Gone are the days of cheap streaming. It's profitability time, folks.
2023 represented a year of change for media after rising costs and debt-ridden balance sheets weighed on the sector in 2022 — and wiped off more than $500 billion in market capitalization.
In response, media giants enacted mass layoffs, rolled out ad-supported tiers, bundled their offerings, and, yes, raised the monthly prices of their respective subscription plans.
"Streaming is moving into an adolescence," Macquarie analyst Tim Nollen wrote in a recent note, referencing those changes. Yet, the said streaming profitability still has a long way to go with virtually all media companies, except for Netflix, losing money.
"Adolescence can be awkward," he said.
Apple (AAPL) raised prices in October, announcing that the monthly cost of streaming service Apple TV+ will go up by $3 to $9.99 for new subscribers. The company also raised prices on other subscription services like Apple Arcade, Apple News+, and its bundled offering Apple One.
Prior to Apple's reveal, Netflix (NFLX) announced it would be raising prices in the US, UK, and France during its third quarter earnings announcement. Its Basic and Premium plans now cost $11.99 and $22.99, respectively, in the US. That's up from the prior $9.99 and $19.99 price points. Netflix’s $6.99 ad-supported plan and $15.49 Standard plan remain the same.
Disney (DIS) hiked streaming prices on Oct. 12 for the second time this year. The price of the Disney+ ad-free plan jumped to $13.99 a month in the US, up from the prior $10.99. That's now double the $6.99 monthly cost Disney charged for the service when it first launched in 2019.
And that's not all.
Warner Bros. Discovery (WBD), which raised the price of its ad-free Max offering in January by $1 to $15.99, announced earlier this month that it would raise the price of its ad-free Discovery+ streaming platform by $2 to $8.99.
Comcast's Peacock (CMCSA) upped the cost of its ad-supported plan by $1 to $5.99 and its ad-free plan by $2 to $11.99 in August. It was the first time Peacock had raised its streaming prices.
In June, Paramount (PARA) launched its Paramount+ with Showtime streaming offering for $11.99 a month — $2 more than the previous price for a Paramount+ subscription. It also raised the prices of its ad-supported tier by $1 to $5.99.
Even cable replacement services like Alphabet's YouTube TV and Disney's Hulu + Live TV have seen prices leap from prior levels.
YouTube TV jumped to $72.99 from $64.99 in March while Hulu + Live TV with ads jumped from $69.99 to $76.99. The ad-free version now costs $89.99, up from the prior $82.99.
Added up, the cost of these services now rival the dreaded cable TV bundle of years past — the very thing that streaming set out to undo.
Consumers cancel streaming plans as prices balloon
Consumers are taking notice with subscribers canceling more of their plans to combat rising costs. According to the latest data from Antenna, US subscribers are canceling streaming services at record rates with nearly 6% of overall subscribers canceling plans in October — the highest recorded rate.
Lionsgate's Starz (LGF-A) saw the highest churn rate out of all the major streamers at 12.5% followed by Discovery+ at 9.2%, Max at 8.4%, and Apple TV+ at 7.2%. Netflix had the lowest churn rate at just 1.6%.
Separately, new data from Statista said Apple TV+ is expected to lose about $6 billion on its streaming video business in 2024, citing elevated churn amid its price hikes. The data comes as Apple has recently committed to beefing up its sports slate.
To combat some of that churn, bundles have increased in popularity.
Although the concept of bundling isn't new, more distributors are now partnering with content operators to offer that flexibility, while competitors may also team up.
Earlier this month, telecom giant Verizon (VZ) announced it will offer a $10 bundle for the ad-supported plans of both Netflix (NFLX) and Warner Bros. Discovery's Max (WBD) streaming services, yielding more than 40% in savings.
Prior to that announcement, the Wall Street Journal reported that Paramount Global (PARA) and Apple (AAPL) are in early-stage talks to bundle their streaming services at a discount. Paramount declined to comment while Apple did not respond to Yahoo Finance's request.
"Everybody's trying to come up with something proprietary," Mark Boidman, partner and global head of media at Solomon Partners, told Yahoo Finance of the bundle. "When you can bundle something together at an attractive price in the minds of consumers then that makes sense."
Marc DeBevoise, who helped launch CBS All Access and now serves as CEO of streaming tech company Brightcove, emphasized the benefits of optionality within the bundle.
"[Streamers] are going to give consumers a lot of different choices over the next few years," he told Yahoo Finance Live. "They are certainly looking at bundling as a way to reduce churn or a way to impact how they can retain those customers over the long term."
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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