Cheaper streaming subscriptions with ads could be a way to break streaming fatigue. As a current study on the user behavior of subscribers shows, almost one in four Germans is considering canceling their streaming subscription. The providers must therefore urgently think about new ways of monetization.
Almost one in four Germans is considering canceling their streaming subscription. So what should Netflix, Amazon, Disney+ and Sky do? The "Global Streaming Study" by strategy consultants Simon-Kucher & Partners shows that new monetization methods are needed. Users want lower prices and would accept advertising in return. In April and May 2022, a total of 1.026 participants in Germany and over 10.500 worldwide took part. They were asked about their streaming behavior, content preferences and willingness to pay.
Reason for termination? Low prices
According to the Global Streaming Study by strategy consultants Simon-Kucher & Partners, streaming offers without advertising could soon be a thing of the past. The reason: Streaming providers are losing masses of customers. In Germany, 24 percent of users are already considering canceling at least one streaming subscription. With Netflix, Amazon, Disney+, Sky, Joyn, RTL+ and DAZN, all market leaders are affected. The customers know exactly how to keep them: new payment models, for example through lower prices and advertising.
If one had to guess at the beginning of the streaming boom, one would probably have named the freedom from advertising as an important factor. This has apparently changed in the course of more and more new streaming providers and a multi-ab behavior. Rather, it now seems to depend on the exclusive, brand new or diverse offers - if customers are allowed to pay less in exchange for advertising, that would take up a large part.
“Streaming subscriptions are price-sensitive products. Customers don't just cancel their subscriptions because of a lack of time. They often have several streaming subscriptions at the same time, so the total expenditure for this will of course become expensive or too expensive at some point," explains Lisa Jäger, Partner and Global Head of Technology, Media & Telco at Simon-Kucher & Partners. “Netflix & Co. have to react urgently if they don't want to lose more members through 'subscription fatigue'. This means that providers have to think about new monetization models. Due to the high risk of termination, this applies in particular to DAZN, Joyn and Sky.”
The Global Streaming Study by Simon-Kucher & Partners shows what the streaming price model of the future could look like. Because while 40 percent of German users state the price as the main reason for their termination, ahead of the desire to save (38 percent) and lack of time (25 percent), the majority can be persuaded to stay by the right offer. A total of 36 percent want to refrain from termination if their provider lowers the prices. In return, they would then accept advertisements. 71 percent already confirm that advertising is not a reason to cancel their Netflix subscription.
"New monetization models can be a way for providers not to lose even more customers," says Lisa Jäger. “A monthly subscription fee plus advertising or completely different hybrid models, which have been known for a long time from music streaming, such as Spotify, are now also conceivable, at least from the user’s point of view, for streaming films, series and the like: Because advertising is real No reason for termination, but prices that are too high do.”
Some results of the streaming study:
- 24 percent are likely to cancel at least one streaming subscription
- Very high risk of churn at DAZN (45%), Sky Ticket (25%) and Joyn (24%)
- At 40 percent, a price that is too high is the main argument for terminations
- 36 percent would keep their subscription if the price went down and there was advertising for it
- For more than 80 percent, advertising would not be a reason to cancel their Netflix subscription
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