Netflix & Hulu Are Changing Subscription Prices: What This Means For Consumers

 In Blog

In recent years we have seen a vast rise in streaming services. Heavy hitters; Netflix, Hulu, HBOGo, and Amazon Prime Video are battling it out for the lead spot in the limitless industry. It has been estimated that Americans spend $2.1 billion a month on streaming subscriptions. As streaming viewership grows and consumers continue to cancel cable for streaming only subscriptions, the stakes will increase as retailers develop new ways to take a larger piece of the pie.

On January 15th, Netflix increased the subscription price for its U.S. plans and Hulu decreased pricing on its basic plan. Examining the performance data collected using Jumpshot’s Insights tool, we pulled data surrounding subscription signup and cancellations for Netflix and Hulu year-over-year.

Netflix Has Decreased Its Cancellations

We compared cancellation share percentages between Hulu and Netflix for the month of January in 2017, 2018, and 2019 and the data shows that Netflix has actually decreased its cancellation share year-over-year. Netflix has evolved from one of the world’s first online DVD rental operations to a leader in the on-demand video market with over 20 years of knowledge and an established customer base. Netflix has successfully created its own content with the start of Netflix Originals that include the chart-topping series Stranger Things and Bird Box. The low cancelation count can also be attributed to some subscribers were not aware of the price increase or opted to stick with the service regardless. The price hike was announced to current customers, Netflix sent an email to subscribers informing them of the price increase.

Hulu Has Retention Problems

While Netflix is reducing its cancellation share, Hulu is seeing more customers cutting their service. When you compare the month of January for 2017, 2018, and 2019, it becomes clear that Hulu has a retention problem. Cancelation for Hulu has risen from 127k in January 2017 to 561k in January 2019. Additionally, we calculated net subscriptions, subtracting new subscriptions from new cancellations on a daily basis for January 2019 and what the data shows is that Hulu’s numbers recently have been in the red as new cancellations outpaced new subscriptions. Hulu’s cancelation share increased to 43% in 2019 as opposed to 19% in 2018 and 20% in 2017. The Wall Street Journal has noted that many subscribers cancel the service when they have watched all of their favorite show’s episodes or when popular items become unavailable. Hulu came on the streaming scene in 2007 and has recently tapped into creating its own innovative shows that have developed a cult following, no pun intended, including The Path and The Handmaid’s Tale.

What About New Subscribers?

Hulu’s price changes had a small effect on signups and subscriptions, from the data, we saw the following: on January 23, Hulu reduced its price to $5.99 but raises prices for Live TV, which caused a slight shift in new subscriptions.

Hulu’s share of new subscriptions increased to about 25% for the 3 days after its price-reduction announcement, up from about 22% on 2019 averages up until that announcement.

However, this shift pales in comparison to a very enticing promotion Hulu ran back on Black Friday in 2018 where the brand captured 65% market share of new subscriptions during that holiday weekend. From a volume perspective, new Hulu subscriptions (average daily) from 1/23/19 -1/26/2019 is down 11% from the daily average up until the announcement.  Though it is only 4 days’ worth of data, we can predict an immediate impact confirming that the price drop was attractive to consumers.

Netflix’s price increase reduced new daily subscriptions by about 19% when you compare average daily new subscriptions of 1/1/2019 -1/14/2019 to 1/15/2019 – 1/26/2019. The subscription count went from 68k on January 12th to 39k on January 17th.

On the flip side, plan cancellations increased by 29% when you compare those to the same time period.

What This Means for Subscribers

Netflix claims the price inflation will help to create new content and will benefit subscribers in the long run. And of course, price-conscious tv watchers will benefit from a lower Hulu subscription price. However, retention will continue to be a problem for both services as several new players are coming into the streaming market soon, which may give consumers even more choice when it comes to streaming video.

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