The Walt Disney Company's CEO, Bob Iger, has said the quiet part out loud.
As reported by Deadline Hollywood:
“It’s not just about raising pricing... It’s about moving consumers to the advertiser-supported side of the streaming platform... the pricing that we recently put into place, which is increased pricing, was actually designed to move more people in the AVOD direction because we know that the ARPU [average revenue per user] – and the interest from advertisers in streaming – has grown.”
TLDR: Streamers want you to watch ads (via ad-supported packages) because they make more money when you do.
Last year I wrote (but never published) a blog post where I used some publicly reported figures, reasonable assumptions, and basic math to help explain why Netflix had done the same thing...
... eliminating lower-level price tiers and forcing subscribers to choose between a more affordable ad-supported tier and a much more expensive ad-free package.
For Netflix, I choose to go ad-free... and pay $20.99+HST monthly for the privilege.
But for Disney? I just let my paid Disney+ subscription expire.
This will be shocking to anyone who knows me: I love Disney! I got up at 5am on the day Disney+ launched to subscribe and watch "Lady & The Tramp" (a Disney+ original film) with my kids before they went to school.
But I collect movies and own copies of almost all the Marvel and Star Wars films, along with hundreds (literally) of the films available on STAR. I thought "Agatha All Along" was terrific and I'm excited for the next installment of "What If..."... but are those shows enough to justify the 25% price increase? Not for me.
Of course, some people will continue to find $149.99 per year (the new annual price in Canada) worthwhile and continue subscribing.
But I suspect many will do what I just did: cancel their subscription, then plan to resubscribe for a month or two to binge-watch the next season of Shogun or The Bear... before cancelling again.
Have we hit a point of subscription fatigue?
Probably.
We live in a world with almost unlimited content options, but most of us don't have unlimited budgets to spend on that content or unlimited time to consume it.*
Decisions must be made.
And the streamers that win will be those with the best content...
... and those who can figure out how to make ad-supported tiers more appealing.
Ads developed specifically for streaming platforms and properly targeted to audiences (versus TV ads recycled for streamers) would be a good start.
* I currently pay for Netflix (ad-free). I get Amazon Prime Video (with ads) included with my Prime subscription. And I have AppleTV+ (no ads, thankfully!) thanks to a "three-month-free" offer sent to my wife. I watch a LOT of TV every week, but even I don't scratch the surface of everything available with just these three services.
P.S. You can read the full Deadline article here.
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