Will Streaming Price Hikes Backfire? The Era of Subscribing & Unsubscribing

When streaming channels first emerged, they arrived as disruptors to current cable options. Cable seemed overpriced, clunky, and monolithic. It didn’t offer enough choice, nor enough control over what could be watched and when. Streaming was a newer, modern model—a high-tech alternative at a significantly lower cost. But over time, streaming became the very monster it sought to upend, turning into something that doesn’t look so different from cable’s original model. And these days, an endless array of price increases plagues the streaming world.

We at Nerdist have tracked the price hikes across major streaming platforms this year, and there were four in eight months. However, while these price increases seem to have been successful for streamers to date, do streaming platforms really have an endless ability to increase subscription prices? Or will this constant raising of costs eventually backfire with consumers? Welcome to the era of subscribing and unsubscribing.

HBO

There are two salient points worth noting about the world of early streamers: a) only a few streamers existed, b) NO ONE yet subscribed to streaming channels (because before that time, they hadn’t existed). And that meant the first order of business for streamers was to build their subscription base. At the start, the primary source of income for streamers was new subscribers. And how do you lure new subscribers into your channels? Why, you make the user experience a REALLY good one, so your consumers think, “Wow, what a great platform. I should join in.” These days, though, the age of the user experience at the forefront of streaming priorities is over. EVERYONE is subscribed to a streamer, more or less. There is no significant money to be had by trying to lure new subscribers into a platform that has saturated its market.

Love is sharing a password.

— Netflix (@netflix) March 10, 2017

So, of course, that leads to generating more revenue from the existing user base, which brings us to ads, password-sharing crackdowns, and price hikes. It’s no coincidence that in the past, streamers mostly didn’t have ads and turned a blind eye to or even encouraged account sharing. Because at that time, having the user be comfortable and happy was paramount. But now, the user experience is fading away, as simultaneously, price increases are coming at every turn. On top of this, more and more streaming platforms have emerged, making the overall cost to stream triple, at least.

So where does that leave consumers? For a time, it felt like consumers were pretty helpless in the mix, presented with two options: pay more for streaming channels or be unable to watch the shows and movies they love. But as price hikes continue to arrive endlessly, it feels like a third option has emerged. More than ever, the era of “subscribe and unsubscribe” is here when it comes to streaming platforms.

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Of course, we haven’t run any official research on the matter. Anecdotally, though, across real friends and online comments, we sense that subscribing to streamers is turning into a more temporary state of existence. Consumers note that they’ll subscribe to a streamer after a TV series they want to watch has been fully released or an anticipated movie has been added, watch it, and then unsubscribe from the platform. The cost vs. value proposition of remaining subscribed for the longer term simply no longer adds up as costs continue to increase. We’re sure there’s probably one main streaming platform that folks might wish to have available at any time, but by and large, the age of long-term subscriptions across ALL available platforms feels like it’s ending.

From a consumer perspective, subscribing and unsubscribing from streamers makes a lot of sense. Coming onto a streamer for a short period of time and watching a whole season of a new TV show, plus whatever else, and then unsubscribing definitely leaves the consumer coming out on top as far as costs go. Purchasing a season of a show is more expensive than buying a month of a streaming subscription. And, unsubscribing means that the costs don’t add up when there’s nothing else to watch. In this way, consumers opt out of the two-choice continuum. They no longer have to pay more than they want to, AND they get to watch the content they love.

Is subscribing and unsubscribing from streamers a perfect model? No. Of course, consumers will experience times when they wish they could watch or rewatch something from a streamer they have unsubscribed from. However, if one can’t afford to remain subscribed to all of the streamers available, then that’s the reality.

If this vision of unsubscribing or subscribing only for short periods of time catches on, then price hikes could finally betray streamers. Receiving, for example, $12 twice a year ($24) vs. $6 twelve times a year ($72) marks a fairly significant loss. Streamers could make three times more from the cheaper option. Of course, we are likely a long way from revenue being severely impacted because of short-term subscribers. But, as we said, it feels like more and more people are thinking about that avenue. And should all of them turn to subscribing and unsubscribing… we bet the streamers will be thinking about price drops pretty quickly.

We don’t know for sure what will happen in the streaming landscape, but it does feel like, at some point, endless price hikes will inevitably backfire on streaming platforms. They simply cannot go on forever.

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