How Increasing Streaming Prices Presents A Valuable CX Opportunity
Since the humble beginnings of YouTube in 2005, the streaming business has come a long way, with projected global revenue of $80.83bn in 2022. Until 2013, subscription streaming services only carried content from traditional TV channels, while free-to-use platforms like YouTube TV offered primarily user-generated content. That changed with the 2013 launch of Netflix's House of Cards. Since then, other streaming services have followed suit.
This change in direction helped more significant streaming services like Netflix and Amazon expand hugely. In addition, it encouraged other players to enter the market, including traditional TV broadcasters and film studios, such as HBO, Disney, and Paramount. With the increased competition, streaming services are now being forced to experiment with different types of video content, such as short-form video, hoping to increase their market share. Despite a looming recession, the overall market remains strong and is expected to grow by around $150 billion by 2026.
Unfortunately, a side-effect of more competition in the streaming market is rising production costs as companies try to compete with more content that meets customer quality expectations. Inevitably, this has led to streaming price increases. For example, as of December 8th, Disney+ with ads will remain at $7.99 per month. That is the same price as the ad-free version currently, which is being raised to $10.99. Netflix has also implemented a streaming price increase, and Hulu is set to impose an increase on its subscribers soon.
Of course, there are outliers in every industry, and some streaming services have reduced their prices. For example, HBO Max has reduced its monthly subscription fee from $9.99 to $7.99, and Apple TV is keeping its fees at a relatively low $4.99 per month.
With Rising Prices Comes Rising Frustration
As subscription prices rise during economic uncertainty, it understandably causes frustration among consumers struggling to make ends meet. Many are beginning to unsubscribe from services they see as luxury items. The rise in the number of services is also causing frustration. For example, Netflix used to carry vast amounts of content from TV and filmmaking companies, many of the shows and movies used to be on other platforms.
These factors have led to the first decline in the number of subscribers in Netflix's history — a fall of almost one million between the second and third quarters of 2022. As this decline immediately followed the January 2022 price rise, it is difficult not to see a correlation. Moreover, suppose you add that HBO Max, which reduced its prices, increased its revenue in the same period. In that case, it becomes apparent that consumers are changing their behavior in response to streaming price increases.
Of course, with the current high rate of inflation, coupled with low wage growth, consumers have less money to spend. When asked, two-thirds of Americans said they were considering cutting back on their current contracts due to the economic situation, with perceived luxuries, such as Netflix and Amazon TV subscriptions, being at the top of their lists for items to cut. On the other hand, only 6% of respondents said they weren't planning on cutting back on anything at all.
With Frustration Comes Opportunity
So, how does this all connect to a "valuable CX opportunity?" The themes covered here have outlined the current state of the streaming industry and given us three critical facts:
- Many of the largest streaming services are increasing their subscription prices.
- Consumers have responded to streaming price increases by unsubscribing.
- Inflation and recession are forcing people to cut costs, and subscriptions for streaming services are at the top of their lists of purchases they can live without.
Of course, most people want to keep some form of entertainment, so they will pick and choose their subscriptions carefully, and they may jump between different service providers as shows and movies they like become available. So, for example, a subscriber might take up Netflix on the month the new season of Stranger Things drops, then unsubscribe and pick up Disney+ as the Marvel movie they're looking forward to is available.
Of course, streaming companies are aware of this kind of activity and do their best to keep their subscribers for the long haul. Unfortunately, this is why it's often difficult to cancel streaming subscriptions. Cancellation becomes a lengthy and laborious process by design. The user is guided through questionnaires about why they want to end the service and has to enter security details at numerous points. Sometimes when you believe you've succeeded in canceling a service, you may become so frustrated that you missed clicking a final link, the service continues, and you must go through it all again.
This type of dark pattern is known as a "roach motel," a term for an agreement that is easy to get into but very difficult to get out of. Unfortunately, it's also terrible customer service, which, in the long run, can negatively impact the business using these tactics. And this leads to a place in the market for an enterprise subscription management solution like ApexEdge.
ApexEdge makes the cancellation experience easy for customers and often obtains refunds if they are eligible. It's easily integrated into your native business journey and saves customers the hassle of finding the provider and their contact details, eliminating unwanted subscriptions and charges. This improves the customer's overall experience and helps build loyalty and revenue.
ApexEdge currently services over 400 U.S. and Canada-based subscription providers with a 99% success rate, saving customers hundreds of dollars annually. To discover the full benefits of ApexEdge, visit our website today and arrange a talk with a customer service agent.
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