Why Are Streamers Raising Their Prices? Because It Works

Online shopping may not be the reason your credit card bill is higher these days — it may be online streaming.

Every major (and, we’d venture, most minor) streaming service has raised its prices within the past 12 months. Why? A couple of reasons: 1) It turns out the economics of streaming aren’t great (womp-womp), and 2) because they can.

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Streaming-economy research company Antenna’s new State of Subscriptions report, obtained by IndieWire, found that price increases at SVOD services have not “significantly disrupted acquisition or retention.” Antenna measured a dozen streamers and found that in the three months leading up to their respective price increases, the group added a combined 7.9 million subscribers in the U.S.

During the same month of their individual price increases, however, the group added just 300,000 U.S. subs. It was the month where each service saw the most cancellations and fewest newcomers. Still, they ended up in the (collective) black because more people signed up than churned out of the overall ecosystem. And the slowdown didn’t last for long: in the three months following the respective price increases, subscriber net adds were 5.5 million. Not as high as the final months at the lower, last-minute price point — 30 percent lower to be exact — but still comfortably on the positive side of the ledger.

In January 2023, when Max raised its monthly price from $14.99 to $15.99 (and left its ad-supported tier unchanged at $9.99), its net adds remained positive in each of the seven relevant months surrounding the increase. Of course, it helped that the jump was just a buck. Max again raised its rates by a(nother) dollar this month, but Antenna’s cutoff for this data set was March 31, 2024 — the end of Q1.

Antenna tracked the following price increases for this installment of State of Subscriptions: Acorn TV (in March 2022), Max (January 2023), CuriosityStream (March 2023), Paramount+ (June 2023), Starz (June 2023), Peacock (July 2023), Apple TV+ (October 2023), Discovery+ (October 2023), Disney+ (October 2023), Hulu (October 2023), Netflix (October 2023), and MGM+ (February 2024).

All told, Antenna measures 33 specialty SVOD services and nine premium ones.

One major SVOD- and now AVOD-hybrid service not measured is Amazon Prime Video. Antenna does not track consumers who get access to services included “broad intra-company bundles,” i.e. Amazon Prime Video through an Amazon Prime membership. Prime Video is available on its own, but the vast majority of users have an Amazon Prime subscription — it is cost effective and often pays for itself in free, fast-shipping for Amazon.com retail items. Apple TV+ is included in Apple’s own bundle of services, but most Apple TV+ subscribers choose to pay for the streaming-video service as a standalone product.

These days, streaming users are willing to avoid the full impact of the price hikes by watching commercials. The final quarter of 2023 was first time that the majority of gross subscriber adds were on ad-supported streaming tiers. The same thing happened the next quarter, making it a trend.

Another on-trend way for streaming users to save money is going for a bundle of services, which are growing in popularity. Participating streaming platforms are willing to offer a discount in exchange for lower churn; studies have shown that people are less likely to cancel a bundle of services than one service alone.

Last month, Comcast announced its (via NBCUniversal) Peacock would soon be available in a bundle with Netflix and Apple TV+ called “StreamSaver” for its broadband customers. Also recently, Fox, Warner Bros. Discovery, and Disney announced plans to launch a sports-streaming service, Venu, together this fall. Disney has long-bundled its own streaming services Disney+, Hulu, and ESPN+. (You can also scrap the ESPN+ piece.)

Antenna now reports what it calls its “Bundle Benefit Ratio” (BBR), for which it separates each service’s subscribers into either “Curious” or “Committed” customer buckets. Basically, a Committed customer is going to stick with a platform; a Curious one is testing the waters. Max and Starz have the highest ratio of Curios to Committed customers and thus the highest BBRs. Simply put, those are the two services that could benefit the most from a bundling partner. You probably would not be surprised to hear that Netflix, with its industry-low churn rate, has the least need for a bundle partner and is the only premium SVOD service with more Committed customers than Curious ones. It’s cool to have Committed customers of course, but that also means a discounted bundle could cannibalize your full-rate customers.

Warner Bros. Discovery is on it. Max launched as a bundle of HBO Max and Discovery+. It was also a piece of the first-ever major streaming bundle of competitors via a Verizon Wireless package that includes subscriptions to both Max and Netflix ad-supported tiers. Max will soon bundle with Disney+ and Hulu.

Starz is available with Netflix’s top tier via Verizon. It can be bundled with AMC+ or Amazon’s MGM+, and is a common add-on option for others, like Hulu or Amazon Prime members.

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