Streaming revolt: Customers turn their backs on Netflix, Hulu and Prime amid skyrocketing prices, annoying ads and unwatchable shows – Fortune

Let's call it the sequel to Cord Cutting: the streaming purge.

More Americans are cutting their subscriptions to streaming services amid high costs and content fatigue. According to data from Antenna, a subscription analytics company, monthly churn for major streamers such as Apple TV+, Discovery+, Disney+, Hulu, Max, Netflix, Paramount+, Peacock and Starz reached 6.3% in November 2023, up from 5.1% in November Previous year .

And over the past two years ending in November, nearly 25% of subscribers canceled at least three of the services, according to Antenna. In November 2021, this share was just 15%.

Check out the average monthly streamer churn chart

With so many changes in the entertainment industry, customers are giving up. Gone are the days when companies spend untold wealth creating content and paying for top-notch talent in the hopes of attracting new customers; Now they are under pressure to actually make a profit. That means less new content, more advertising and higher prices.

“For many years, streaming services offered subscriptions at enticingly low prices,” says Dan Goman, CEO and founder of Ateliere Creative Solutions, a production and distribution company. But these rates were ultimately unsustainable. “We are now seeing the industry move towards familiar models – ads and packages.”

If the price increases seem quick, it's because they have to be, says Goman.

“It all happens very quickly. The industry is forced to change overnight to survive,” he says. “Consumer demand for content will continue, it’s just a matter of how they access that content in the future.”

The companies are making a number of changes to attract (or in many cases re-attract) viewers, including offering cheaper, ad-supported streaming options and working with other companies to deliver more content for the customer's dollar.

That being said, while consumers are limiting some streamers, they're not eliminating them 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 way. (Its lead over broadcast and cable has since diminished somewhat.)

Still, viewers are becoming increasingly selective about how they spend their money. Here's why some Americans are cutting back on spending.

Exploding prices

Streaming was an attractive proposition for viewers when subscriptions were relatively cheap and content libraries extensive. However, there are more companies with streaming platforms that are continually increasing prices, making it more affordable with fewer options. For example: When Disney+ launched in 2019, it cost $7 per month. Just a few years later, the ad-free version costs twice as much.

How much the prices increase obviously varies depending on the subscriber. But the Financial Times recently found that a viewer now pays $87 a month for the top services, up from $73 in 2022. An August 2023 Wall Street Journal analysis found that the price of ad-free Streaming has increased by 25% in a year.

It's an industry-wide problem: In 2023 alone, Apple TV+, Disney+, Hulu, Max, Netflix, Paramount+ and Peacock have increased their prices.

2023 price increases include:

  • Apple TV+: Monthly costs 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 plan increased from $15 per month to $18.
  • MAX: The ad-free offering increased from $15 per month to $16 (previously it was HBO Max). The company has also added an Ultimate Ad Free tier worth $20 per month.
  • Netflix: The Premium plan increased to $22.99 per month, an increase of $3. The basic plan increased by $2 per month to $11.99. The company also cracked down on password sharing.
  • Paramount+: The Premium plan, which includes Showtime, is now $12 per month (was $10); The cost of the ad-supported version also increased from $5 per month to $6.
  • peacock: The ad-free Premium Plus plan increased by $2 per month to $12; Additionally, the ad-supported subscription was increased by $1 to $6 per month.

While some consumers may not have been concerned about the cost when services were cheaper, even news of a price increase may cause them to reevaluate whether they will actually use and get value from a particular streaming platform.

Combined with the overall rise in the cost of living that Americans have faced in recent years, more and more people are foregoing 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 is becoming increasingly expensive to avoid them.

Take Amazon, which recently announced it would begin inserting ads into Prime Video content later this month. Viewers can watch the film ad-free by paying 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 choosing the cheaper tariffs (the companies' public statements bear this out). This works well for entertainment companies; You earn more from ads than from subscriptions.

“The subscription model is not economically viable at current prices,” says Keith Valory, CEO of streaming service Plex, pointing out that when cable was at the helm, providers got their share of subscription costs plus advertising revenue and emigration was negligible. Now they rely more on subscriptions when churn is high. “It’s not surprising that all these people are talking about it or starting to add ads to their subscriptions.”

Disney CEO Bob Iger said the price increases in ad-free plans are intended to attract more people to the cheaper plans. “We are very optimistic about the long-term advertising potential of this business, even in a difficult advertising market,” Iger said last year.

“The industry knows that price increases will ultimately cause consumers to reconsider their subscription options and perhaps switch to some type of ad tier or package deals,” says Goman. “Either way, both options are better for streaming services.” [and] Industry. Ad tiers offer operators more revenue potential, while packages ensure sustainability and predictability.”

Unwanted content

As the number of streamers has increased over the years, it has seemingly become increasingly difficult to find quality content. Add to that the slowdown in the overall business environment, and some customers say they're starting to run out of things to consider, making the monthly cost even less gratifying.

Some companies, including Warner Bros. Discovery and Disney, are removing shows and films from their streaming services to avoid paying royalties and royalties. Even if a show or movie is promoted as original to a specific platform, the company may still pay for targeting. When Warner Bros. reduced its content offerings last year, the company saved tens of millions of dollars.

However, this means viewers could miss out on some of their favorite shows or movies. It may also lead to consumers distrusting streamers in general, analysts say. Even when a title is moved to a different streaming platform, “app fatigue” begins to impact 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,” Valory says. “As more streaming services come onto the market, it has become increasingly difficult to find content.” And when content is difficult to find, viewers cancel their subscriptions.

But in some cases, 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 out there, they can’t even wrap their heads around the amount of content available to consume, let alone find the time to browse through it and consume it all,” says Janus. “Instead of continuing to pay for streaming services that they never open, they are choosing to simplify their lives and stick with one or two of their favorite platforms.”