By Kayla DeKraker
Streaming costs may be increasing, but subscribers seem willing to keep paying the price.
Though streaming used to be a more affordable option compared to cable, that isn’t the case anymore as rates continue to climb.
“The years of prioritizing user growth with low prices are over,” said Mike Proulx, vice president and research director at Forrester.
In just the last few months, Disney hiked prices for nearly all its streaming plans by $2 to $3. Apple TV+ raised costs to $12.99 per month, up from $9.99. Other streamers including Netflix, Discovery+, Peacock, Dropout.tv, Paramount and Fubu also increased subscriptions fees.
Related: Another Streaming Service Hikes Prices
But leaders across the industry justify the increases.
“When we look across our portfolio…we’re seeing growth in consumption and the popularity of our offerings, which gives us the pricing leverage that we believe we have,” said Disney CEO Bob Iger.
Warner Bros. Discovery finance chief Gunnar Wiedenfels previously explained, “For a decade in streaming, an enormously valuable amount of quality content has been given away well below fair market value. And I think that’s in the process of being corrected. We’ve seen price increases across essentially the entire competitive set.”
Despite the hikes, Netflix customers remain particularly loyal to the platform. Analyst Robert Fishman said, “Netflix has really cracked the code in terms of pricing.” MSN reported that Netflix cancelation rates are only 2%.
Though many Americans feel pressure financially due to the economy, a recent study shows that about one-in-three Americans say they’ve cut other household expenses specifically to keep their streaming subscriptions.
“Subscribers refuse to give up on streaming — they just keep spending,” said Paul Larbey, CEO at Bango. “But they’re re-balancing that spend to protect the streamers they love the most. They’ll cut back elsewhere, tolerate ads if the deal’s right, and move up or down tiers when new options land. But a key point is that for most people, Netflix is a non-negotiable ‘Forever Subscription.'”
He continued, “For SVOD teams looking to grow their subscriber base in this market, the brief isn’t ‘add more content’, it’s ‘productize choice’. Offer clear ad tiering options to keep subscribers paying and make upgrade/downgrade as easy as play/pause. Treat ‘forever’ as a distribution strategy by bundling alongside the brands people never cancel.”
The major media companies behind platforms such as Disney+, Hulu, Max and others are shifting from a subscriber-growth mindset to a profit-making one. They launched streaming at low prices to gain users but now must pay for huge content costs. But as long as companies keep making money and customers continue to subscribe, a decrease in prices doesn’t look likely.
Read Next: Why Streaming Prices Rose by 23% Last Year
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