Call it cord cutting’s sequel: the streaming purge.
More and more Americans are cutting their subscriptions to streaming services amid high costs and content fatigue. Monthly churn for major streamers including Apple TV+, Discovery+, Disney+, Hulu, Max, Netflix, Paramount+, Peacock, and Starz hit 6.3% in November 2023, up from 5.1% a year prior, according to data from Antenna, a subscriptions analytics company.
And in the past two years ending in November, almost 25% of subscribers cancelled at least three of the services, according to Antenna’s data. In November 2021, that share was just 15%.
Customers are calling it quits amid a slew of changes in the entertainment industry. Gone are the days of companies shelling out untold riches to create content and pay for top-notch talent in the hopes of attracting new customers; now they're under pressure to actually turn a profit. That means less new content, more ads, and higher prices.
"For many years, streaming services offered subscriptions at rates that were enticingly low," says Dan Goman, CEO and founder of Ateliere Creative Technologies, a production and distribution company. But those rates were ultimately unsustainable. "We’re now seeing the industry gravitating toward familiar models—ads and bundles."
If the price hikes seem swift, that's because they have to be, says Goman.
"This is all moving very rapidly. The industry is being forced to change overnight to survive," he says. "Consumer demand for content will continue, it’s just a matter of how they will access that content going forward."
The companies are instituting a number of changes to attract (or in many cases, re-attract) viewers, including offering cheaper, ad-supported streaming options and combining with other companies to provide more content for the customer's dollar.
All that said, while consumers might be cutting back on some streamers, they're not cutting them out entirely: In fact, Americans are watching streaming services more than ever. According to Nielsen data, streamers accounted for a record 38.7% of Americans' viewing time in July, with YouTube TV and Netflix leading the pack. (Its lead over broadcast and cable has fallen a little since then.)
Still, viewers are getting more selective with how they spend their dollars. Here's why some Americans are cutting back.
Skyrocketing prices
Streaming was an attractive proposition to viewers when subscriptions were relatively inexpensive and content libraries were vast. But there are more companies with streaming platforms, and they have been steadily raising prices, making it less affordable for fewer options. One example: When Disney+ was introduced in 2019, it cost $7 per month. Just a few years later, the ad-free version is double that.
How much prices are increasing varies by subscriber, of course. But the Financial Times recently found a viewer now pays $87 per month for the top services, up from $73 in 2022. A Wall Street Journal analysis from August 2023 found the price of ad-free streaming rose 25% in a year.
It's an industry-wide affliction: In 2023 alone, Apple TV+, Disney+, Hulu, Max, Netflix, Paramount+, and Peacock all raised their prices.
2023 price increases include:
- Apple TV+: The monthly cost increased by $3, from $7 to $10.
- Disney+: The ad-free option increased from $11 per month to $14. The annual price also increased, from $110 to $140.
- Hulu: The ad-free offering increased from $15 per month to $18.
- MAX: The ad-free offering increased from $15 per month to $16 (it was previously HBO Max). The company also added a $20-per-month Ultimate Ad Free tier.
- Netflix: The Premium offering rose to $22.99 per month, a $3 increase. Its basic plan increased by $2 per month to $11.99. The company also cracked down on password sharing.
- Paramount+: The Premium offering, which includes Showtime, now costs $12 per month, up from $10; the cost of the ad-supported version also increased, from $5 per month to $6.
- Peacock: The ad-free Premium Plus offering increased by $2 per month to $12; it also increased the ad-supported subscription by $1, to $6 per month.
While some consumers might not have worried about the cost when the services were cheaper, even news of a price increase can cause them to reevaluate whether or not they are actually using and getting value out of a certain streaming platform.
Combined with the general cost-of-living increase Americans have faced over the past few years, more are cutting out discretionary spending like entertainment subscriptions.
More ads
Many streamers, including Disney, Hulu, and Netflix, offer ad-supported and ad-free streaming packages, with the ad-free option typically costing a few dollars more per month. But it's getting increasingly expensive to avoid them.
Take Amazon, which recently announced it will begin inserting ads into Prime Video content later this month; viewers can watch ad-free by shelling out an additional $2.99 per month.
Of course, ad-supported streaming is cheaper than its ad-free counterpart. Antenna's data shows that more and more people are opting for the less expensive plans (the companies' public statements back that up). That works out well for the entertainment companies; they make more off of the ads than they do subscriptions.
"The subscription model is not economically viable at current pricing," says Keith Valory, CEO of streaming service Plex, noting that when cable reigned supreme, providers received their portion of the subscription cost plus ad revenue, and churn was negligible. Now they are relying more on subscriptions when churn is high. "It's unsurprising that all these guys are talking about or starting to include ads in their subscriptions."
Disney CEO Bob Iger has said the price increases in the ad-free tiers are meant to push more people to the less expensive plans. "We’re very optimistic about the long-term advertising potential of this business, even amid a challenging ad market," Iger said last year.
"The industry knows that price hikes will ultimately drive consumers to reevaluate their subscription choices and perhaps move to some kind of ad tier or bundled deals," says Goman. "Either way, both options are better for the streaming services [and] industry. The ad tiers give the operators more revenue potential while bundles provide sustainability and predictability."
Undesirable content
As streamers have proliferated over the years, quality content has become seemingly harder to find. Add to that the cooling of the overall business environment, and there is starting to be a dearth of things to watch, some customers say, making the monthly cost even less palatable.
Some companies, including Warner Bros. Discovery and Disney, are taking shows and movies off their streaming services to avoid paying royalties and licensing fees. Even if a show or movie is advertised as an original for a specific platform, that company still might pay to host it. When Warner Bros. trimmed its content offerings last year, it saved tens of millions of dollars.
But that means viewers could miss out on some of their favorite shows or movies; it can also make consumers distrustful of streamers in general, analysts say. Even if a title moves to a different streaming platform, "app fatigue" is starting to affect customer retention, says Plex's Valory. Who wants to pay for another new service?
"The streaming media experience is too chaotic...[it] needs to be more cohesive," says Valory. "As more streaming services emerge, content has become increasingly more challenging to find." And when content is hard to find, viewers cancel their subscriptions.
In some cases, though, consumers have the exact opposite problem, says Ryan Janus, an Arizona-based certified financial planner who helps families budget. There's no shortage of content, but it's time-consuming to sift through it to find what appeals to each individual user.
"With all the different streaming services, they can't even come to terms with the amount of content available to consume, let alone actually find the time to search through it and consume it all," says Janus. "Rather than continuing to pay for streaming services that they never open, they decide to simplify their life and stick to one or two of their favorite platforms."
Editor's Note: This article was updated with the correct the name of Ateliere Creative Technolgies.
