Almost every major streaming subscription service has hiked rates this year—in an attempt to please investors frustrated with persistent losses.
Key Details
- Netflix did away with its basic subscription plan for new customers last week, requiring new signups to purchase an ad-tier subscription or pay for a higher tier starting at $15.49—an increase from its 2007 price of $8.99.
- The announcement was followed by Spotify and YouTube Premium, which respectively hiked prices by roughly $1 to $2 for the first time since they launched.
- On July 17, Peacock hiked its premium subscription price by $2 for the first time since the creation of the service.
- Other major services have also seen recent hikes—including Max ($1), Hulu ($5), Paramount Plus ($2), Disney+ ($4), AppleTV+ ($2), and Apple Music ($1).
Why It’s Important
As we previously reported, the streaming wars have proven to be a highly costly and unprofitable endeavor, with all major streaming services reporting severe double-digit losses in 2022 and many planning to be sold off, downsized, price-hiked, or consolidated this year. Streaming services are in the red, and investors are losing their patience.
Netflix—being one of the largest streaming service providers—has attempted to take the lead in making changes to increase profitability, from implementing advertising tiers to cracking down on password sharing. At last week’s second-quarter earnings call, the company revealed its most recent crackdown on account sharing netted the company 5.9 million new subscribers. Netflix’s shares dropped in early morning trading by 8% the following day as investors were disappointed by the numbers.
Customers are generally amenable to high spending on streaming. Recent surveys have shown customers will pay roughly $42 per month on streaming services, although it remains unclear how a median $2 price hike over time will affect the number of subscription services customers keep without dipping into less expensive ad-tiers, Axios notes.