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NPD: Streaming Video Consumers Becoming More Price Sensitive

With a slew of subscription streaming video services available on the market, new data from The NPD Group finds that the cost of streaming has begun to impact consumer choice on SVOD platforms.

The Port Washington, N.Y.-based research firm found that the cost of streaming had risen to the No. 2 reason (from No. 4) for canceling a SVOD service. The data is based on online consumer surveys fielded from April 5 to 21 of more than 5,000 U.S. respondents, aged 18+ from diverse regions and demographical backgrounds.

Based on the study, consumers are also increasingly signing up for services based on promotional or discounted offers.

“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,” John Buffone, executive director, industry analyst at NPD, said in a statement.

Buffone said that 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.

Indeed, as of April 2022, promotional offers and discounted fees were more heavily influencing not only if consumers signed up for a SVOD service, but also their preferred method of sign-up (e.g., direct from the provider). In the survey period, the No. 1 reason cited for SVOD users signing up for a service was because of a free trial offering. At the same time, promotion/discount offers became the top reason driving preferred sign-up method, moving up four spots from October 2021 (among viewers extremely or very likely to subscribe to a SVOD service in the next six months).

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But while price and promotions/discounts play increasingly important roles, content remains critical to the consumer consideration set. Knowing that a specific TV show or movie was on a service drove one-third of SVOD users to sign-up, an increase versus six months ago, driven by younger viewers (up six percentage points).

“Consumers are creating a value equation to determine what services they ‘need’ versus those they cancel, especially as they return to experiential activities,” said 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.”

When pricing tiers are available, survey results indicate that a customer who pays a premium for an ad-free experience is engaging with the service more frequently, with 28% reporting using the service every day or most days vs. 20% of the ad-supported subscribers reporting the same. Consumers who 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.

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