Streaming services such as Netflix have long been an attractive alternative to linear television. A wide range of series and films for a low price, which you can watch whenever you want without having to sit through commercial breaks.
Especially in America, the rise of video services caused people to cancel their expensive TV subscriptions and only watch via streaming platforms. The number of households with a TV subscription is also shrinking in the Netherlands. While in 2013, when Netflix came to the Netherlands, almost every household had a TV connection, more than a million households currently no longer have a TV subscription, according to research. Numbers of the Consumer & Markets Authority.
But streaming is now quickly more expensive than a TV subscription. That TV package costs around 12.50 euros per month, in addition to the internet connection that comes with it and which you also need for streaming services.
While a single Netflix subscription was sufficient a few years ago to chat about popular series at the coffee machine, you now need a wider range of subscriptions to keep up. More companies launched their own streaming services. Disney+, HBO Max, Apple TV+, SkyShowtime, Amazon Prime Video: there is more and more on offer.
The rates have risen considerably. Last week, both Viaplay and SkyShowtime announced a price increase of 2 euros per month. In doing so, they follow their competitors. Netflix started in 2013 with a monthly price of 7.99 euros, but now there are different rates, ranging up to 15.99 euros. At the end of 2019, Disney+ still cost 6.99 euros per month, which is now 10.99 euros. And Apple TV+ doubled subscription prices to 9.99 euros.
Share the costs by sharing the same account with friends and family? Various services, most notably Netflix, have now taken measures against this. Sharing passwords with people who do not live under the same roof is only possible at an additional cost.
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Those who want to pay less can increasingly opt for something that streaming services were once the alternative to: advertisements. Anyone who agrees to advertisements at Videoland pays half as much. SkyShowtime and Disney+ also offer cheaper subscriptions with advertising, Netflix has already done this in the United States and France, but this does not yet exist in the Netherlands.
“You see that the market is maturing,” says Sebastian Haenen of consultancy firm Simon Kucher, who conducts annual research into the streaming market. “This is reflected in commercial behavior by players such as price increases, advertising and a ban on sharing accounts. Consumers respond to this. In the Netherlands, the amount that consumers are willing to pay per service has dropped from 13 to 10 euros.”
Prices are rising partly due to pressure from shareholders. After Netflix presented lagging results, the stock price plummeted in early 2022. Netflix did everything it could to increase profitability. Price increases, advertising subscriptions and free-riders who had to take out their own subscription had results. The share price has recovered.
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Cutting subscriptions
Niels van de Ven, associate professor of marketing at Tilburg University, also sees this willingness to cut back on subscriptions. He conducted research into the number of subscriptions that consumers have. “People underestimate that. As soon as they realize how many they have, they are shocked and want to cancel.”
This also includes many forgotten subscriptions, says Van de Ven. A good source of income for providers, because money comes in monthly without having to use the service – and therefore costs – in return.
“With price increases you create moments when people remember that they have a subscription. Then they will reconsider. Companies lose the benefit of forgotten subscriptions as soon as they increase prices.”
According to Haenen, there must be a balance between the price asked and what you get in return as a consumer. “As long as you keep adding things to your offering, such as Netflix, which now also offers games, there is room for prices to match. But if you change little in your offering and the price increases, that is difficult.”
Despite this increasingly wide range, Netflix subscribers with the cheapest rate also get access to everything. “The differentiation now lies in whether or not there are advertisements and higher image quality with more expensive subscriptions,” says Haenen. It could be, Haenen believes, that it is a first step towards different subscription types for one streaming service – each with its own offer.