This isn’t just an idle threat. According to Deloitte, 40% of consumers have already cut back on subscriptions during the previous three months. Even more revealing: 61% say they would cancel their favorite service if the price went up by just five dollars.
Let me repeat that—they would cancel their favorite service, not just any platform.
People now complain of subscription fatigue—and for good reason. If things don’t change, it will soon reach the point of subscription exhaustion. Tech companies have created this mess, and now must live with the consequences.
They did it with three exploitative strategies.
(1) Everything got turned into a subscription. [...]
(2) You’re now punished with intrusive and endless advertising if you don’t subscribe. [...]
(3) Instead of competing on quality and service, companies focus on “audience capture”—and then exploit the captives.
That’s you, by the way—you are the captive. At least that’s how you’re treated by the big tech platforms.
Years ago, these same companies started by offering stuff for free, or at a small price. They only forced through huge price increases after they had captured a huge user base. You see that strategy at Netflix, Spotify, Instagram, etc.
These companies make little effort now to improve their offerings or user interface. In many instances, quality has declined, even as they raise prices. But consumers aren’t stupid—they can see that they’re getting a shaft that won’t cop out...
But even I can’t believe how greedily they have now implemented that strategy. Spotify has raised its price three times in less than three years. It’s now asking $12.99 per month. And if you want a family subscription—which is essential in a household like mine—the price jumps to $21.99 per month.
Those are US prices, but Spotify is doing the same thing everywhere. Last summer, the company forced through price increases in 150 countries.
YouTube is even more avaricious. The company is now raising its premium subscription to $15.99 per month. And the family rate is a whopping $26.99—that adds up to $329 per year.
But Netflix may have gone too far. The company’s stock dropped 12% last week after its latest quarterly results. Investors expected the company to raise its guidance for future earnings—because of this subscription price boost. But the company refused to do so, and took a more cautious stance.
According to Morningstar analyst Matt Dolgin:
“The market likely hoped for increased full-year guidance, given that the March price hikes came as a surprise…Growth acceleration in 2027 now seems less likely.”The more you dig into the latest earnings report, the more ominous things look. Netflix only met expectations because of the breakup fee after it walked away from the Warner’s acquisition. Without that one-time benefit, earnings per share would have dropped year-on-year.
If you try to find some good news here for the company, it comes from Netflix’s shift to advertising. This may be its growth engine in the future—because price increases are now stirring up consumer resistance.
I’d like to be able to provide specific numbers here, but Netflix now refuses to tell us the number of total subscribers. That’s revealing in itself. Not long ago, the company bragged endlessly about subscriber growth. Their silence now tells you everything you really need to know.
Three Ways to Defeat Subscription Fatigue
You aren’t helpless here. You do have options for battling subscription fatigue. Here are three of them.
For a start, customers have learned that canceling a subscription might make sense even if they are just bluffing. It’s amazing how different the rate looks if you’re willing to walk away. I recently canceled a subscription, and was offered an 80% price cut if I would reconsider.
I’m now thinking I should cancel every streaming subscription once per year—just to see what special offer I’m missing. Even if I sign up again at the old rate, I haven’t lost anything by trying this tactic.
Another way of combating costs is a rotation strategy. Under this scenario, consumers only pay for one video streaming subscription at a time. When they want to watch something on another platform, they simply cancel the current subscription and move to the new provider. This lets them watch anything they want for just one monthly payment.
Sure, it’s a hassle. But when annual subscriptions can cost $300 per year or more, consumers are increasingly willing to go to the trouble of ‘rotating’ from service to service.
Of course, you always have the final option of just walking away. Judging by the mood of the consumer, that will start happening more and more.
by Ted Gioia, Honest Broker | Read more:
Image: uncredited/Netflix
[ed. One more option: Earlier this year I got tired of Amazon Prime's video service - more ads and almost every movie I wanted to see was either a rental or purchase. So I quit Prime altogether (or suspended my account, as Amazon put it). Then one day I saw they had exclusive rights to some movie or other that I wanted to see; they'd increased their speed of delivery in my zip code; and I really did miss free shipping and returns. So I unsuspended my account and started paying a monthly membership fee again. But... just by turning off my service for a few months I got back to my initial lower subscription rate simply by cost averaging over the year (albeit with a few less months of service). So you don't have to quit completely, just for a few months. (Might I also note that this blog has always been ad and subscription free!)]
