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Streaming service price hikes outpace inflation

Streaming service price hikes outpace inflation

Streaming service price hikes outpace inflation 💸

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?

What’s up with rising streamer pricing?

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 multi-channel video program distributors (MVPDs) 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 more pricey are streaming services?

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 is 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 have launched around a decade ago are now closer to 100% higher in price than they were at teh 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 the pandemic and subsequent recessions and inflation on the streaming service market.

Streamer prices start low and then 📈

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, it's price at 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% premiym 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.

Inflation adjustment = sticker shock

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 increases 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.

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

Time to make a choice

If you want to save on your streaming costs, you really have two options.

Go with ad supported plans, like the one Disney+ plans to introduce later this year, which is actually expected to be cheaper than the inflation-adjusted cost.
Consolidation, or at least pausing some services until you have something to binge watch.

These days, streaming providers are making it a bit less attractive to pause your subscription. Skip a week and you’ll miss a weekly release of one of your favorite shows. But, hitting unsubscribe is still an option all the same and 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.

This Week's Streaming Guide

1. Hulu's 'Reasonable Doubt' court show launches today.

"You'll judge Jax Stewart for her questionable ethics and wild interpretations of the law…until you're the one in trouble." Streaming today (Sept. 27). -

Watch on Hulu

2. Peacock documentary 'Sex, Lies and the College Cult' streaming Wednesday.

"'Sex, Lies and the College Cult' is

a new Peacock doc about Sarah Lawrence cult

. Larry Ray was found guilty of extortion, sex trafficking, forced labor, money laundering and other charges earlier this year." Available on Peacock this Wednesday (Sept. 28). -

Watch Peacock Without Cable

3. Netflix takes on the Gamestop saga.

Watch 'Eat the Rich: The Gamestop Saga' on Netflix this Wednesday (Sept. 28). -

Watch on Netflix

4. Hocus Pocus 2 is coming to Disney+.

The long-awaited 'Hocus Pocus' sequel brings the original actresses back to the action. Stream on Disney+ this Friday (Sept. 30). -

Watch on Disney