When you consider the demand for their content, the ad-free subscriptions to Netflix and Discovery + are great, while quite a few SVODs overcharge their users.
In an inflationary environment, it’s important to understand which streaming services will have scope to charge consumers more. The central value proposition SVODs offer their subscribers is a catalog of content they want to watch for a recurring subscription price. The main point is that it is not just the size of the catalog that makes subscribers appreciate the platform but how attractive that content is. This is why demand is important to understand the price point a platform must set in order to be a compelling deal for subscribers and remain competitive with other platforms. We see a clear relationship between the total demand for content on each platform (movies and TV series) and the price point each platform charges consumers.
As broadcast companies continue to raise prices but consumer budgets are squeezed, it will be important to strike a balance between keeping up with rising costs while not sparking subscriber inflation. As Wall Street’s focus on these platforms shifts from simply looking at net subscribers to scrutinizing streaming revenue, the ability to charge consumers more will help these platforms become profitable.
Become a member to read more.
In terms of indie platforms, the standard Netflix tier appears to be a great value for subscribers and offers more on-demand catalog than we’d expect at the $15.99 price point, according to Parrot AnalyticsThe data, which takes into account consumer research, streaming, downloads, and social media, among others.
At the other end of the price spectrum is Discovery+, which is one of the cheapest ad-free tiers at $6.99 per month but still manages to pack a punch with its catalog in high demand at this price.
On the flip side, Showtime’s $10.99 price tag seems excessive for the amount of content demanded that the platform provides subscribers. Comparing Starz and Showtime, Starz appears to offer the most value of these two channels that have been converted from premium cable channels to streaming platforms. For Showtime, Starz provides its subscribers with a platform of shows and movies with 27% more demand and 18% less cost than Showtime.
Request a platform catalog for the price of a monthly subscription
Disney + just launched a new ad-supported tier and Disney + Premium tier at $10.99 per month. Its price seems to be in line with expectations given the amount of demand for content on its platform.
Apple TV+ raised its price in October for the first time since the launch of the platform (from $4.99 to $6.99). The chart shows how the price increase moved Apple TV+ to the wrong side of the “price is right” line. While the price increase now makes it a little more expensive than expected given its catalog demand, it’s important to remember that the Apple TV+ catalog is built from exclusive assets that act as a stronger incentive for subscribers to sign up. This focus on exclusivity will likely allow Apple to ship more than one platform with a similar level of demand that comes in part from non-exclusive content.
Things get interesting when we consider how aggregate options are priced. While the Disney+/Hulu/ESPN+ bundle is one of the more expensive options, it fulfills its commitment to subscribers and offers a high-demand catalog of shows and movies. When we think of Hulu or Disney+ on their own, their catalogs are priced in line with what we would expect given the demand for their libraries. The bundled option offers more demand than we might expect at its price point. This is an example of an effectively priced package that would entice subscribers to upgrade from any one platform on its own.
Compare Disney+ / Hulu / ESPN + with Paramount + / Showtime bundle. While Paramount+’s price seems attractive on its own, the extra cost when adding Showtime to the package makes the bundled option seem overpriced.
Christopher Hamilton is Senior Insights Analyst at Parrot Analytics, a WrapPRO partner. For more from Parrot Analytics, Visit the Data and Analysis Center.
