More media companies and legacy linear network owners are launching streaming platforms, adding to the market more options for consumers than ever, which could mean a high monthly bill when it comes to streaming costs.
A new survey finds that consumers are tired of spending so much and could consider canceling plans as more plan prices going up.
What Happened: As Netflix Inc NFLX pushes to add more subscribers to its already record increase in the fourth quarter, the company could face pressure from consumers considering lowering the amount they’re spending on streaming platforms monthly.
A new Deloitte report says consumers spend an average of $69 per month on streaming, up 13% year-over-year from the same report last year. Consumers subscribe to an average of four streaming platforms each month, as reported by Variety.
The bad news for streamers is that 47% of consumers surveyed said they pay too much for the streaming platforms they have. Forty-one percent said that the content on streaming platforms isn’t worth the price, up five percentage points from 36% in last year’s report.
The survey found that cable or satellite TV customers spend $125 per month, more than streaming customers.
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Why It’s Important: Streaming platforms could face pressure to keep customers as more platforms launch and as consumers look to cut costs.
The survey found that 60% of consumers said they would cancel their service if their favorite streamer raised prices by $5 per month.
More than half of consumers who subscribe to streaming platforms (54%) said they have at least one ad-supported tier, which could be to cut costs. This was up from 46% with at least one ad-supported tier last year.
Netflix and Walt Disney Co DIS have ad-supported plans and used this avenue as a way to lower churn and get consumers subscribed at lower price points and offset the subscription revenue with advertising revenue.
Price Matters: Survey respondents say $14 is the right spot for ad-free streaming platforms and $10 is the right price for ad-supported services. Platforms that price above these ranges could face consumer losses.
Netflix raised prices in January with its ad-free plan now costing $17.99 per month. The streaming leader continues to add to its content with live sports rights and events, which could help keep people subscribed all year long and justify one of the higher prices in the market.
What’s Next: Upcoming quarterly reports from media companies could be key for investors to see if the survey results hold true and people are cancelling plans. Thirty-nine percent of consumers in the survey said they canceled at least one streaming platform plan in the last six months.
AppleTV+, a streaming plan from Apple Inc AAPL, currently only offers an ad-free plan. The platform, which has a smaller content library than rivals, has an ad-supported plan reportedly in the works. Based on this survey, the sooner that platform launches, the quicker Apple could boost its subscriber count.
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