In the highly competitive US streaming market, pricing has become a critical tactic for services looking to maximise profitability while also appealing to both new and existing subscribers. Warner Bros. Discovery’s streamer Max, for example, slashed prices for its ad-supported tier for a limited promotion offered in the US during the week of Black Friday, in November 2023, resulting in the biggest sign-up peak since the launch of the platform. 

The promotion allowed existing and new users to sign up to Max’s ad-supported tier for a monthly price of $2.99 (a discount of 70%, down from $9.99). This discounted price for users that sign up during Black Friday week will remain for six months, after which these users will be required to pay the standard monthly price of $9.99 in order to continue their subscription.

This offer had a significant impact on sign-up activity for the platform and resulted in an estimated 1.2m sign-ups in November 2023, over double the sign-up rate for each of the previous three months. There has also been a higher rate of retention for the cohort of subscribers that signed up during Black Friday (just 2.3% had churned within a month) in comparison to consumers that signed up during the previous week (6.1% churn), with the low price more effectively able to retain subscribers. 

Demonstrating the value of the platform over the course of the six-month promotional period will be key in ensuring these consumers stay on after the promotion ends. A number of popular shows are debuting new seasons during this period, including True Detective, Curb Your Enthusiasm, Hacks and Tokyo Vice. Crucially, however, the highly anticipated second season of House of The Dragon is slated for release in the summer, providing an incentive for consumers to retain the subscription following the price increase.

Attracting, and retaining, subscribers to the ad-supported tiers is now a key strategy for major SVoD platforms, as they seek ways in which to further grow their revenue in saturated markets. Higher ad-tier take up means more attractive inventory to advertisers, which will allow the platforms to increase CPMs and generate additional revenue per subscriber. Max’s Black Friday promotion resulted in a proportional increase in ad-tier subscribers in its total user base – jumping from 5.5% in October 2023 to 7.5% in November – which otherwise remained stable in H2, highlighting the effectiveness of this strategy.

Ad-tier take up remains proportionally lower for Max’s rivals Netflix and Disney+, likely due to the comparatively high price of Max’s ad-free tier ($15.99). Both Netflix and Disney+ have to date employed other strategies to grow their ad-tier user base – Disney+ offers the ad-tier in attractive bundles with Hulu, and Netflix’s move to remove the Basic tier has driven sustained growth in the proportion of ad-tier users.