Average Monthly Streaming Budget Plummets 30% as Viewers Turn to Ad-Supported Plans
New data from Parks Associates shows that most viewers are cutting back their budgets with ad plans, though many are also cutting back on the number of subscriptions.
Audiences can be forgiven for wondering why streaming services are seemingly so desperate to push ad-supported streaming plans on them. After all, ad-free plans are much more expensive to subscribe to, and thus should bring more revenue per user, right? Not so. Ad-supported streaming plans may pull in less subscription dollars, but the ad revenue they generate alongside more than makes up for the lower monthly price customers see. Every major streaming service besides Apple TV+ offers an ad plan now, and new data from Parks Associates shows that customers are taking advantage of the savings offered by ad tiers and being more selective about their streaming choices, as the average monthly spend on streaming services has plummeted in recent years.
Key Details:
- In 2021, the average streaming customer spend $90 per month on streaming services.
- The number is $63 today, but 20% of customers still subscribe to 9+ streamers.
- Twenty percent of viewers subscribe to nine services or more, as compared to Q3 2023, when the number was 29%.
The new data from Parks shows that viewers have responded to the seemingly never-ending wave of streaming price increases by prioritizing which services matter most to them. Average monthly spending on streaming hit $90 per month in 2021, but the number has dropped as prices have gone up, and as of the first quarter of 2024 respondents to park said their monthly outlay for streamers was $63, a 30% decline.
Some viewers are simply canceling more services, as Parks’ data shows. The percentage of customers who subscribed to nine or more streaming services in the third quarter of 2023 reached 29%, almost one-third of all viewers. But that number has dipped to 20% in Q1 2024, though the number of viewers who subscribe to between zero and three streamers per month seems about the same in that time span.
“Consumers are spending less, but rather than go without, many are using ad-based alternatives to save on costs,” said Sarah Lee, Research Analyst, Parks Associates. “A service needs to provide unique and ongoing value if it is to charge a premium.”
Which Streamers Are Establishing Themselves as Good Values?
Disney+ is one of the services helping itself stand out best as viewers get more choosy about their streaming dollars. The introduction of Hulu content onto the Disney+ app was a highly shrewd move, as viewers can subscribe to both services for just $10 per month and watch most of the shows and movies from either library on a single platform. Disney+ will also add an ESPN tile later this year, making a huge selection of live sports available and clearly demonstrating the “unique and ongoing value” Parks identifies as necessary for streamers to stand out.
Netflix has some work to do on the value front. A report from earlier this week stated that Netflix is looking to potentially offer free streaming plans in some areas, as adoption of its ad plan has lagged behind that of other streaming services. Netflix has already tried to boost the value of its $6.99-per-month Standard with Ads plan, by allowing binging viewers to stream select episodes ad-free and letting customers of the plan download shows and movies to watch offline.
Amazon counted on the value it had already established when it rolled out ads on Prime Video. Instead of creating a cheaper ad-free tier, Amazon simply forced all of its viewers to accept ads or upgrade to an ad-free plan for an extra $2.99 per month. It wagered that most viewers who get Prime Video through the larger Prime subscription would continue to see its value, with benefits like free two-day shipping as worth the minor headache of a few streaming ads during playback.
The Parks data makes it clear that streamers like Paramount+ and Peacock — both of whom recently announced price increases on ad-supported and ad-free plans — will need to keep thinking about how to keep their services a good value if they don’t want to risk mass customer defections.
“All categories of household services face challenges, as consumers reevaluate their spending and subscriptions,” said Elizabeth Parks, President and CMO, Parks Associates. “A focus on value and education, the user interface, and the customer experience is what will drive the next generation of services in the home.”
Amazon Prime Video
Amazon Prime Video is a subscription video streaming service that includes on-demand access to 10,000+ movies, TV shows, and Prime Originals like “The Lord of the Rings: The Rings of Power,” “Jack Ryan,” “The Marvelous Mrs. Maisel,” “The Boys,” and more. Subscribers can also add third-party services like Max, Showtime, STARZ, and dozens more with Amazon Prime Video Channels. Prime Video also offers exclusive live access to NFL Thursday Night Football.