Rising Costs Steering Streaming Consumers to Promos, Discounts: NPD

Cost jumped from the No. 4 to the No. 2 reason consumers canceled a subscription VOD service in April, reported NPD Group Thursday. “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 analyst John Buffone. Though SVOD service costs are still dramatically lower than in traditional pay TV, providers need to recognize that price sensitivity is growing “so they can adjust their offerings to retain their subscriber base,” Buffone said. The survey also found consumers are increasingly signing up for services based on promotions or discount offers. In the April 5- 21 survey period, the top reason cited for SVOD users signing up for a service was because of a free trial. Content remained critical to SVOD considerations: A specific TV show or movie drove a third of SVOD sign-ups, driven by younger viewers, Buffone said. “Consumers are creating a value equation to determine what services they ‘need’ versus those they cancel, especially as they return to experiential activities,” said the analyst. Ad-supported tiers can be a way to cut costs without losing access to content, he noted. Understanding how consumers value content will be “key in determining tier structure and pricing strategies,” he said. Customers paying a premium for an ad-free streaming experience engage with the service more frequently, with 28% reporting using the service every day or most days vs. 20% of the ad-supported subscribers, NPD said. The survey included over 5,000 U.S. consumers 18 and older.