August 11, 2023

The Rising Costs of Entertainment: Streaming Companies Raise Prices

Frankie Pike

Disney is raising prices for Disney+ and Hulu’s ad-free tiers by as much as 27 percent despite losing about 11.7 million subscribers in the second quarter.

According to Bloomberg, Disney+’s ad-free tier will cost $13.99 a month and Hulu’s will cost $17.99 a month beginning Oct. 12. The ad-supported tiers, on the other hand, will remain priced at $7.99 a month each (or $9.99 a month bundled).

“We’re obviously trying, with our pricing strategy, to migrate more subs to the advertiser supported tier,” said Disney CEO Bob Iger.

With 85 percent of U.S. households subscribing to one or more streaming services as of 2021, according to Kantar, there isn’t much room for streaming services to increase profits by gaining subscribers. But there is room to increase profits from existing subscribers — hence the price hikes.

Netflix’s standard subscription, which cost $7.99 a month in 2011, now costs $15.49. Even accounting for inflation, $7.99 in 2011 dollars is worth $10.86 today.

Customers who keep their streaming subscriptions despite price hikes will likely have higher expectations. (If we’re paying more, shouldn’t we get more?)

With the ongoing Writers Guild of America strike hitting its 100th day this week and actors joining the picket line, delivering high quality content will be difficult. Many productions have already been halted longer than in the 2007-2008 strike.

“The endgame is to allow things to drag on until union members start losing their apartments and losing their houses,” a source told Vanity Fair.

The combination of higher prices and less quality content could be bad news for advertisers in the coming months.

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