GfK: Netflix & Amazon Should Consider Ads vs. Fee Hikes

NEW YORK: Following its latest study, GfK suggests that commercial-free streaming platforms like Netflix and Amazon may need to consider accepting advertising as an alternative to raising their subscription fees in order to achieve revenue and profit growth.

The study, Comparing Streaming Services 2016, finds that $10 to $11 is the most that subscribers would be willing to pay each month, on average, for Netflix or Amazon Prime. The current subscription prices are $9.99 per month for standard Netflix service and $10.99 for Amazon Prime’s month-to-month subscription plan. The research suggests that subscribers to Netflix might be slightly more price-tolerant, but none of the services have much wiggle room when it comes to fee increases.

According to GfK research, the most important attribute in choosing a streaming service among streaming users is cost, cited by 75 percent. “Availability of specific programs” came in second at 69 percent and “availability of new movies” was third at 68 percent. All three of the major subscription streaming services—Netflix, Amazon Prime and Hulu—were seen as underperforming on these top three attributes.

Original and/or exclusive content (“not available on any other service”) ranks ninth among the top reasons that people subscribe to streaming services, cited by 47 percent of major streaming service users. Access to content not received via regular TV services is the number 12 reason, selected by 38 percent of respondents.

“With all three major SVOD firms raising their commitments to original and exclusive programming, the investment required for these flagship shows may need to be offset by new revenue streams in order to meet investor expectations,” said David Tice, the senior VP of GfK’s media and entertainment team. “Hulu and other ad-supported services have offered ‘ad-free’ subscriptions as a premium option; conversely, Netflix and Amazon Prime may need to introduce ‘ad-inclusive’ subscriptions to hold the line on monthly subscription costs for their price-sensitive customer segments.”