In the subscription video-on-demand business, price has suddenly replaced content as king.
According to recent surveys conducted by NPD Group, free signup promotions went from being the No. 4 reason consumers signed up for an SVOD service back in October to being their top rationale in April.
And price went from the No. 4 reason to cancel a subscription streaming service to the No. 2 reason. ("I'm not watching as much as before," was the top reason ticked off by survey respondents.)
“In the last several months consumers have had to navigate rising prices in many facets of their lives and SVOD services are part of that mix with companies like Netflix and Amazon raising their subscription rates,” said John Buffone, executive director, industry analyst at NPD. “While cost considerations in SVOD services are still dramatically lower than in cable and satellite TV, it is important for providers to recognize that price sensitivity is growing so they can adjust their offerings to retain their subscriber base.”
NPD Group surveyed 5,000 U.S. adult consumers in October and April to come up with the comparative analysis in its Connected Intelligence TV Service Switching Study. (The research company would not provide Next TV a copy of the report without us paying for it ... which in our desperate line of work, just doesn't happen very often.)
“Consumers are creating a value equation to determine what services they ‘need’ versus those they cancel, especially as they return to experiential activities,” added Buffone. “For some consumers ad supported tiers can be a way to cut costs without losing access to content. As we look to the future – including potential AVOD offerings from Netflix and Disney -- understanding the differing consumer value propositions will be key in determining tier structure and pricing strategies.”
Conversely, when paying a premium for no-ad versions of SVOD services, consumers tend to engage more. NPD Group said 28% who signed up from premium tiers used the service every day vs. only 20% for those who select a partially ad-supported plan.
Consumers that pay a premium for ad-free viewing also place significantly more value in content availability, exclusivity, search, discovery, and user interface, indicating they are a more engaged consumer," NPD added. ■
Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!
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