With Streaming Fees Increasing Are You Getting Your Money's Worth?
A recent survey indicates that over half of Gen Z and millennial respondents feel they overspend on streaming services monthly, reflecting a growing concern. Despite the fee hikes by major streaming platforms in response to investor demands for better returns, users across all age groups continue to buy their subscriptions, with the average customer willing to allocate approximately $42 per month for these services.
As expenses rise, more consumers are actively seeking budget-friendly alternatives featuring advertisements. Spotify's announcement of a $1–$2 increase in its premium subscription fee, the first since its inception over a decade ago, underscores the industry-wide trend.
This follows price hikes by YouTube Premium Music and YouTube Premium Video, indicating a widespread shift in the streaming landscape.
Price Hikes Across Major Streaming Platforms
In 2024, consumers are facing the brunt of escalated subscription fees across nearly every major streaming service. These price hikes are a response to media companies' endeavors to recoup substantial investments made in transitioning towards streaming, a move that has proven costly and relatively unprofitable thus far.
Anticipating these pricing adjustments, many customers are expected to gravitate towards more budget-friendly ad-supported plans. This shift carries the potential to enhance revenue per user, a prospect that resonates well with investors.
Amazon Prime Video recently made headlines by announcing an additional $2.99 monthly charge for its ad-free version, coinciding with the introduction of advertisements on its video platform. The price adjustment applies to both the standalone $8.99 monthly subscription of Prime Video and the $139 annual or $14.99 monthly subscription of Amazon Prime.
Throughout 2023, several other streaming providers also implemented pricing increases. In January, HBO Max increased the cost of its ad-free package by $1 to $15.99, while Netflix discontinued its lowest ad-free option priced at $9.99 per month in July, prompting new and existing users to opt for its $6.99 per month ad-supported plan.
On the other hand, Peacock initiated its first price hike since its 2020 launch in August, raising the price of its ad-free version by $2 to $11.99 and its monthly fee by $1 to $5.99. Disney followed suit in October, increasing the monthly charges for all its services. Furthermore, the Disney+ ad-free tier surged by $3 to $13.99, the Hulu ad-free plan escalated by $3 to $17.99, and the ESPN+ monthly plan climbed by $1 to $10.99.
Survey Insights
A Harris Poll commissioned by Tubi unveiled that 62% of respondents expressed a preference for free streaming with advertising, while 58% indicated a preference for watching commercials over paying more for ad-free streaming. Furthermore, subsequent research revealed that 71% of Gen Z and millennial participants had terminated subscriptions due to increased costs for enhanced access.
The survey was administered to 2,503 adults who streamed video for at least an hour per week between December 2023 and January 2024.
Libby Rodney, Chief Strategy Officer of The Harris Poll, commented on the findings, stating, "In a time when every dollar matters, the popularity of ad-supported streaming platforms shows how consumers are smartly seeking value without compromising content quality."