As Streaming Costs Increase, Price and Exclusive Content Are Key to Consumer Choices

For many, canceling streaming services become an easy first stop when looking for ways to trim a household’s entertainment budget. Month-to-month contracts make streamers easy to ditch, especially when customers are only interested in one or two shows in a given service’s library in the first place. Ad-supported plans are one of the ways streamers are giving viewers an avenue toward saving money, but a new survey from Hub Research shows that subscribers are more loyal to these plans, despite price increases. Hub also took a look at how viewers prioritize what’s most important to them when picking a new streaming service, and the answers should be quite encouraging for services that are raising prices to achieve profitability more quickly.

Key Details:

• Hub found that the maximum amount audiences are willing to spend on TV subscriptions has dropped slightly in the past year.
• Despite this, viewers who are signed up to ad-free services are more likely to stay subscribed to those services over time.
• Having access to new movies and the ability to watch all episodes of a show are still very important to streaming customers.

Peacock and Paramount+ are the two latest streaming services to announce their prices were rising, and both will see their ad-supported plans increase to $7.99 per month by summer’s end. Ad-free streaming prices are rising at an even higher rate; data released in August 2023 showed that ad-free streaming prices had risen 25% market-wide in the previous year, and price increases have not slowed since.

That’s leaving viewers feeling increasingly tapped out when they’re figuring out their monthly entertainment budgets. Hub’s data shows that the amount viewers spend per month on their TV subscriptions has dipped by $3 as compared to 2023, and the maximum that consumers are willing to spend has decreased by $1. These are relatively small drops, but it goes to show that viewers have plateaued their TV spending, even with the seemingly never-ending supply of new content available.

This data might lead observers to think that viewers will downgrade to ad-supported plans whenever available, in order to save money and maybe even squeeze in another streaming subscription every month. But Hub’s data found that people who are already subscribed to ad-free plans are much more likely to keep those plans. When asked if they’d still have a given streaming subscription one year from now, 74% of Hub respondents who had ad-supported plans said they probably or definitely would. The number rises to 85% among ad-free customers, showing that ad-free plans create better loyalty than ad-supported ones do.

What Matters Most to Customers When Picking New Streamers?

Streaming services make more money from ad-supported customers than they do from ad-free subscribers, but Hub’s data should give pause to any executive who wants to propose ditching ad-free options altogether. The latest survey from Hub asked respondents to identify the factors most important to them when considering the value of a new streaming service, and while cost-related reasons were highly consequential to participants, they were fairly equally balanced with content-related reasons. It also found that viewers think of streamers that offer ad-supported and ad-free streaming plans as a better value overall.

The most important factor when determining if a streamer is a good value is having a lower price than other services with similar content, according to Hub’s survey. But access to movies fresh from theaters and carrying every episode of a given show also added a good deal of value to streaming services in the minds of customers, showing that while cost-related factors are important, they aren’t the only way viewers decide to add a new streamer, even at a time where it seems every service is hiking prices. In aggregate, content attributes matter more to customers than just a low price.

“These results are encouraging for streamers under pressure to maximize profits,” said Jon Giegengack, Principal at Hub. “Consumers are feeling the pinch of inflation. But even so, key content like theatrical movies and exclusive originals are as important as cost – great news for platforms that need to raise prices, not lower them.”

Streamers are doing everything they can these days to show Wall Street that their platforms are on the way to profitability. That’s the biggest explanation for the rash of price hikes that have hit the industry in the past 18 months, but Hub’s data shows a clear willingness from customers to keep paying for the content that they want most, and even to pay more for ad-free plans.