Subscription Fatigue Growing as Churn Rate Hits 47%; Price Considerations Most Common Reason
The late 2010s were truly a golden age for streaming customers. Providers had thousands of hours of content available, most of it ad-free, and most of it priced at a rate that was too good for customers to ignore, allowing users to stack streaming services on top of each other and still save big money over a cable subscription.
That golden age is well and truly over now. A recent report indicated that a bundle of the top five ad-free streaming services in the United States now costs $87 per month, a number that rivals the cost of the average cable subscription. Disney+ recently announced the second price increase for its ad-free tier in less than a year, and Netflix pulled its cheapest ad-free offering for new subscribers in July.
Customers are feeling those rising costs in their bank accounts, and are not shy about acting accordingly. A new survey from Civic Science shows that 50% of the population in 2023 is feeling subscription fatigue so acutely that they’ve either canceled or intend to cancel a subscription because of it.
Streaming subscriptions in particular are bearing the weight of this dissatisfaction. The number of customers who subscribe to four or more streaming subscriptions has plateaued, while the number who subscribe to just one or two services is growing. Over half of streaming consumers canceled a service due to rising prices in June, and over 40% downgraded to an ad-supported plan to save money.
The numbers from Civic Science are reinforced by new data from Parks Associates, which shows the average annualized subscriber churn rate for streaming customers now stands at 47%. That means almost half of streaming users have canceled or will cancel a service at some point in 2023, and the need to cut household expenses is the most frequent reason given for ditching a streamer.
So what can streaming platforms do to combat these trends? Cheaper, ad-supported plans are certainly a good place to start. The Civic Science study found that 40% of respondents would prefer free streaming funded entirely by ads, as opposed to just 27% who said they’d be most interested in a more expensive plan that cut out the commercials.
Streaming providers would do well to start finding solutions to the churn problem soon. Data from Aluma Insights shows that 52% of streaming users now “hop” from one service to another in the name of keeping costs down, signing up for a short period of time, and then canceling to sign up for another service. This behavior is also known as “cycling,” and another survey from earlier this year found that almost 7 in 10 adults were considering doing it at some point in 2023.
There’s no doubt about the fact that the golden age of cheap, ad-free streaming is long gone. Now that streaming has mostly slain the linear TV dragon it had its sights on for so long, it must grapple with how to keep itself profitable as it transitions to the main source of entertainment for most TV watchers in the United States.
Disney+
Disney+ is a video streaming service with over 13,000 series and films from Disney, Pixar, Marvel, Star Wars, National Geographic, The Muppets, and more. It is available in 61 countries and 21 languages. It is notable for its popular original series like “The Mandalorian,” “Ms. Marvel,” “Loki,” “Obi-Wan Kenobi,” and “Andor.”