In the world of streaming, consumer sentiment reigns supreme, steering the latest profit strategies. Simon-Kucher’s Global Streaming Study unveils a landscape where ad-supported packages beckon frugal viewers yet pose a danger of devouring existing subscribers. Meanwhile, 'free-riders' are poised to become paying customers if password-sharing is cut off.
- Only 11 percent of surveyed Netflix subscribers and 15 percent of Disney+ subscribers opt for ad-supported plans in the US
- Nearly 40 percent of respondents consider canceling subscriptions, but half would stay for a cheaper ad-supported option
- 56 percent of respondents accept cracking down on password sharing
- 30 percent of streamers use a subscription paid on someone else’s dime
- 50 percent of ‘free riders’ are potential subscribers if they lose shared access
[September 27, 2023] – The race for profit has prompted streaming providers to explore ad-supported plans and tighten password-sharing rules. Research from global consultancy Simon-Kucher warns of a profit versus loss balancing act.
“Our latest study offers a front-row seat to the streaming industry's tightrope act, where efforts to attract new subscribers pose potential risks alongside rewards. The introduction of ad-supported packages can be a valuable tool for attracting new, price-savvy subscribers. However, providers need to be aware of the potential for profit loss should existing customers downgrading their packages outweigh new customer growth,” said Lisa Jaeger, Partner and Global Head of Technology, Media & Telco at Simon-Kucher. “Despite initial backlash after announcing tighter password-sharing restrictions, Netflix thrived, converting borrowers into paid members. Our research findings support that password clampdowns can be a profit booster.”
Ad packages: a double-edged sword
Ad-supported subscribers primarily crave lower costs (40 percent), with 36 percent unfazed by ads and 13 percent embracing them. First-mover Netflix is betting on new customer acquisition, offsetting package downgrades. This is supported by the data, with about 60 percent of ad package subscribers coming from new customers versus 40 percent who downgraded. However, disney+ is facing higher cannibalization, with an even split of new customers versus downgrades.
Cracking down on password sharing
Globally, 30 percent of streamers are 'free-riders,' using a subscription paid for by someone outside their household, with India and the Netherlands topping the list at 40 percent. Acceptance of password-sharing restrictions varies, with India at 65 percent and Spain, Australia, and China at 43-52 percent.
If 'free-riding' ends, 50 percent of free-riders surveyed would most likely buy their own subscription --- a large majority (90 percent) of which would even be willing to pay full price. Around 30 percent would abandon the service, and 20 percent would seek access to the streaming content through unofficial websites. Regionally, responses to a password crackdown vary: respondents in India, Brazil, and China are most open to buying their own subscription (55-70 percent); those in Australia, France, the UK, and Germany are most likely to quit the service (35-44 percent); and those in China, Singapore, and the Netherlands comparatively favor access through unofficial streaming websites (25-28 percent).
Complete study findings are available upon request, including country splits.
*About the Study: The Global Streaming Study 2023 was conducted during May 2023 by the global consultancy Simon-Kucher & Partners. More than 12,000 consumers from across 12 countries (Australia, Brazil, China, France, Germany, India, Netherlands, Singapore, Spain, Sweden, UK, US) were surveyed on their streaming behaviors and preferences.
About Simon-Kucher
Simon-Kucher is a global consultancy with more than 2,000 employees in 30 countries. Our sole focus is on unlocking better growth that drives measurable revenue and profit for our clients. We achieve
this by optimizing every lever of their commercial strategy – product, price, innovation, marketing, and sales – based on deep insights into what customers want and value. With 37 years of experience in monetization topics of all kinds, we are regarded as the world’s leading pricing and growth specialist.