The Federal Trade Commission on Thursday announced a proposal to change its rules to include a provision that would make it easier for consumers to cancel recurring subscription services. And while streaming services clearly fall into that category, one analyst doesn’t anticipate a rule change would have much impact on major SVODs.
The main reason, TVREV’s Alan Wolk told Fierce, is that SVODs already make it fairly easy to cancel.
Dubbed “click to cancel,” Wolk said the newly proposed FTC provision “seems to be aimed at a small subset of (largely) DTC companies that sell other types of subscriptions and don’t make it easy for consumers to cancel, forcing them to, for instance, call to cancel, to a number where it can take hours to get through to an actual person.”
To that point, the FTC in announcing the proposal pointed to recurring subscription services – be it cosmetics, newspapers or gym memberships - that make consumers jump through hoops to cancel recurring charges, saying the amended rule would require sellers of services to make the process of canceling as easy as it is to sign up. The proposed change is part of the FTC’s ongoing review of its 1973 Negative Option Rule, which it uses to combat unfair or deceptive practices related to subscriptions, memberships and other recurring-payment programs.
“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” said FTC Chair Lina M. Khan in a statement. “The proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one. The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”
And checks by Fierce confirmed that leading SVODs do make canceling a quick, sometimes one-step process. SVOD leader Netflix, for example, allows users to delete their subscription with a simple click or two within its app. Hulu, meanwhile, requires users visit a specific website, but still makes deleting an account easy with a couple of clicks. Disney+ also makes it fairly simple to cancel a subscription, which is possible after following a couple of prompts via the mobile app or web.
The ease of canceling is one of the reasons streaming services are facing another challenge – a rise in subscription cycling. That’s where users sign up for one service, often for a specific piece of content, only to promptly cancel and shift to another one after they’ve consumed the TV show or movie they were following. In a recent report from Samba TV, the vendor found 69% of U.S. adults plan to subscription cycle in the next six months. The report also pegged Disney+ and Netflix as potentially best positioned to avoid subscription cycling, in part thanks to content investments, while Apple TV+ could be most at risk as nearly 60% of viewers watched just one of the top 50 programs on the platform.
That said, many people value entertainment services and might not want to bother with canceling.
“With streaming, I feel like most people don’t cancel because they’re lazy and the dollar amount is low enough that they think ‘well maybe there’s something I’d want to watch later this month,’” Wolk said.
Traditional cable and satellite MVPDs, meanwhile, are somewhat known for making it challenging to cancel service, though Wolk pointed out that the proposal doesn’t appear to apply to those providers.
“If this impacts anyone in the TV industry, it would impact certain MVPDs whose clutches are notoriously hard to escape,” he commented. “But it does not look like they would be included as they are not a recurring subscription.”
As for MVPDs, the chair of another government regulator – Jessica Rosenworcel of the Federal Communications Commission – this week proposed a new consumer protection rule that would require cable and satellite pay TV operators to clearly and prominently display an “all-in” price for video services on marketing materials and bills. The aim is to provide more transparency of the full cost of video programming – inclusive of retransmission consent fees, regional sports, and other programming-related fees – both allowing consumers to better comparison shop and to eliminate the practice of those passed costs showing up as a tax, fee, or surcharge on bills, something Rosenworcel said is misleading.