Netflix, Disney+, and HBO? Cord-cutters are willing to pay much more for the right streaming services
Consumers pay $22 per month on average for video streaming subscriptions and are willing to pay roughly $11 per month, or 50 percent more, for additional services, the study found.
As legacy media companies like Comcast enter the video streaming wars, a new survey suggests that price-sensitive consumers are still willing to spend much more to watch movies and shows online.
A KPMG survey of more than 2,000 consumers found that consumers pay $22 per month on average for video streaming subscriptions and are willing to pay $11, or 50% more, for additional services. At the same time, the survey suggests that consumers care more about a streaming platform’s price than its content library.
The study comes as Apple, AT&T, Walt Disney Co., and others enter a highly competitive streaming business that’s been dominated by Netflix and Amazon and fueled by consumers ditching costly cable plans. The findings could be interesting for Philadelphia-based Comcast, which plans to launch a free, ad-supported version of its forthcoming streaming service.
Price was the most important feature consumers consider when choosing a streaming service, beating out content, advertisements, and ease of use, the survey found. A little more than half (52%) of 18- to 24-year-olds and 67% of people ages 25 to 60 ranked price above all other features. By comparison, 36% of younger consumers and 48% of older customers said content is most important.
“What was clear is that there is this high degree of price sensitivity on what they’re willing to pay,” said Michelle Wroan, who leads KPMG’s national media sector.
The new entrants into the streaming business are charging anywhere from $4.99 per month (Apple TV+) to $14.99 (HBO Max) for their libraries of on-demand movies and shows. Netflix and Amazon Prime Video each cost $8.99 per month, while Hulu charges $5.99 for its basic plan, which includes ads.
While most consumers prioritized price, the KPMG survey found that being ad-free was the second most important feature for younger consumers. Few consumers cared about reducing fees by inserting ads, with just 11% of younger consumers and 9% of older ones saying that was most important.
Assuming the price is right, “content is still king,” Wroan said, which is why media companies have spent heavily on acquiring rights to popular shows and lining up high-profile production teams.
Comcast lost 238,000 TV customers during the third quarter this year, continuing a trend of consumers fleeing pay TV for cheaper streaming options. But the cable giant has replaced those cord cutters with more profitable high-speed internet customers, signing up 379,000 during the quarter.
Comcast’s NBCUniversal is set to launch its streaming service, called Peacock, in April with 15,000 hours of content. Unlike ad-free Netflix, Peacock will be supported by advertising, with an ad-free version available for a fee that has not yet been disclosed.
The company is considering making the ad-supported version free for all users, not just existing Comcast customers, according to CNBC. A NBC spokesperson declined to comment on the report when it was published this month, and did not a return request for comment this week.
In addition, Comcast recently launched Xfinity Flex, a Roku-like streaming box that aggregates streaming services and is free for Comcast’s internet-only customers.
KPMG surveyed 1,025 consumers ages 25 to 60, and 1,030 consumers ages 18 to 24. All confirmed they had at least one streaming service.