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The Streaming Revolution: Rising Prices, Shifting Strategies

Once seen as an affordable option for entertainment enthusiasts, the streaming landscape is undergoing a seismic shift as the industry is experiencing a surge in subscription fees. By: Wee Yan Ling

In recent years, studio leaders are cautioning that streaming content investment is reaching its culmination, prompting studios to shift focus from high subscriber counts to hitting streaming revenue targets. Hence, customers are witnessing the dreadful repercussion of price hikes.

In hopes of meeting their streaming revenue goals, studios have adopted multiple strategies to bolster their bottom line. Such strategies include the use of advertising, dropping licensed content, and altering content slates. However, the most inevitable and direct route for immediate growth for streaming services is increasing their monthly subscription pricings.

Despite the slow growth of subscribers, price hikes have proven itself effective in rendering an instant boost in the revenue for streaming services. Examples include Netflix, Disney Plus, Hulu, and ESPN Plus as they all have revised their prices several times. The trend is uniform across all the services in the streaming industry and reflects a shift in the economic dynamics in the industry.

In October 2023, seven streaming services increased their pricing. Netflix has increased their prices on two plans, Disney has hiked their fees and Hulu has implemented plans without advertisements. Across the tiers, the average increase of pricing has risen by an approximate 23%.

Amazon intends to introduce advertisements in the baseline Prime Video service, and if subscribers want to skip through the advertisement breaks, they would have to opt to pay $2.99 on top of their Prime membership.

There has been a demand for ad-supported tiers in recent years as subscribers turn to more cost-efficient alternatives. It is estimated that 10% of Netflix customers have employed this ad-based subscriptions in November 2022 and the figure had continued to increase to 35% by November 2023. Other streaming services have also witnessed a similar trend as subscribers turn to ad-supported tiers.

Another dreaded form of price increase is the implementation of password crackdowns. This has contributed to the revenue instantaneously despite the slow growth rate of subscribers. This strategy is employed to help companies offset their escalating costs.

Netflix’s password crackdown was proven effective as they gained 9 million new subscribers globally at the end of May last year. They have also reported a revenue of $8.5 billion for the third quarter of 2023.

As the streaming landscape continues to evolve, the once enticing deals and low-cost entry points of streaming services are merely distant memories. Major streaming giants have all raised their prices with the cost of streaming reaching an all-time high. The streaming industry is now navigating a complex terrain of pricing strategies, expanding price points and adapting to consumer preferences amid the ongoing ‘streamflation’.

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