40% of Consumers Likely To Cancel a ‘Costly’ Online Subscription: Survey

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

40% of Consumers Likely To Cancel a ‘Costly’ Online Subscription: Survey

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For years, online streaming services lured consumers as cheaper options to watch TV or listen to music. But a new survey suggests that many Americans will likely ditch a digital service this year because it’s too expensive.

Cost is the top reason why Americans are likely to cancel an online subscription for movies, music, news or other apps, according to a new survey commissioned by Los Angeles-based tech consultancy Concepts Rise. The findings come amid an increasingly crowded and competitive market for digital subscriptions, as well as the higher consumer prices Americans are now paying due to inflation.

In a survey of 1,054 U.S. adults conducted in mid-February, 40% said they are either “very likely” or “somewhat likely” to cancel a paid subscription this year. Of that group, 43% said they would likely do so because the services are “too costly.” Other reasons included wanting to consolidate services (20%), the end of a promotional discount (18%) and a lack of quality media (13%).

Those figures could give pause to the likes of Netflix, which recently raised prices by as much as $2 per month for its video subscription plans. But Majid Abai, founder and CEO of Concepts Rise, said the streaming giant can probably get away with higher rates because of its superior user experience and pipeline of fresh content. It is “second-tier” rivals, with poorer navigation features and less new content on offer, who should be more hesitant about raising prices, he added.

“[Netflix is] definitely leading the pack on that standpoint, and therefore they get to raise the price,” Abai said of the company’s content offerings. “I think it's a big risk if the secondary tiers decided to [raise prices].”

Both Netflix and Spotify spooked investors earlier this year after each forecasted slowdowns in their subscriber growth this quarter. While it’s uncertain whether those low estimates are mere road bumps or harbingers of long-term decline, Abai said media companies must focus on retaining customers as their platforms mature and new subscription growth slows. He compared the digital subscription model to that of software-as-a-service (SaaS) firms, which often go through growth patterns but ultimately need to retain customers.

“Now it becomes a balancing act of really continuing to grow and reducing churn on the other side,” he said of streaming services.

Concepts Rise’s data indicates that consumers are still willing to sign up for a new service—if the price is right and the content is broad. When all survey participants were asked what would motivate them to subscribe to an online service, most of them (58%) said better pricing, followed by broader product offerings (22%).

The survey’s findings are consistent with other new data on video streaming habits. Subscription analytics firm Antenna released data last week showing that more consumers opted for cheaper, ad-supported subscriptions in 2021 than in previous years. Ad-supported plans accounted for 32% of all premium subscription video on demand sign-ups last year, compared to just 19% in 2020, Antenna said.

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Los Angeles’ Wage Growth Outpaced Inflation. Here’s What That Means for Tech Jobs

Samson Amore

Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College and previously covered technology and entertainment for TheWrap and reported on the SoCal startup scene for the Los Angeles Business Journal. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.

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Energy Shares Gears Up To Bring Equity Crowdfunding to Retail Investors
Photo by Red Zeppelin on Unsplash

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