September 5, 2023
Disney gen 1 VVVV
Research from global consultancy Simon-Kucher into consumer streaming behaviour 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 per cent say that they are considering cancelling 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 All4+ leads the pack in local players. Apple TV+ and ITVX 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 % 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 Prime Video fare better, with Netflix having 16 % and Prime Video having 19 % of users considering cancelling within the next year, while Disney+ sits at 24 %.
Amongst local streaming services, ITVX Premium (34 %) and Now (38 %) have the highest shares of users likely to cancel, All4+ is performing slightly better with 32 % 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, Prime Video 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).
- All4+ 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, All4+ performs strongest overall, while Now 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 %) but also Prime Video (69 %), Now (66 %), Apple TV+ (64 %) and Disney+ (60 %). Even among customer groups with less price increase expectation, increases are still anticipated by more than half of subscribers (ITVX Premium with 54 %; All4+ with 51 %).
Even though price increases are anticipated, price sensitivity is relatively high – on top of subscribers who are already considering cancelling their subscription within the next year, another 16 % of subscribers would consider cancelling if prices increased by 10 %.
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 % interested in streaming/gaming crossover but only 14 % for respondents aged 40+). Of the younger subscribers that are interested in the new feature, 44 % indicate that they are willing to pay GBP 3 on top of their usual subscription price for such an offering.
A social ‘Watch Together’ feature allowing multiple accounts in different locations to synchronise and play content at the same time could also provide value. In the UK, 27 % of respondents would be interested in such a feature, opening new avenues for streaming monetisation.