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We’ll be straight with you. The economy is getting worse, inflation is soaring, and streaming service prices are slowly creeping up. At some point, something’s going to have to give. Will it be more pricing tiers across the industry (which we’re starting to see a bit ad-supported models)? Or will more people start dropping services in a mass refusal to keep paying a higher percentage of their income to a growing number of streaming services?
Streaming service price increases are no laughing matter
Let’s start with something that’s not surprising to anyone reading this: streaming services are pricier than they used to be. That applies to both on-demand streaming services like Netflix and Disney+, and virtual multi-channel video program distributors (vMVPDs) like Sling TV, YouTube TV, and fuboTV. We’re all currently paying more for these services than we were just two years ago. Those of us who have been subscribed to these services for longer have seen prices increases rather dramatically in the past 5 years.
Those eventual price increases were to be expected. Rapid inflation, however, is complicating the issue. We’re going to get a little mathy today, but don’t worry. It’ll all conclude with a little insight.
How much have streaming services increased in price?
Almost every major streaming service has increased its prices at least once since its initial launch. When services come to market, their primary goal is typically to pull in subscribers first, then increase prices later. They don’t come to market at the subscription price target they have in mind to generate revenue. In fact, most will take a profit loss for a few years until they’re able to get to the right balance of subscribers and subscription pricing to generate a healthy profit.
Let’s look at what price increases have looked at for a few top services:
Netflix: When the service launched its Standard subscription in 2007, it charged $8 per month. As of 2022, a Standard subscription is $15.49 per month. That’s a 93.6% price increase since launch.
Disney+: At its 2019 launch, Disney+ was $6.99 per month. By the end of 2022, Disney+ will be $10.99 per month (unless you want it with ads, where the price will be $7.99 per month). That’s a 57.2% price increase since launch.
YouTube TV: When it launched in 2018, YouTube TV was $35 per month. As of 2022, YouTube TV is $64.99 per month. That’s an 85.7% price increase since launch.
Philo: At its 2018 launch, Philo was $16 per month. Now, Philo is $25 per month. That’s a 56.3% increase in price.
That’s just a sampling. However, if you take a broad look across every major streaming service, you’ll see similar numbers. Services that launched around a decade ago are now closer to 100% higher in price than they were at the start. And services that launched around 2018-2020 are now around 50% to 60% higher in price.
The past two years have seen a high rate of price increases in a short amount of time, reflecting the impact of the pandemic and subsequent recessions and inflation on the streaming service market.
How much more am I actually paying?
Now here’s the real question. Price increases happen. We all (mostly) accept that as a reality. But are the price increases keeping up with inflation or exceeding it? Well, let’s look at the numbers for those services we just looked at in the section above.
Netflix: The $8 USD Netflix was charging in 2007 is now the inflation-adjusted equivalent of $11. The cumulative rate of inflation during that time was 42.8%. With Netflix now charging $15.49 for the Standard for US subscribers, its price is a 40% premium over its inflation-adjusted launch price.
Disney+: The $6.99 per month Disney+ was charging in 2019 is now the inflation-adjusted equivalent of $8.10. The cumulative rate of inflation during that time was 15.8%. With Disney+ set to charge $10.99 per month for an ad-free experience by the end of the year, subscribers will be paying a 35.7% premium over its inflation-adjusted launch price.
YouTube TV: The $35 YouTube TV was charging at launch in 2018 is the inflation-adjusted equivalent of $41.28. The cumulative rate of inflation during that time was 17.9%. With YouTube TV now charging $64.99 per month, subscribers are paying a 57.4% premium over its inflation-adjusted launch price.
Philo: Philo’s comparatively cheap $16 price at launch in 2018 is the inflation-adjusted equivalent of $18.87. As with YouTube TV, its cumulative rate of inflation was 17.9%. Since Philo is now charging $25 per month, subscribers are paying a 32.5% premium over its inflation-adjusted launch price.
What do these price increases mean for me?
Phew. That was a lot of math. If you look across the industry, you’ll see very similar price adjustments. It’s not just your imagination; prices are increasing across the board. Not just that, however. They’re also increasing well above the rate of inflation, and well above the real wage increases of workers, which are actually now falling as a result of inflation.
What this means for you, me, and almost everyone else is that in real dollars, streaming services now cost a higher percentage of income. While it’s overall marginal, it certainly adds up over time. But for those living at or below the poverty line, entertainment is becoming harder and harder to access, especially with password-sharing crackdowns.
Two takeaways: Ad-supported models or dropping services?
Providers aren’t blind to the financial impacts they’re having with price increases. Hence, the rise in ad-supported models (both lower-cost and free-with-ads). When Disney+ raises its prices later this year, for example, it plans to introduce an ad-supported tier at $7.99 per month. That price is actually lower than the inflation-adjusted cost it was charging at launch, making it a good deal—if you can tolerate ads, of course.
The other alternative? Dropping services altogether, or at least pausing services until you have something to binge-watch.
Streaming providers are making that a bit more difficult as they’ve started switching back to the weekly release model for hit shows. That’s an intentional approach specifically designed to make sure viewers stay subscribed for longer periods of time. Consequently, higher prices were leading subscribers to start binge-pause-binge cycles. With weekly releases, you’re going to have to wait much longer for full seasons to release, and service providers are counting on your impatience.
Nevertheless, pausing your subscription and bingeing whole seasons is still an option. If you have the patience for it, it may be the only and best cost-saving option for services that don’t offer cheaper ad-supported tiers and don’t allow password sharing.
Sam Cook is a full-time content strategist by day, a part-time freelance content writer since 2015. In another life, he was a high school English teacher for nearly a decade. Based in sunny New Orleans, he writes long-form educational content on technology, including Insurtech, Fintech, HRtech, and content streaming. He loves whittling down complex ideas within these areas that make decisions easier for buyers. When he’s not reading books with his son Miles and playing video games with the family, you can find him immersed in his growing collection of Euro-style board games.