Streaming subscription fees have been rising while content quality is dropping

[Karlston]

Surveys show decline in customer satisfaction with what is available to stream.

 

Subscription fees for video streaming services have been on a steady incline. But despite subscribers paying more, surveys suggest that viewers are becoming less satisfied with what's available to watch.

 

At the start of 2024, the industry began declaring the end of Peak TV, a term coined by FX Networks chairman John Landgraf, refers to an era of rampant content spending that gave us shows like The Wire, Breaking Bad, and Game of Thrones. For streaming services, the Peak TV era meant trying to lure subscribers with original content that was often buoyed by critical acclaim and/or top-tier actors, writers, and/or directors. However, as streaming services struggle to reach or maintain profitability, 2024 saw a drop in the number of new scripted shows for the first time in at least 10 years, FX Research found.

 

Meanwhile, overall satisfaction with the quality of content available on streaming services seems to have declined for the past couple of years. Most surveys suggest a generally small decline in perceived quality, but that’s still perturbing considering how frequently streaming services increase subscription fees. There was a time when a streaming subscription represented an exclusive ticket to viewing some of the best new TV shows and movies. But we’ve reached a point where the most streamed TV show last year was Suits—an original from the USA Network cable channel that ended in 2019.

Subscriber satisfaction declining

Earlier this month, TiVo released its Q2 2024 TiVo Video Trends Report: North America survey of 4,490 people in the US and Canada ages 18 and up. The survey found a drop in the percentage of subscribers who would rate the content quality of their subscription video on demand (SVOD) services as "moderate to very good." (TiVo’s report defines SVOD as “services offering on-demand streaming content in which users pay a subscription fee.") The decline is present for subscribers to streaming services with and without ads.

 

In Q2 2022, 78.6 percent thought their ad-free SVOD service had "moderate to very good" stuff to watch. But in Q2 2023, that dropped to 77.4 percent, and in Q2 2024, the percentage fell further to 74.5 percent. For ad-supported SVOD services, the percentage dropped from 74.2 percent in Q2 2023 to 60.8 percent in Q2 2024.

 

Credit: TiVo

Ars Technica asked TiVo why subscribers may be feeling less satisfied with streaming content quality, and Scott Maddux, VP of global content strategy and business at TiVo parent company Xperi, pointed to some potential reasons while noting that other factors could also be contributors.

 

"As more and more consumers shift to ad-supported SVOD services, the perception of the content quality may have also shifted downward a bit,” Maddux said.

 

Maddux also suggested that streaming companies' financial challenges could be impacting content quality:

 

The amount of new original content overall on SVODs may be down [year-over-year] as many streamers continue to struggle to hit profitability targets. Without new original content (or exclusive content deals), perceptions of value/differentiation may decline.

Similarly, a CableTV.com survey of 7,130 US streamers released in January 2024 pointed to a drop in subscriber satisfaction with streaming content quality. The publication asked respondents how satisfied they were with their streaming provider's original content. Disney+, Hulu, Max, Netflix, and Paramount+ all saw their satisfaction rates fall from 2023 to 2024. However, Apple TV+, Amazon Prime Video, and Peacock all improved from 2023 to 2024.

 

In September 2023, Whip Media released its 2023 US Streaming Satisfaction report, which surveyed over 2,000 US streaming subscribers. The report said that the 2023 analysis:

 

clearly indicates that satisfaction among the top tier of streaming platforms is gradually declining while mid-tier platforms rise in overall satisfaction. The narrowing competitive market suggests there is high demand for showing the right mix of original and library content—and consistently maintaining a delightful viewer experience—in order to drive an overall value that subscribers expect.

Whip Media's 2023 report found that Apple TV+, Hulu, Peacock, Paramount+, and Prime Video all showed gains in terms of the percentage of subscribers satisfied with the quality and variety of original content available on the platforms from 2022 to 2023.

