Study: People Are Canceling Streaming Services Because Of Rising Rates

Over the past few months, Netflix
, Disney+, Paramount+ and other streamers have all hiked prices for subscribers as they look to turn a profit — some more successfully than others — in an arena that’s largely been defined by losses.

But those subscribers may not be willing to stick around for more rate hikes. A new analysis finds that more than half of consumers have canceled a streaming service because of increasing prices.

The study, from information and insights company TransUnion, found that Millennials are especially intolerant of rising rates, with 53% saying they’ve given up a service after a price jump.

It’s likely little wonder, then, that ad-supported tiers (which streamers make available at a lower price than the standard subscriptions) have made such a roaring debut across platforms over the past year. Consumers want to keep prices low or have options to actually reduce what they pay.

“We’ve long assumed that ad-supported streaming environments can help consumers manage the expense of multiple streaming subscriptions. In this study, we saw more than half of consumers canceled subscriptions as soon as they experienced price increases,” noted Julie Clark, senior vice president of the Media & Entertainment Vertical at TransUnion.

“These findings absolutely support a case for ad-supported tiers, potentially with lower pricing options for consumers. Lower prices for the services themselves may seem challenging short term. From an RPU [revenue per user] perspective, ad-supported offerings can still offer longer term benefits for streaming platforms and content owners.”

Saving Money With Ad-Supported Streaming Tiers

For Netflix, for instance, the ad-supported tier costs $6.99 per month compared to $15.49 per month for the cheapest non-ad plan. Consumers seem OK with ads that save them money — which is ironic considering one of the initial draws of streaming platforms like Netflix vs. traditional TV was the lack of ads to skip through.

Still, Clark says traditional TV is still a different beast.

“Fragmentation is going to be a part of the streaming experience for a few years, and by its very nature, it will differentiate from the traditional cable model,” she says. “The future will be dominated by consumer choice and real-time flexibility to access the content they crave. Is it possible that it will look like cable – maybe. But the real driver is going to be putting choice into the hands of consumers to curate their own media environment.”

Other Reasons To Cancel Streaming Services

Pricing hikes are hardly the only reasons people are getting rid of streaming subscriptions. The analysis also found that 29% of all respondents canceled because they’d finished a specific show or movie.

And 28% cited a lack of new content on the services (though given the glut of options available, perhaps they simply aren’t looking in the right place). Still, that should be a concern for streamers, some of which have nixed already-completed productions like Spiderwick Chronicles and pulled old episodes of shows such as Westworld from streaming in order to save money.

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