The Impacts of Increasing Streaming Services Prices
The Hollywood writer’s strike is officially over, and the ongoing actor’s strike could be nearing an end after several days of amicable negotiations between studios and the Screen Actors Guild. But the changes brought by these negotiated deals is only beginning—and consumers may soon feel the impact in their bank accounts.
According to recent reports, many of the leading streaming services already intend to raise the prices of their subscription services once the actor’s strike is over. In anticipation of higher production costs going forward—and in response to the hundreds of millions of dollars lost by the studios since the strikes began earlier this summer—consumers can expect to start paying more for their streaming subscriptions in the coming months.
Those rate hikes are only the latest in a series of adjustments streamers have made over the past few years, and the increased cost raises the question of exactly how many consumers may decide to cancel some of their subscriptions and control their own costs.
As the number of streaming services has expanded in recent years, the subscription price for many of the top streaming brands has also seen a significant rise.
In October 2020, for example, during the heart of the pandemic, Netflix increased the price of its standard plan from $12.99 to $13.99 per month. Fast-forward to today, and that same plan now costs $15.49—with another price hike already in the works.
Similar increases have been tracked among other leading streamers. In December 2020, Hulu with Live TV hiked prices by ten dollars per month, jumping from $54.99 to $64.99. Today, the price for that plan is $69.99, and Hulu reportedly plans to increase that price to $76.99 in November 2023—a total price increase of $22 per month, or 40 percent, in less than three years.
YouTube has also seen a big jump, going from $49.99 to $64.99 per month in June 2020. Disney+ recently upped its price from $10.99 to $13.99 per month in response to losing millions of subscribers earlier this year. Sling TV increased its package prices from $30 to $50 in a one-year span. Only Amazon Prime Video has maintained its price over that time, with a video-only subscription costing $8.99 per month.
In most cases, streamers have advocated for their price increases by pointing to an improved app experience: either by investing into expanded original content creation, adding new channels and content libraries, or both. This was the case for Netflix, Hulu, and YouTube TV.
Along with those alleged product enhancements, many consumers will presume that recent economic inflation is contributing to those price increases. And in some cases, such as with Disney+, price hikes may be targeted as a strategy for shoring up incoming revenue—particularly as increased ad-supported TV options, including ad-supported streaming tiers, see increased adoption by the public.
It’s unlikely, however, that the next wave of price hikes can stick to the same argument. Many consumers will be anticipating that the new labor deals for writers and actors will have contributed to rising costs, and streamers may try to scapegoat those groups to deflect scrutiny and criticism. Regardless, though, streaming companies will have to balance their ambitions for increased prices with the risk of driving away customers and slowing subscriber growth.
Raising prices may be a tool for sparking a short-term injection of revenue, but this strategy could inspire a new set of problems in the near future. One potential obstacle is the threat of curtailed subscriber growth.
Netflix, for example, already lived through a dip in subscriber growth in early 2021, which could be attributed to the price hike. Another price increase—especially so soon after the latest price increase, and in a more uncertain economic environment—could frustrate consumers and motivate them to cancel subscriptions and curb their own streaming costs.
YouTube TV also experienced a slowdown in subscriber growth after its price increase. Similar risks may be faced by every streamer that decides to increase prices.
Price-hikes across the industry may succeed in sparing any single brand the disdain of the public. But the collective rise in monthly streaming expenses could be a significant burden on some consumers, giving them the motivation they’ve been seeking to cut down on their number of subscriptions.
If that happens, it’s possible ad-supported streaming, cable TV and other digital video providers could see increased audience engagement from consumers consolidating their activity across lower-cost channels.
No matter how these streaming price increases unfold, local businesses should be prepared to capitalize on potential advertising opportunities arising from this disruption. A digital advertising partner can help you plan media buys that lock down reliable, relevant ad inventories at a competitive price. At the same time, those experts can help your business steer clear of media buys that could be adversely impacted by streaming price hikes and potential subscriber loss.
Plan your media buy today to get an early lead on your competition. Contact Cox media to get started.
Connect with a Marketing Expert
Share Post On Social
Stay On Top of the Newest Business and Marketing Insights
Sign up for our monthly newsletter to get the latest industry information, business trends and marketing updates.
Connect With Your Local Marketing Expert
You know your business. We know advertising. Together, we can bring your business to more people. Contact a member of our team today. We’d love to help you grow.