Streaming services keep raising their prices. The Wall Street Journal estimates that the average cost of major ad-free streaming is up over 25% this year. Disney (DIS) is the latest player to announce price hikes, following Peacock, Max, and Apple TV+ who all have raised prices within the past year. Yahoo Finance Tech Editor Dan Howley details the rising prices by noting "it's basically up across the board with every major streaming service."
- The cost of streaming is going up. Disney is the latest player to announce price hikes, raising costs for ad-free Disney and also Hulu, each by 20% or more. Peacock, Max, Paramount Plus, and Apple TV Plus have all raised their prices in the past year. And the Journal estimates that the average cost of major ad-free streaming is up nearly 25% in a year.
For more on this, we want to bring in Yahoo Finance's Dan Howley and Alexandra Canal to take a look at all angles of the streaming wars and how much people are paying right now. But Dan, when it comes to what's going on right now, how much more people are paying, what are we seeing, and, I guess, what kind of behavior, maybe, could we expect?
DAN HOWLEY: It's basically up across the board for every major streaming service. It started more or less last year when Netflix raised their prices. Their premium plan went up to about $20. Then they started saying we're going to crack down on password sharing. They introduced their $6.99 ad supported plan. Now, if you try to share your password, you're going to have to chuck an extra $7.99 in there. Sorry, mom and dad.
Then we also have Hulu. They raised their prices last year, along with Disney. Disney just did that again. We have Max, HBO, whatever they want to call it. They raised their prices. Peacock-- who's subscribing to Peacock? But whatever. They also raised their prices.
And then YouTube TV, which I subscribe to for the Mets, raised their prices. I ranted about this, though. The Mets and SNY can't come to an agreement.
- That's an expensive--
- It is an expensive subscription. The YouTube TV one is the one that stood out to me. Go ahead, Dan.
DAN HOWLEY: It's dumb. $64.99 to $72.99 for me to watch "Naked and Afraid" while I drink White Claw and get drunk and laugh at these people in the woods. Is it worth that? Is it worth that?
- $72.99--
ALEXANDRA CANAL: YouTube TV is supposed to be a cable replacement.
- It is.
ALEXANDRA CANAL: So it's in a different category than your Netflix or Apple TV Plus. But if you're only using it to watch "Naked and Afraid," maybe not worth the $72. I don't know.
DAN HOWLEY: Don't poo poo getting drunk and laughing at people.
ALEXANDRA CANAL: Oh, no. I'm not. I use it to watch "Summer House" exclusively, so, hey.
- There you go.
- All of these make you question, which of these do I still need? Do I need to have, of course, Netflix? Well, yes. But the Netflix, the Hulu, Disney, do you need-- well, Disney, Hulu, all together now basically. Do we need all of these? And you have consumers starting to, I guess, question these-- what we've looked at as little-- not necessarily-- little luxuries. They're not necessities, right?
- They're certainly not necessities. But I think so many people just get used to having these subscriber service, and I'm speaking from firsthand experience, that if these companies do raise it by 20%, the likelihood of you're then going on and canceling. They're willing to take that chance. And we saw it here from a number of streamers over the last year.
And yes, there has been a little bit of churn, but it's been a smart move on the streamers part just in terms of some of the pressure that they're seeing. They're trying to do everything they can to cut their losses, and this strategy is working. It's tough for us, but it's working for them.
ALEXANDRA CANAL: And if you think about the password sharing crackdown, I mean, Netflix added 5.9 million subscribers in a large part due to the password sharing crackdown. So we might not like it, but we're doing it. And you brought up a good point with churn.
Obviously, when you raise prices, that's a big risk. It is the critical problem that these streaming companies face. I've spoken to analysts about that. They can't ignore churn. However, I think it's worth noting that all of these subscription services, they have ad-supported tiers now, and they're cheaper.
And one of the reasons why they're raising the prices on the ad-free plans is they're trying to convince consumers, well, don't cut us out entirely, just watch us with ads. That is a higher average revenue per user, that's that metric, RPU, very key to profitability. So there's a method behind the madness going on.
- Do we think people are going to go back to cable, though? I mean, I actually still have cable.
DAN HOWLEY: I don't think we're going to go back to cable, but the thing that's going to start happening is more bundling. We have the Hulu, Disney, ESPN Plus bundle. You're just going to see more of that, whether it's with carriers, whether it's through different platforms, and that's how it's going to be.
And then some of the folks that I spoke to said think multiyear now contracts, where maybe you lower the monthly price, but you're hooked in for two years and then--
- That's the cable model.
DAN HOWLEY: Exactly. So it's all going back there. And I think one of the things with churn-- and I'm thinking about this is Netflix said that they're working on their cloud gaming initiative. Well, it's not because they want to compete with Microsoft and Sony. It's because they don't want you to leave when you got Stranger Things on there.
I watched-- I went through-- we were talking about this earlier. I went through the carousel the other day of all the Netflix originals. It is trash, just complete trash. There was like one thing that I watched.
ALEXANDRA CANAL: But you have a lot of content, right?
DAN HOWLEY: Right. That's the thing.
ALEXANDRA CANAL: And there's going to be new churn data out next week that I'm going to be tracking. But I have something right now from antenna, and this is monthly signups. Out of all the major streaming services, Apple TV Plus saw less monthly signups in June than they did a year ago. Everyone else is up.
And even though Apple TV Plus, the content is really good, there's not a ton of it. And I think that's a big factor when people are weighing their decisions here. But bundling, absolutely. I hear that from literally every single person I talk to. That's a new frontier.
DAN HOWLEY: That's cable.
ALEXANDRA CANAL: Yeah, exactly.
- And then you're going to be paying just as much as you were before, if not maybe even more. All right, Ali and Dan, thanks so much.
