3 days Ago By PYMNTS
As streaming platforms continue to raise subscription fees, many consumers say they are dissatisfied with the quality of content being offered. Recent surveys, such as TiVo’s 2024 report , suggest satisfaction with both ad-free and ad-supported services has declined, sparking concerns that the golden age of high-quality, original programming might be over. In fact, PYMNTS data also shows that cost is the primary factor in consumers canceling streaming services.
But is this as alarming as it seems? Experts are questioning the significance of these findings, noting that there are multiple factors at play — such as consumer expectations, market competition, and industry pressures — that may not be fully captured by these surveys. To explore these trends, PYMNTS reached out to several experts in the streaming media space for their perspectives on why subscription fees are rising while content quality appears to be declining. Here’s what they had to say: Increased Competition Dan Rayburn , a streaming media industry analyst and podcaster, said, “ Every single company has raised rates, and the No.
1 cost is licensing and producing content. The cost of licensing has skyrocketed, and as a result, companies are unable to generate profit unless they charge consumers more.” Rayburn explained there is increased competition in the streaming space, which includes lucrative sports deals that complicate the landscape.
“Sports, in particular, has made the cost of streaming much more complex,” he explained. “For example, the NFL has multiple streaming deals with different platforms, which means companies are paying large sums for these exclusive streaming rights.” Despite these challenges, Rayburn believes consumer dissatisfaction is a natural part of a trial-and-error process in the streaming industry.
“If consumers feel that the value isn’t there, they’ll jump from service to service,” he said, adding that no streaming platform discloses churn rates, and declining content quality is purely subjective. He cautioned against focusing on survey data, as it often fails to capture the full scope of consumer behavior, including subscriptions and cancellations. Surveys Don’t Tell the Whole Story Michael D.
Smith , a professor of information technology and public policy at Carnegie Mellon University , offered an optimistic view, saying changes in satisfaction revealed by surveys like TiVo’s are not as significant as they may appear. “Most services just moved by a percentage point or two, which is within the margin of error of the survey,” he explained. “Only three services saw satisfaction changes greater than five percentage points, and two of those saw an increase in satisfaction.
” For example, Apple TV+ and Peacock both experienced satisfaction increases from 2021 to 2023. Smith believes the streaming market is highly competitive, with eight major services vying for consumer attention. “If you’re dissatisfied with the value you’re getting from your current service, cancel and try another one,” he added.
“Services track cancellations in real time and will adjust accordingly. If they raise prices too much, they’ll figure it out and change.” Consumers Can Be Fickle Chatura Ranaweera , professor of marketing , Lazaridis School of Business and Economics , Wilfrid Laurier University , said content quality isn’t the only thing that impacts customer satisfaction.
“When prices go up, satisfaction can drop,” he said. “Satisfaction is relative to expectations. People’s expectations change over time as well.
Movies are struggling, too. As such, there are general trends in culture that can impact customer expectations. I did not get the impression that the picture reflected is a disastrous one by any means.
It may reflect changes to many things like customer expectations, customer habits, prices, cost pressures and content quality, in addition to short-term effects that may not persist.” Ranaweera also noted price increases are common during inflationary periods and that surveys often capture a snapshot of consumer sentiment, which may not reflect longer-term trends, adding, “I f the trends persist, then it could be a more serious matter.” Subscription Fatigue Neil Saunders , managing director, r etail , at research firm GlobalData , told PYMNTS subscription fees have risen, “but so have many other prices across the economy.
The problem is that many consumers switched to streaming to save money on traditional cable, and those with multiple subscriptions are now paying almost as much or even more than cable. There is a bit of subscription fatigue and there’s increased churn for some of the streaming services.” According to the experts interviewed by PYMNTS, while rising streaming fees and declining content quality are creating some dissatisfaction among consumers, the situation is far from catastrophic.
Many of the issues, they say, can be attributed to broader market trends, including inflation and rising production costs. While some argue the industry is still in a phase of trial and error, others suggest that streaming services will need to adapt to consumer demands by improving content offerings and addressing subscription fatigue. Ultimately, consumers have the power to switch services if they feel they are not getting value for their money, and this competition could drive further improvements in the industry.
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