As people are massively canceling their streaming subscriptions, platforms are looking for alternative ways of making money.
Streaming services have become a major part of our lives and are where some of the key watercooler moments in major series occur. You’re as likely now to speak about the latest developments in your favorite streaming service’s landmark series as you are what was on linear TV last night.
However, with the rise of different streaming services, all offering the latest series that you need to keep up with, there’s a comparative rise in streaming fatigue. That’s when users begin to realize they have too many services to keep up with – and crucially, too many services they’re paying for – and decide to cut back on some of them.
In the last six months, more than one in three people canceled a streaming subscription, according to Deloitte. And data analytics firm Antenna has tracked users, finding that the average monthly churn for streaming video services reached 5.2% by the end of 2021 – two percentage points higher than at the start of 2019.
Streaming services start the fightback
The reasons for people canceling their subscriptions or reducing the number of them are legion. Key amongst them? The cost of living crisis has racked everyday people’s bank accounts and left them wondering how to afford so many subscriptions. UK households subscribe to two services on average, while United States households subscribe to four.
Each of those costs money, and as a result, families are starting to reconsider which streaming services they see as important and canceling those they don’t deem necessary. Such decisions have impacted streaming services, including Netflix, which reported disastrous first-quarter results earlier this year.
But streaming services are seeing ways to try and keep those customers who would otherwise cancel – and in so doing, are upending their business models to try and ensure that the departures don’t become so great that they’re terminal for companies.
Bring on the ads
Producing streaming series and movies costs money, never mind the charges for the rights to broadcast pre-existing content on their services. And suddenly, it seems that the services involved are recognizing that the sums don’t always add up – particularly if customers start abandoning the services en masse.
As a result, to try and keep customers, streaming services are providing alternatives for their customers at a lower cost than their current versions. While increasing the price of their standard options, companies are also offering cheaper, ad-supported services. Disney+ is the latest to do so, announcing they’ll be launching their ad-supported tier in the United States on 8 December. That’ll be followed by a global rollout in 2023.
The ad-supported tier will cost the same as the current standard ad-free Disney+ service. Disney+’s ad-free monthly subscription will be increasing from $7.99 per month to $10.99 per month, or the annual subscription from $79.99 per year to $109.99 per year. Meanwhile, Disney+’s ad-supported monthly subscription will be introduced at $7.99 per month, with no annual option offered.
Charging the same for less content?
It’s an example of digital shrinkflation – getting a worse service for the same price – and is one that Netflix and others have also followed. According to Disney, the service will aim to include around four minutes of advertising per hour of content watched, less than traditional TV in the United States, as well as less ad time than Peacock and HBO Max.
But it’s a recognition that people’s disposable income is decreasing as inflation and an economic downturn starts to hit and an acknowledgment that the company still wants to keep customers, even if they have a worse experience as a result.
Of course, whether customers will stomach the changes is yet to be seen. The use of ad blockers and ad-skipping technology has always been popular and is likely to be deployed where possible on these services, too.
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