The Impact of Streaming Subscription Price Hikes

Netflix, Disney+, and Max are some of the most popular streaming platforms that reign when it comes to bringing in monthly and yearly subscriptions. There’s no doubt that they will continue to take the top spots, but with recent subscription price increases across major streaming platforms, many consumers are now turning to free streaming platforms or even canceling their subscriptions. With these changes in consumer behavior, how should marketers navigate the streaming space?

Cancellation and ad-supported subscriptions

Even though streaming subscriptions increased year over year in 2023, cancellations also grew by 36.2M, with total subscription and cancellation numbers being almost equal (as shown on the right side of the chart below). It is no surprise that the cost of streaming has become one of the main reasons users have canceled their service. Many are only subscribing to a platform to watch the latest season of their favorite show and canceling when they finish it. This behavior is more common in streaming than cable because of the diverse streaming platforms and exclusive content on each one. Paired with the fact that canceling is possible with a click of a button, this means that users are not afraid to take advantage of these flexibilities.

Many users are also turning to ad-supported tiers to compromise on the price hike. As subscription prices rise across streaming services, users are willing to deal with the ads for a lower price. Compared to January, Netflix saw a nearly double-digit increase in the ad-supported tier to 40 million. This will only continue to rise as Netflix eliminates its cheapest ad-free tier as they automatically enroll users in the basic ad-supported tier. With this change, advertisers will have more opportunities to advertise in the streaming environment as ad-supported tiers become more popular.

Free streaming platforms

The primary difference between ad-supported subscriptions and free streaming platforms is that free platforms require no payment to access the content. In today’s environment, users are flocking to free streaming platforms like Tubi and Pluto TV, even if they are riddled with ads. For example, Tubi reported a 46% increase year over year in its average audience, and it’s not the only free streaming platform that is seeing growth as Pluto TV and The Roku Channel are both continuing to rise. With free streaming platforms seeing increases in combined subscribers, they are continuing to rise in TV share versus paid streaming services who are seeing flat share year over year. This gives advertisers more wiggle room to explore beyond the major platforms and negotiate at a lower rate.

What this means for marketers

As streaming becomes more ad friendly and subscription-free platforms become increasingly popular, marketers should start (or continue!) to invest in streaming across different platforms. With streaming platforms’ vast and specific audience targeting, many marketers can refine targeting efforts without wasting impressions. With the growth in free streaming platforms, new opportunities are now available to test, too. With the growth in subscription-free platforms, there’s no longer a need to stick to the major streaming platforms with higher costs; many marketers can now target similar audiences at a lower price. Leveraging these new changes in the streaming environment will help marketers refine targeting efforts more cost effectively.