The gravy train is over, streaming services getting more expensive
posted Sunday Aug 13, 2023 by Scott Ertz
When the streaming services first launched, everything was too good to be true. The price per month versus what you got was absolutely in the consumer's favor. Companies were spending more than they were making in an attempt to attract new users. But now, with intense competition, streaming companies are changing the equation to try to be profitable and that means consistent price increases. Disney's streaming services are just the beginning.
The promise of streaming
In the beginning, the streaming services were billed as an ad-free replacement for the ad-laden cable services. For a fraction of the cost of cable, you could eliminate the ads and choose which services you wanted to subscribe to. That way, you had better control over your expenses, your viewing experiences, and who you supported.
It was a similar promise to what cable had made decades earlier. When cable was first launched, stations (except for rebroadcasts of local channels) were ad-free. Why pay for a service if you're going to get ads? The paid cable service, versus the free over the air televisions broadcasts, were your way to skip the ads and only get content. But, in fairly short order, that promise fell apart with ads coming to nearly every cable network. But the bill didn't go down - it went up. Plus, you had to subscribe to everything or nothing. It was a different offering from what was promised.
Streaming's current situation
The streaming services have, once again, followed cable's lead and added ads into their subscriptions, though some like Peacock launched that way to begin with. Over the past few years, the cost of the streaming services has risen significantly. This week, new price increases from Disney's streaming division has caught the attention of consumers and caused them to wonder exactly what is going on.
Disney+, the company's namesake streaming service, is raising the price of its ad-free tier from $11 per month to $14 per month. The company's other service, Hulu, is also seeing an increase in its ad-free tier. The service will go from $14 to $18 per month. Together, you can get a deal of $20 per month, which is a decent deal if you only look at the current price of the services. However, if you look at the prices a year ago, it's nearly the retail price.
This is the second time in the last 12 months that Disney+ and Hulu have increased their prices. But Disney is not the only company to increase its streaming prices. Netflix saw an increase of $1.50 per month. Max (previously HBO Max) saw a $1 increase, though it did merge with Discovery+. Apple TV+ increased by $2. Paramount+ saw a $2 increase. Peacock also saw a $2 increase.
With increased prices and more competition, customers are starting to have to decide which services to keep and which to skip. This will likely lead to a different problem for the service: a decrease in subscribers. Disney+ has seen customers fleeing. Netflix already saw an exodus last year. Others are likely to see the same thing coming soon.
Following cable's lead might not have been the best choice in this situation.
