Despite Subscription Fees, Audiences Keep Streaming

4 Min Read

The streaming world lately has looked a lot like the economy at large: after a period of steady growth, it’s a little hard to tell whether things are still going well? Inflation is a hot button topic for the economy, and “streamflation” (which is exactly what it sounds like) has subscription fees climbing. However, despite the tumultuousness of the industry headlines, streaming is continuing to grow. Let’s get a bird’s-eye view of these recent shifts.

Things Keep Changing, But Streaming Keeps Growing

We’ve been following the recent shifts in the streaming TV world. At the start of the year, the Emmys’ nominations signaled the first decline in the number of new shows released in a calendar year. Despite the move away from a deluge of new content,  TV rewatching is more popular than ever, so our outlook was and continues to be positive. Even without the volume of new releases, people continue to stream.

Then came the news about the partnership between three major players — Disney, Fox, and Warner Brothers — on a new sports offering. Sports fans have been one of the last holdouts of linear TV subscribers. “The aggressive move by Disney, Warner Bros. Discovery, and Fox could be a watershed moment that will change all of that — potentially undercutting linear TV’s domain over sports for good,” MNTN’s Stephen Graveman wrote when the news broke. “It’s just one more sign that Connected TV’s influence is continuing to climb and reshape the entire media landscape.”

Last week, we covered the continued volatility in the streaming market once again. (Are you sensing a theme yet?) Warner Brothers announced their profitability, rumors swirled about a potential merger, and lawsuits surfaced against the aforementioned sports channel. Even with so much up in the air, there is little to concern advertisers. “The majority of consumers who have cut the cord won’t be making the move back to cable,” MNTN’s Cat Hausler wrote. “And while various streaming services may be battling for profitability and decreasing subscriber churn, savvy advertisers can avoid all of that noise with an audience-first approach to CTV advertising.”

Streamflation Is Not Stopping Streamers

The streaming news didn’t slow down this week with even more headlines about the shape shifting streaming landscape. Multiple outlets reported on “streamflation,” or the rapidly inflating prices of streaming services. Many of the top streaming channels, including Netflix and Disney, have announced price increases over the past year. What was once the promised land of more affordable TV watching, is now quickly adding up to the cable TV prices everyone was so eager to leave behind. Per research from Deloitte, the New York Times reports: “the average household that subscribes to four streaming apps may now end up paying just as much as a cable subscriber.”

While this leads to online grumbles aplenty, people are not actually taking the steps to cancel their subscriptions. In fact, a recent Bank of America report shows that households paying over $100 a month have more than doubled from 2021. One reason viewers aren’t canceling is that the streaming channels make it purposely difficult; they aren’t sending out email reminders or following other best practices to alert subscribers. To mitigate the expense, many subscribers are jumping from one subscription to the other — but, crucially, not yet exiting the streaming space altogether.

Why might TV lovers be sticking around? Streaming prices haven’t outstripped cable subscriptions just yet. This could be thanks to the lower prices of ad-supported tiers, which make subscribing to multiple channels more accessible. Regardless of how expensive the ad-free tiers become, ad-supported tiers will always be a more attractive deal in comparison. At the end of last year, according to a study by Antenna, there were more new subscriptions to ad-supported plans than ad-free plans.

Those offerings still appear valuable to streamers, too, even in duplicate. This week the back-and-forth story about the impact of Amazon’s new ad policy on their existing FreeVee service. Despite unconfirmed reports that the FAST channel is on its way out, Amazon announced the addition of 14 new channels to the service this week. Whatever actually happens with FreeVee, it’s clear  opportunities in ad-supported channels aren’t drying up any time soon.

Streamers Have Their Shows, Advertisers Have Their Audiences

The streaming boom has undoubtedly come with a lot of growing pains. The era of Peak TV may be over. Streaming channels have realized that they can’t subsidize the cost of endless original content with existing subscription prices. TV viewers are regularly chopping and changing which channels they are subscribed to. Yet, streaming as a whole seems as healthy as ever — because people keep watching it. And advertisers with an audience-first strategy can keep reaping those big-picture benefits, following their target audience, whatever service or new ad-supported offering they try next.