How Disney, Netflix, and more streaming companies are fighting FTC's 'click to cancel' proposal
Trade orgs for Netflix, Disney, and others oppose an FTC plan to make it easier for people to cancel subscriptions.
The "click to cancel" proposal comes as streamers and other businesses face rising cancellation rates.
Companies argue the regulation would impose heavy costs and infringe on their freedom of speech.
Now that we seem to be at peak subscription, media and entertainment giants are pushing back hard against the Federal Trade Commission's "click to cancel" proposal that would make it easier for people to cancel streaming, gaming, and other services.
But legacy Hollywood giants like Disney, together with tech interlopers including Netflix and other affected businesses, are putting up a resistance to the proposed regulations.
Companies of all stripes have angered consumers by making services all too easy to sign up for but often confoundingly difficult to cancel, with gyms and news outlets considered among the worst offenders. The FTC has gone after individual companies; it recently sued Amazon, alleging the etailer "tricked" people into signing up for Amazon Prime.
That followed the FTC's proposal in March for a regulation that's intended "to make it as easy for consumers to cancel their enrollment as it was to sign up." The policy would cover providers of both digital and physical subscriptions, from streamers and gym memberships to phone companies and cable TV distributors.
The new rule would require companies to offer a simple mechanism for users to cancel subscriptions the same way they signed up. For example, you wouldn't have to cancel a service in person or over the phone if you signed up for it online.
"I can't tell you how much time I've spent trying to cancel subscriptions I never wanted, let alone the cost!" one person wrote in a comment to the FTC.
The proposal comes at a precarious time for the entertainment industry. Hollywood distributors are counting on streaming to save them from the decline of the cable bundle. But the model depends on getting more subscribers to join and stay, and consumers have become trained to frequently cancel their subscriptions.
The average monthly churn rate across 10 subscription video streamers reached 5.8% in 2022, up from 3.2% in 2019, according to data analytics firm Antenna. In a Deloitte survey, 44% of respondents said they canceled a paid streaming service within the past six months, the highest level in the nearly five years Deloitte has been tracking churn.
Battling churn has thus become an industry priority. In rolling out its new streamer, Max, for example, Warner Bros. Discovery emphasized new features built into the app to keep people from canceling.
And entertainment trade orgs are fighting the FTC's proposal, submitting comments to the FTC ahead of its June 23 deadline for public comment.
The Internet & Television Association, which counts Disney, Paramount, and Warner Bros. Discovery as members, said in its public comment that the proposed reg is so vague, it would lead marketers to be excessive in their disclosures, leaving consumers "inundated" and "confused." The reg would even infringe on its members' freedom of speech, the association argued.
"The proposal would also severely curtail or, in some cases, even prohibit companies from communicating with their customers, in violation of the First Amendment," the association wrote.
Sirius XM wrote in its comments that one proposed requirement — that companies maintain records of phone calls with customers — would cost the company "several million" dollars a year to comply with.
The Entertainment Software Association, the video gaming trade organization, noted that the FTC's proposed disclosure requirements "would interfere with game play and customer enjoyment." The ESA wrote that "most consumers understand autorenewal offers and are knowing and willing participants in the marketplace" and that letting customers cancel immediately would prevent member companies from offering them alternative plans or discounts. The ESA was joined in its comments by the Digital Media Association and Motion Picture Association, whose members include Netflix, Sony Pictures Entertainment, and Universal Pictures.
The FTC will examine the feedback it's received through public comment before considering a final rule.
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