Despite its rapid expansion, the underlying economics of streaming remain challenging, with major media companies grappling to achieve profitability. As always, subscription costs are trending upwards… but this feels like a pivotal moment.
My highly unscientific, anecdotal, armchair research tells me that people – even those who can easily afford it – are willing to churn out of any streaming service if it doesn’t feature a show they care about. This raises the question: at what price might we hit the consumer demand’s elasticity limit? It looks like we’re going to find out soon enough.
Disney+, after experiencing unprecedented growth during the pandemic, announced its second price hike in less than a year, raising its ad-free subscription to $13.99 by October 2023. Hulu, a majority-owned subsidiary of Disney, followed suit, marking its ad-free tier at $17.99. This shift isn’t exclusive to Disney. Paramount, Warner Bros. Discovery, NBCU, and even industry pioneer Netflix have all adjusted their pricing upwards this year. Because price hikes alone won’t get the job done, Disney is looking to follow Netflix’s lead and it’s actively exploring measures to crack down on password sharing.
If you didn’t know better, you’d think the economics of streaming came as a surprise to big media companies. Spending more on production while simultaneously reducing available distribution channels. What could possibly go wrong?
Author’s note: This is not a sponsored post. I am the author of this article and it expresses my own opinions. I am not, nor is my company, receiving compensation for it.