 

However, six of the eight streaming services that Whip Media examined either showed a decline in overall satisfaction or stayed stagnant from 2022 to 2023. Apple TV+ and Peacock were the only services showing gains from 2021 to 2022 and then again from 2022 to 2023, as you can see below:

 

Credit: Whip Media

Budgets, strikes impact streaming content

It's not just streaming services that may be seeing a dip in content quality. TiVo's survey also recorded a drop in perceived content quality among pay-TV services. (TiVo's report defines pay-TV as "services that aggregate live and on-demand linear television distributed over a cable, satellite," or managed Internet Protocol Television platform.

 

But streaming's rising prices and history of exclusive, original content have led some streaming subscribers, especially early adopters, to expect more. Yet, streaming providers have made notable budget cuts to content spending in the past couple of years, which has also meant the removal of content from services.

 

As Variety calculated in June 2024—citing internal data and numbers from Morgan Stanley—Amazon, Disney, Fox, Netflix, and Warner Bros. Discovery are expected to spend less on content from 2023 to 2026 compared to what they spent from 2019 to 2023. TV spending for Prime Video “is projected to drop from a CAGR of nearly 22 percent between 2019 and 2023 to just 12.6 percent between 2023 and 2026,” Variety reported. Overall, though, global content spending is on the rise, and even during the 2023–2026 period, “content expenses are still broadly expected to grow on an annual basis,” the publication noted. However, some of those growing costs are expected to be related to rising production costs, which are impacted by various external factors, like inflation.

 

Recent content spending was heavily impacted by strikes from the writers (from May to September 2023) and actors (from July to November 2023 ) in Hollywood. Variety suspects that 2023 “will likely remain the low point of spending for most companies over the next few years,” which suggests improvement on the horizon.

 

Netflix co-CEO Ted Sarandos said earlier this month that Netflix's plans to release some popular original content, like Cobra Kai and Nobody Wants This, were delayed until the second half of 2024 due to the strikes. With the strikes resolved, Sarandos said that Netflix is moving toward a “more normalized output schedule.” TV shows are more on track than movies are, though, and neither category is totally on schedule, he noted.

 

Further underscoring the complexity in putting out content that subscribers—an audience that is growing larger and more diverse and that has heightened expectations tied to streaming fees—is the idea that improving content quality is about more than growing content budgets. With most streaming providers still struggling with high churn rates and maintaining profitability, there’s increasing pressure for strong, unique content. Meanwhile, streaming originals like Prime Video's The Lord of the Rings: The Rings of Power have proven that big budgets don't create beloved content.

 

Per Variety, streaming providers can find ways to improve content quality without growing content spend at an unsustainable rate:

 

The trick to success in the current market will be spending on the right projects, which will likely be more shows with broad appeal, reasonable budgets, and fewer movie stars.

Streaming services are feeling the pressure

With the strikes over and streaming prices constantly climbing, streaming providers will have to do more than bundle their streaming services with rivals to satisfy subscribers.

 

Notably, TiVo’s survey found content quality to be a huge driver for new streaming subscriptions. Its report said that the top reasons for people subscribing to a new streaming service are: because the service “has a large library of good programming,” followed by the service having a “specific show or movie I wanted to watch," “good original programming”, and “episodes of an old favorite show."

 

However, as noted, the Peak TV era and the idea of streaming services having amazing, can't-miss content has faded. On Monday, Bloomberg reported that “most people in the film business don’t think Netflix makes good movies” and that Netflix wants to shift toward building quality film content rather than buying film studios' leftovers, as Netflix has done in the past. It pointed to Netflix trying to be more selective and make more movies in-house to boost its film reputation. Netflix “wants to make better movies by making fewer and spending less,” Bloomberg said.

 

Even without expanding content budgets, streaming providers have found ways to try to build more revenue through password crackdowns and the introduction of ad tiers. For better or worse, these methods could push streaming providers to improve content quality as they look to grow and better appeal to advertisers.

 

And in this world of ad-driven revenue, subscriber counts are starting to get less attention as the presented measure of success, with industry leader Netflix famously shifting to pushing so-called engagement numbers—or how much time people spend watching stuff —at investors.

 

With streaming more competitive than ever, companies should feel more pressure to offer the type of content quality that helped make streaming so popular in the first place. They can't ride Suits' coattails forever.

 

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