Study: Bundling and Pricing Impacting SVOD Competitive Landscape

New data from Ampere Analysis finds that as SVOD services in the U.S. mature, pricing and bundling are key to subscriber retention.

Newer platforms (including Disney+) tend to have higher levels of both sign-up and churn (subs not renewing) as they rely more heavily on individual title launches, while established platforms’ sign-up and churn rates are much more affected by pricing changes.

Ampere found that bundling is key to help mitigate price sensitivity, with Hulu and Disney+ having both benefitted in terms of sign-up and churn from the strength of the Disney Bundle, which also includes ESPN+.

During the Dec. 19 “Monday Night Football” broadcast on ESPN between the Green Bay Packers and the Los Angeles Rams, Disney+ ran an ad touting its ad-supported $9.99 bundle with Hulu. The combo has been in effect since Dec. 8, when Disney+ launched an ad-supported option and ended offering the triple combo plan (with Hulu and ESPN+) with no ads on Disney+.

Combining Disney+, Hulu and ESPN+ has been a successful subscriber growth tool for Disney+, in addition to bundling with Hotstar in India. The latter saw a 42% uptick in subscribers in the most-recent fiscal quarter — double the growth of Disney+ subscribers in North America.

With the average U.S. home subscribing to 4.5 SVOD services, the platform stacking ceiling has almost been reached — thus jumpstarting the need for lower-priced ad-supported subscription tiers.

Hulu’s U.S. sign-up and cancellation rates now mimic those of Disney+, as its users increasingly purchase their subscription through the bundle. Almost one third (32%) of Hulu subscribers have bundled with Disney+, according to Ampere.

Disney+ also uses franchise title releases and its first live broadcast to drive subscriber sign-ups. The first large peak in daily sign-ups seen on Sept. 8, corresponded with Disney+ Day, the annual marketing event that features the release of exclusive premieres and the announcement of upcoming content. This year’s event saw the release of big franchise titles including Thor: Love and Thunder, Pinocchio and Obi-Wan Kenobi: A Jedi’s Return. The next large subscriber growth occurred on Sept. 19, with the premiere of the 31st season of “Dancing With the Stars,” and on Sept. 30, with the release of Hocus Pocus 2.

Report: $12 the Ideal SVOD Monthly Fee, Well Below Netflix, HBO Max Prices

On the heels of Netflix raising the monthly price for its standard plan to $15.50, new data from researcher Morning Consult finds that the average U.S. streamer is comfortable paying only around $12 monthly for service. That’s about $3 less than the monthly fee for HBO Max, but above the fees charged by Disney+, among others.

Citing a Jan. 28-31 survey of 2,210 U.S. adults, the report found that respondents also considered the optimal price for ad-supported VOD services such as Hulu, Paramount+, Discovery+ and Peacock to be around $10.

Respondents’ acceptable price range for streaming services showed slight movement from a similar 2019 survey. The report found that the bottom of the price range for ad-free services increased by a dollar to $11-$16, while consumers’ preferred range for ad-supported services grew to $8-$14. Netflix’s new $15.50 standard plan is only 50 cents below what Americans said is the highest acceptable price for an ad-free streaming service.

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“Netflix and HBO Max are quickly approaching the top of consumers’ preferred price range, while others such as Disney+ and Apple TV+ still have room to go higher,” report author Sarah Shevenock wrote in a note. “Given that consumers haven’t fundamentally changed their minds in the last three years about how much a service should cost, additional increases could spur consumers to reconsider the number of subscriptions they can afford. It is a delicate game of which companies such as Netflix are well aware, but for now, they think the added revenue is worth the risk of losing some subscribers.”

Paramount+ to Cost Less Than CBS All Access

An ad-supported version of Paramount+ will launch in June at a monthly subscription rate of $4.99 — $1 cheaper than the existing CBS All Access plan with limited ads.

Tom Ryan, CEO of ViacomCBS Streaming

ViacomCBS is rebooting the CBS All Access subscription streaming service to Paramount+ on March 4 at $9.99 for the ad-free plan, which also features more exclusive content.

The pricing was disclosed Feb. 24 during ViacomCBS’s marathon special investor event by Pluto TV founder Tom Ryan, who is now CEO of VIacomCBS Streaming.

CBS All Access and Showtime OTT ended 2020 with 19.2 million combined U.S. subscribers — up from 11 million at the end of 2019.

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