Inflation bites. The stakes in the streaming wars get higher with falling subscriber numbers. While pricing matters in user retention, consumers will continue to share passwords and look for bundle deals, notes Seth Shafer, senior research analyst for S&P Global Market intelligence, and Michael Nocerino, research analyst at 451 Research, a part of S&P Global Market Intelligence.
Spending squeeze
A rising costs of living pushes consumers to cut down on discretionary spending such as streaming services, especially for those from lower-income households. A 451 Alliance survey found a 4-percentage point decrease in the proportion of lower-income households (under $50,000 per year) subscribing to paid streaming services. However, higher-income households (over $100,000 per year) recorded a 5-percentage point increase in subscriptions. Higher-income households tend to use three or more services, while lower-income households typically use two or fewer.
Streaming: better value for money
Expensive TV subscriptions have long suffered from attrition since the arrival of streaming services. Survey data from the 451 Alliance shows that 56% of lower-income households subscribe to a traditional TV service in comparison to three-quarters of higher-income households. Lack of viewing options may drive consumers to ditch traditional TV.
Not enough value for money was cited by 42% of consumers as a reason for canceling their TV service, while 33% see streaming services as a better fit. This contrasts with more than half (55%) of consumers with no history of traditional TV subscription, who agree that streaming services are a better fit.
Cheaper is better
The perceived value of streaming services determines whether consumers will stick with their current subscriptions, even though these platforms tend to be more affordable than a traditional TV subscription.
Price increase (37%) and not using the service enough to justify the cost (37%) are tied for the top reasons consumers cancelled a streaming subscription, followed by content not being worth the price (27%).
Meanwhile, more affordable pricing, including free trials, different price options and ad-supported tiers are cited as factors that could entice those who have never signed up to a streaming service.
Bundling and password sharing
Streaming services aiming to increase the number of signups should note that more than half of consumers said they have either shared account access with family or friends (34%) or have used another subscriber’s access (24%). While Netflix has started cracking down on password sharing, it is still allowed on other services. Disney said it will begin to restrict password sharing staring in November 2023. A more palatable option for streaming services would be bundling, as 35% of consumers said that they receive some or all of their streaming video subscriptions as part of a bundle.
Bundling and password sharing
Netflix (56%) and Amazon (55%) are neck-and-neck in user numbers, followed by Hulu (41%) and Disney+ (36%). Hulu and Disney+ receive big boosts, often included as add-on services from heavy streamers who subscribe to five or more services. Amazon ranks highest in terms of user satisfaction (97%), followed by Paramount+ (96%) and Max (95%). Heavy streamers are more easily satisfied, according to 451 Alliance survey results.
