Streaming services keep raising their prices, and it’s becoming less economically feasible for many households to keep paying for premium subscription tiers. More viewers are making the switch to free ad-supported tiers to save money. But how much money could you actually save by dropping your premium tier streaming subscriptions?
Quite a lot, according to new data from Parks Associates.
The average streaming household, which subscribes to 5.6 platforms, according to the research firm, could save $366 a year on average by switching to ad-based tiers.
“The move to ad-based services provides more options for consumers, especially as they are seeking a balance between costs and the desire for multiple content options,” Jennifer Kent, Parks Associates vice president of research, said in a statement. “Not everyone’s favorite streaming service offers a cheaper ad-based service tier yet, and many subscribers will choose a mix of ad-based and premium options, depending on household preferences.”
Earlier this month, during the firm’s presentation of its State of the Market: Streaming Video Services report, Parks Associates said in the past month, 31% of U.S. households reported watching an ad-supported video on demand or a free ad-supported streaming service – a 13% increase from 2018. In addition, 41 million U.S. households are expected to watch ad-based over-the-top (OTT) video services like Tubi, Freevee, and Pluto TV. Last December, the firm said streaming subscriptions has declined 25% from $90 in 2021 to $73 in 2023, as viewers migrated to free, ad-supported services to save money.
A majority of streamers are currently struggling with profitability. Streaming services saw a massive influx of users in 2020 when most of the world was indoors. Reports said that many Americans were paying for up to six streaming services. Since then, numbers have mostly returned to pre-pandemic with Americans paying for about three or four subscriptions.
In addition, inflation has risen over the last three years and has put studios between a rock and a hard place. Services must find a way to maintain increasingly budget-minded customers while raising subscription fees to remain operational.
Kent’s prediction that subscribers will choose a mix of ad-based and premium options further supports the firm’s previous notion that platform consolidation could be a potential solution for companies, viewers, and advertisers.