Streamflation hits American wallets

Watch out for streamflation

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The Future. After years of offering subscriptions at a discount, streamers are out of the growth game and into the play for profitability — that means cutting costs and raising prices. But it’ll be a tricky balancing act, since raising prices can lead to churn (which audiences have no problem with these days). To combat the lack of loyalty, studios may need to bundle their disparate services at a discount — making it harder for people to hit that cancel button.

Profit platforms
Audiences are getting a taste for how much streaming services should really cost.

  • Every major streamer is raising the prices of their ad-free tiers by about 25% over the next year, with Disney already doubling the cost of Disney+ from its initial $6.99 price in 2019.
  • That’s because filling these platforms with content is expensive (like billions in losses expensive), and the streaming economy isn’t as lucrative as Hollywood thought it would be as they tried to chase Netflix.
  • So, the added costs are partly being pushed onto subscribers, and partly being subsidized by newly rolled-out ad tiers.
  • Those ad tiers have helped fuel new signups, considering they cost about half of the ad-free ones.

While increased churn is a real possibility due to the price hikes, streaming, as an industry, is here to stay. According to Nielsen, streaming now represents 38.7% of Americans’ viewing time, and it’s the first time traditional TV viewership has dropped below 50%. That’s a paradigm shift.

The only question streamers really need to worry about is whether they’ll be one of the four services that the average American subscribes to.


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