Cost is Number Two Reason for Canceling

Port Washington, NY, June 23, 2022 –According to The NPD Group, from October 2021 to April 2022, cost went from the #4 reason for cancelling a subscription video on demand (SVOD) service to #2. In fact, based on the latest TV Switching Study, consumers are also increasingly signing up for services based on promotional or discounted offers.

“In the last several months consumers have had to navigate rising prices in many facets of their lives and SVOD services are part of that mix with companies like Netflix and Amazon raising their subscription rates,” said John Buffone, executive director, industry analyst at NPD. “While cost considerations in SVOD services are still dramatically lower than in cable and satellite TV, it is important for providers to recognize that price sensitivity is growing so they can adjust their offerings to retain their subscriber base.”  

As of April 2022, promotional offers and discounted fees were more heavily influencing not only if consumers signed up for a SVOD service, but also their preferred method of sign-up (e.g., direct from the provider). In the survey period, the #1 reason cited for SVOD users signing up for a service was because of a free trial offering. At the same time, promotion/discount offers became the top reason driving preferred sign-up method, moving up four spots from October 2021 (among viewers extremely or very likely to subscribe to a SVOD service in the next six months). 

But while price and promotions/discounts play increasingly important roles, content remains critical to the consumer consideration set. Knowing that a specific TV show or movie was on a service drove one-third of SVOD users to sign-up, an increase versus six months ago, driven by younger viewers (up six percentage points).

“Consumers are creating a value equation to determine what services they ‘need’ versus those they cancel, especially as they return to experiential activities,” added Buffone. “For some consumers ad supported tiers can be a way to cut costs without losing access to content. As we look to the future – including potential AVOD offerings from Netflix and Disney – understanding the differing consumer value propositions will be key in determining tier structure and pricing strategies.”

When pricing tiers are available, survey results indicate that a customer who pays a premium for an ad-free experience is engaging with the service more frequently with 28% reporting using the service every day or most days vs. 20% of the ad-supported subscribers reporting the same. Consumers that pay a premium for ad-free viewing also place significantly more value in content availability, exclusivity, search, discovery, and user interface, indicating they are a more engaged consumer.

Methodology
The results of the NPD Group’s Connected Intelligence TV Service Switching Study are based on online consumer surveys of more than 5,000 U.S. consumers, aged 18+ from diverse regions and demographical backgrounds. The report was fielded from April 5- 21, 2022.

About Connected Intelligence
Connected Intelligence provides competitive intelligence and insight on the rapidly evolving consumer’s connected environment. The service focuses on the three core components of the connected market: the device, the broadband access that provides the connectivity and the content that drives consumer behavior. These three pillars of the connected ecosystem are analyzed through a comprehensive review of what is available, adopted, and consumed by the customer, as well as reviewing how the market will evolve over time and what the various vendors can do to best position themselves in this evolving market. For more information: http://www.connected-intelligence.com.



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