Streaming services like Netflix (NFLX), Hulu, Disney+ (DIS), and YouTube TV (GOOG, GOOGL) were supposed to save us from overpriced cable packages that drained our pockets for decades. And indeed, for a time, those platforms threw themselves at us with low prices and the ability to share accounts with friends and family.
But those days are gone, and streaming is increasingly conjuring the ghost of overpriced cable bundles.
“We are past the Gold Rush era of streaming television,” explained Gartner research director and analyst Eric Schmitt. “The business models that are premised on eyeballs, not revenue, are no longer viable.”
For users that means rising prices, more ads — and crackdowns on password sharing. For companies, it means users canceling plans more often when they run out of shows and movies to watch.
The end of an era
Since 2022, each of the major streaming platforms have raised rates, introduced ad-supported tiers, or begun cracking down on folks who shared passwords. Netflix kicked things off in early 2022 when it announced it was raising prices for its Standard plan from $13.99 to $15.49 and increasing the cost of its Premium plan from $17.99 to $19.99.
It also introduced a $6.99 ad-supported plan and more recently killed its $9.99 Basic plan. The company also began requiring users who share accounts with people outside of their households to pay $7.99 for access.
Disney+ followed Netflix’s lead, first by introducing an ad-supported tier for $7.99 and raising the price of its ad-free tier from $7.99 to $10.99 in 2022. And this month, the company said it’s further increasing the price of its ad-free option to $13.99. The cost of Hulu without ads also jumped from $14.99 to $17.99.
Hulu + Live TV with ads is also increasing from $69.99 to $76.99, while the ad-free version goes from $82.99 to $89.99. Sure, those include Disney+, Hulu, and ESPN+, but that’s cable TV pricing.
Apple (AAPL) TV+ also increased its price from $4.99 to $6.99.
This year, Max (WBD) increased its pricing from $14.99 to $15.99, Peacock’s ad version went from $4.99 to $5.99, and the ad-free option went from $9.99 to $11.99. Even Paramount+ is charging more, with the company raising prices on its ad-supported tier from $4.99 to $5.99. It also killed off its Showtime-free version and now charges $11.99 for an ad-free option with Showtime.
Then there’s YouTube TV, which now costs $72.99 after jumping from $64.99.
All of these increases and ad options mark the end of a time when you could subscribe to multiple streaming services without a care.
“We have absolutely entered an era where there will be a winnowing and trimming and pruning of the services that a household subscribes to,” Schmitt said. “And I think we'll see more churning and more people moving in and out of services. We'll see service providers offering multi-year, long-term contract incentives just like was done in the cable business and in the phone business.”
It was always going to be this way
The age of cheap streaming services was never meant to last.
Companies used low prices and oodles of content, both good and bad, to get customers engaged with their platforms. But the fire sale on streaming is over, and now those same companies are hoping their customers stick around as they try to improve profitability.
“Because content is the thing that keeps consumers subscribed to their favorite streaming service, and the strikes that are happening in Hollywood jeopardize fresh content being added to these platforms, that obviously has an effect to this value equation,” explained Forrester VP and research director Mike Proulx.
And if new content is in short supply, and customers are noticing price increases hitting their monthly bills, there’s a better chance that they’ll cut back on their subscriptions.
“When we asked US online adults about their top reasons for keeping or canceling a streaming service, No.1 is the price,” Proulx said. “And the second reason, to no one's surprise, is the quality of content.”
In other words, streaming services are set up for a difficult time as they look to raise prices at the same time that they are facing twin strikes in Hollywood. And they’ll need to find some way to provide more value to consumers if the content isn’t there.
Daniel Howley is the tech editor at Yahoo Finance. Follow him @DanielHowley.
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