Will Streamers Begin Allowing Viewers to Pay by Usage Instead of by Month?
Will Streamers Begin Allowing Viewers to Pay by Usage Instead of by Month?
A new survey shows that more viewers want flexible payment options for their subscription services.
The promise of streaming once seemed to offer myriad advantages over cable, and one of the biggest that viewers grabbed onto was month-to-month contracts. That type of flexibility is something that most cable distributors never dreamt of offering, but it still creates an environment in which it’s easy for viewers to pay for services they don’t regularly use. A new report by Zuora has details on how streamers could adjust their payment models to help further reduce churn. But will services that benefit from subscribers who pay but don’t use their platforms be incentivized to change?
Key Details:
- The Zuora report found that 80% of people want flexibility in their pricing options.
- More than 20% of respondents said usage-based pricing is a preferred payment method.
- Nearly 80% say they would like an option to pause subscriptions instead of canceling outright.
The data from Zuora was collected in an effort to better understand the habits of modern subscribers. It has multiple implications for streaming service operators, starting with its finding that 80% of respondents prefer to have multiple pricing options when choosing a subscription. That’s key for Apple TV+ which is the last streamer not currently offering an ad-supported plan as well as an ad-free one, though that may be changing.
The data also has important findings for streamers who are looking to potentially bundle with competitors. At a rate of 48%, respondents said they preferred to bundle services because of the enhanced value offered by such a configuration. While cost is the overriding factor, personalization also plays a role, with 23% favoring à la carte products when they only want parts of the bundle. This is a key finding for streamers like Disney+, which has long been a part of the Disney Bundle and is now part of a new combo offering with Hulu and Max.
One intriguing nugget in the survey was consumer interest in subscription plans that allow them to pay for the service by usage. On the whole, 22% of respondents said they would like an option that lets them pay as they use a subscription, and the number jumps to 32% among Gen Zers.
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So, Will Streamers Introduce Usage-Based Price Models?
Unfortunately, usage-based pricing isn’t likely to come to a streamer near you any time in the near future. Most streaming services have hit peak losses, but none besides Netflix are able to show a consistent profit yet, and a change away from monthly subscription pricing would be a huge disruption to each service’s plan for profitability.
Streamers rely on customers who keep paying for their subscriptions, even if they’re not watching. A survey released by Self Financial this week found that almost 30% of Netflix subscribers let their subscription go unused, and if all these customers canceled their subscriptions, it would equate to a subscriber loss in the tens of millions. That revenue wouldn’t be easy to replace even for the world’s largest streamer, and other services with fewer customers have even more incentive to keep these viewers signed up, whether they’re watching or not.
But there could be a middle ground between monthly subscription plans and usage-based payments for streaming services. Zuora’s report also found that 78% of subscribers would like an option to temporarily pause their accounts and then resume service later. This could have a dramatic effect on churn; the streaming cancelation rate has risen 300% in recent years, and Zuora’s own data found that 57% of respondents said they have subscribed to a streaming service in order to watch one title or live event, then canceled once that event/show was finished.
A pause option would allow streaming services to keep unengaged users as customers, at least in name. It would lower the barriers for viewers who want to start their accounts again, and would preserve their watch histories and other preferences instead of forcing them to start over if they rejoin a streaming platform they’ve canceled in the past.
For now, streamers are obsessed with boosting revenue and getting to profitability in order to prove to investors that their businesses are viable. But once that is accomplished, they may be able to start looking at ways to give viewers more options for pricing flexibility, such as a feature that allows customers to pause subscriptions instead of canceling them outright.
Apple TV+
Apple TV+ is a subscription video streaming service for $9.99 a month that includes high-quality original shows and movies including Best Picture winner “CODA,” popular sitcom “Ted Lasso,” and dramas like “The Morning Show” and “Severance.” Apple TV+ is also home to MLB baseball games on Friday nights and MLS Season Pass. Apple TV+ can be added as a channel on Prime Video.