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The end of the free trial? Why a once-popular marketing tactic is now rarely offered.

By Weston Blasi

People used to spend a month watching their favorite streaming shows for free, but that's harder to do now

Enter your payment information and enjoy a free week or month of a streaming service.

For a long time, that was a marketing technique new streaming services employed to get customers to try their product. The only risk for consumers was if they didn't like the service, and subsequently forgot to cancel it in time.

But free trials on streaming platforms - usually only offered to new customers - are being shortened or going away completely.

Netflix (NFLX) ended its free seven-day trial in 2020, Disney+ (DIS) stopped its seven-day trial in 2020, Peacock ended the free version of its service in 2023, HBO/Max (WBD) stopped its in 2020 and both Hulu and ESPN+ have also ended their free 7-day trials.

Some streamers still offer free trials, but they're in the minority.

YouTubeTV, the Google-owned (GOOG) streamer that debuted in 2017 with a 30-day free trial, now offers trials ranging from 14 days to two - mostly based on where you live. Apple (AAPL) offers a free seven-day trial for its AppleTV+ membership. And Amazon (AMZN) Prime offers a 30-day free trial, but Prime offers a lot more than just streaming, such as free two-day shipping on purchases.

For most streaming companies, "free trials have not been effective," Jim Willcox, senior electronics editor at Consumer Reports, told MarketWatch. "Longer free trials allow people to watch all the stuff they want to watch, and then cancel. If they were effective they would have kept them."

Willcox believes that some customers in the past would rotate through streaming services with the intent to basically watch a series for free.

"If you give somebody a 30-day trial, within a month a lot of people can binge-watch all the stuff they want to see," Jim Willcox said. "Making shorter trials makes a lot of sense."

See also: Should you cancel Netflix, Disney+, Costco or Spotify? Ask yourself this one question.

Another reason many streaming companies are getting rid of free trials is investor pressure to prioritize profits, says Jacqueline Corbelli, CEO of BrightLine, a technology software company that specializes in television advertising

"The impetus is the pressure from Wall Street that these services are losing so much money year-over-year," Corbelli said. "It's become a real focus for investors, and they need to find additional revenue in their sub base wherever they can because of the profitability issue."

Modern streaming has proven to be a business where it's difficult to turn a profit. Comcast (CMCSA) said its Peacock service lost $2.75 billion in 2023 and Disney+ lost $138 million last quarter. Netflix is one of the few streamers to be profitable with its 260 million subscribers.

"It's the pressure on the subscription revenue," Corbelli added.

Another reason streamers might have been willing to get rid of free trials in recent years is because many of them are offering cheaper ad-supported plans that could get people to subscribe.

Several brands, including Disney+, Netflix, Hulu and Max, all debuted lower-cost plans with commercials in recent years. While they might not be free, many of those ad-supported plans are sometimes half the price of ad-free versions.

"They are giving you an opportunity to watch at a lower cost for a period of time that is not free," Corbelli said.

Representatives from the streaming companies mentioned in this story did not respond to MarketWatch's request for comment.

Read on: Will a Super Bowl only be available on a streaming service? 'That's where this is all headed.'

-Weston Blasi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.


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02-14-24 1354ET

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