The clash for streaming market share continues - with consumers considering canceling subscriptions and potential price increases threatening to drive churn rates, key players must prove their value
Simon-Kucher’s recent Streaming Study reveals that UK consumers perceive the price-value relationship of many global and local streaming offerings to be shifting out of balance, while appetites for new offerings are growing
- Up to 40 percent of subscribers are considering canceling streaming subscriptions within the next year, even before considering price increases
- A further 16 percent of subscribers would consider canceling if prices increased by 10 percent
- Most subscribers expect streaming prices to rise next year, particularly for Netflix (71 percent expect a price increase)
- Global players Netflix and Disney+ are the only players for which subscribers perceive that prices reflect the product value, other players are shifting out of line in the price-value relationship, especially Apple TV+ which is situated farthest from the ‘consistency corridor’
- Local players such as ITV X Premium, NowTV and All 4+ are perceived to perform similarly to each other and are only slightly behind leading providers Netflix and Disney+; they are also perceived to provide significantly more value than Apple TV+
- More than 40 percent of streamers under 40 find the idea of combining streaming and gaming appealing as a future value-add
London, 5th September 2023 -- The latest research from global consultancy Simon-Kucher into consumer streaming behavior and preferences reveals that the current perceived price-value positioning leaves little headroom for straightforward price increases. Price increases without also increasing the perceived product value could be costly for both global and local streaming providers, leading to risks of cancelations in a competitive market.
“With subscribers feeling that many providers are not delivering value for money, it’s more difficult than ever before to raise prices without adding real value to the offering - this is just as true for the UK’s local players as it is for the streaming giants” said Greg Harwood, Partner. “Even though consumers are anticipating more price increases in the next year, hiking prices up further will significantly increase the number of subscribers considering leaving– which is why even small increases should be justified with clearly communicated value enhancements. While sentiments vary between age groups, combining streaming and gaming and adding social features look to be promising future value-adds.”
Value perception – a key factor in the struggle for streaming market share
Respondents feel that most local and global streaming providers have prices that are not consistent with perceived product value and, consequently,16-38 percent say that they are considering canceling their subscriptions within the next year. While the study indicates that subscribers perceive a relatively similar value delivered by each provider, Disney+ performs best amongst the global players and All 4+ leads the pack in local players. Apple TV+ and ITV X Premium come last in their respective global and local groups.
Among the global players, Apple TV+ users are by far the most likely to consider leaving with 37 percent indicating that they are likely to cancel their subscriptions within the next year – likely due to Apple’s price increase last year, the service is seen as offering poorer value for money than its competition. As such, Apple TV+ has approximately twice the expected churn compared to the other major players. Netflix and Amazon fare better, with Netflix having 16 percent and Amazon having 19 percent of users considering canceling within the next year, while Disney+ sits at 24 percent.
Amongst local streaming services, ITV X Premium (34 percent) and NowTV (38 percent) have the highest shares of users likely to cancel, All 4+ is performing slightly better with 32 percent of users indicating that they plan to leave.
Anticipated cancellations across both local and global players are driven by perceived differences on the most important purchase criteria:
- Overall, Amazon is perceived to have the cheapest price compared to competition; Apple TV+ is perceived as most expensive for what it offers
- Disney+ is perceived as the market leader in terms of broadness and frequency of new content added to the platform
- Disney+ is also perceived to have the most unique content, likely due to its exclusive IP rights (e.g., Marvel, Star Wars)
- All 4+ is perceived to be the most intuitive platform to use, Apple TV+ with lowest ease of use
When looking across global players, Disney+ performs strongest, closely followed by Netflix, while Apple TV+ performs worst. Amongst local providers, All 4+ performs strongest overall, while NowTV performs worst, mainly due to low scores on price, selection of content and ease of use.
Potential price increases threaten to drive churn rates
Most subscribers expect streaming prices to rise in the next year, particularly for Netflix (71 percent) but also Amazon (69 percent), NowTV (66 percent), Apple TV+ (64 percent) and Disney+ (60 percent). Even among customer groups with less price increase expectation, increases are still anticipated by more than half of subscribers (ITV X Premium with 54 percent; All 4+ with 51 percent).
Even though price increases are anticipated, price sensitivity is relatively high -- on top of subscribers who are already considering canceling their subscription within the next year, another 16 percent of subscribers would consider canceling if prices increased by 10 percent.
Using value-add features to stand out in a saturated market
Combining streaming and gaming could be a promising future value-add, especially for streamers under 40 (41 percent interested in streaming/gaming crossover but only 14 percent for respondents aged 40+). Of the younger subscribers that are interested in the new feature, 44 percent indicate that they are willing to pay £3 on top of their usual subscription price for such an offering.
A social ‘Watch Together’ feature allowing multiple accounts in different locations to synchronize and play content at the same time could also provide value. In the UK, 27 percent of respondents would be interested in such a feature, opening new avenues for streaming monetization.
Complete study findings are available upon request, including country splits.
*About the Study: The Global Streaming Study 2023 was conducted during May 2023 by the global consultancy Simon-Kucher & Partners. More than 12,000 consumers from across 12 countries (Australia, Brazil, China, France, Germany, India, Netherlands, Singapore, Spain, Sweden, UK, US) were surveyed on their streaming behaviors and preferences.
For further information, please contact:
Rachel Pope
rachel.pope@simon-kucher.com
About Simon-Kucher
Simon-Kucher is a global consultancy with more than 2,000 employees in 30 countries. Our sole focus is on unlocking better growth that drives measurable revenue and profit for our clients. We achieve this by optimizing every lever of their commercial strategy – product, price, innovation, marketing, and sales – based on deep insights into what customers want and value. With 37 years of experience in monetization topics of all kinds, we are regarded as the world’s leading pricing and growth specialist.
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