Streaming is finally starting to pay off for media companies, but there’s a catch — to get there, consumers are facing higher subscription costs and increasingly frequent price hikes according to CNBC.
Legacy media companies entered the streaming market with a focus on gaining subscribers and competing with category leader Netflix as traditional cable TV bundles lose customers. Now, looking for a return on their content investments, Disney, Warner Bros. Discovery and others are aiming for streaming profits.
Their strategies include rolling out cheaper, ad-supported models; launching platform bundles; and cracking down on password sharing, but price hikes have shown more immediate results toward profitability.
“The years of prioritizing user growth with low prices are over,” said Mike Proulx, vice president and research director at Forrester.
Disney said last week that its combined streaming services — Disney+, Hulu and ESPN+ — were profitable for the first time during its fiscal third quarter. Although the company added new subscribers, that milestone was largely due to price increases.
CEO Bob Iger said during an earnings call that Disney has “earned” its pricing in the marketplace due to the company’s creative contributions and product improvements. He noted that with past price increases, the company hasn’t seen a “significant” number of customer departures.
“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,” Iger said.
The major streaming services have gone through a number of price hikes and changes throughout the past few years.
In just the past five months, four streamers have announced price increases: Warner Bros. Discovery’s Max, Comcast’s Peacock, Disney and Paramount.
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