the amount of content available for consumption, let alone actually taking the time to find it and consume it.” “Instead of continuing to pay for streaming services they never open, they decide to simplify their lives and stick to one or two of their favorite platforms.”