Rise In Streaming Subscription Rates Is Not A Strange Thing

As they raise their subscription rates, the major streaming services might get a lesson in what the market will bear.

New subscribers and existing ones might not easily acquiesce to the streamers’ new assault on their wallets.

News stories about subscription fatigue come up fairly often. This is the condition that sets in when household bill-payers come to the realization that their multiple streaming subscriptions have added up to more than they ever planned to spend just to watch TV.

Some people then start whittling down their streaming subscriptions, dropping some and keeping others. 

Some of them might even be downgrading their subscriptions to the lower-priced ad-supported tiers. But ultimately that’s a boon, not a detriment, to the streaming services.



The latest of the big streamers to disclose a price increase is Netflix, according to stories that proliferated last Thursday.

The stories said Netflix plans to raise the monthly price of its basic plan for existing U.S. subscribers from $9.99 to $11.99 (effective immediately, according to news stories last week).

More significantly, the news stories said the basic plan will no longer be available at all to new subscribers. 

If I understood the stories correctly, the implication is that new subscribers will have the choice of signing up for Netflix’s premium plan at $22.99 a month -- up from $19.99 -- or going with the ad-supported tier for $6.99 a month.

This strategy seems designed to steer more subscribers to Netflix’s ad tier, where it needs to grow an audience base to support its growing ad-sales business. And if a number of new subscribers opt for the premium, ad-free service, then Netflix also gains.

The goal of building audiences for ad-supported streaming tiers while also growing ad-free subscription revenue might be the same strategy already being adopted by the other majors.

Other streamers hiking their prices this year include HBO Max, Discovery+, Paramount+, Disney+, Hulu and Peacock.

The rising cost of doing business was another consideration for the streaming services that have driven up their fees.

The majors already spend billions to feed a content pipeline that they believe is the lifeline of their business.

And now, the costs of producing new series and licensing old ones are expected to rise -- reflecting the gains made by Hollywood writers in their recent strike -- and gains that will also likely be realized by the actors who are still on strike.

But what about subscribers? What will the market, or their wallets, bear when it comes to increases in the fees they pay every month to the streaming services?

Last year, a Recurly study of trends in subscription services said households subscribe to five streaming services on average.

The piece of data most relevant to this TV Blog was this one: Forty-six percent of U.S. consumers canceled a subscription due to price increases in the last year, the study found.

But as the headline on this TV Blog suggests, it is no strange thing for TV companies to consider strategies for making more money.

As reflected in the wave of subscription fee increases, the current strategy overtaking the industry is the building of two revenue streams -- ad sales plus subscriptions.

It is what basic cable adopted decades ago, and millions upon millions stayed with cable TV through a hundred fee increases without ever cutting the cable cord.

The same phenomenon might be in play in the subscription streaming world too. When the monthly bills come, some people just pay them because once they have become streaming converts, they can’t imagine leaving.

Next story loading loading..