2023 Saw THIS Skyrocket

(5MinNewsBreak.com) – 2023 marked a pivotal shift in the media landscape, as companies grappled with the financial aftermath of a challenging 2022, which saw a staggering $500+ billion erased from market values.

In an effort to recover, media titans initiated sweeping layoffs, introduced ad-supported options, bundled services, and significantly, increased subscription fees.

The streaming industry, according to Macquarie analyst Tim Nollen, is undergoing its “adolescent” phase. This period is not without its challenges, as most media companies, barring Netflix, are yet to achieve profitability. Nollen quipped, “Adolescence can be awkward,” aptly summarizing the industry’s current state.

Take Apple (AAPL), for example, which in October announced a price hike for its Apple TV+ streaming service, now $9.99 monthly for new subscribers, a $3 increase. Other Apple services like Apple Arcade, Apple News+, and the Apple One bundle also saw price increases.

Similarly, Netflix (NFLX) raised its prices in the US, UK, and France. Its Basic and Premium plans in the US now cost $11.99 and $22.99, up from $9.99 and $19.99, respectively. However, its ad-supported and Standard plans remained unchanged.

Disney (DIS) also joined the trend, raising the price of its ad-free Disney+ plan in the US to $13.99 monthly, a significant leap from the initial $6.99 at launch in 2019.

Warner Bros. Discovery (WBD), Comcast’s Peacock (CMCSA), and Paramount (PARA) weren’t far behind, each elevating their subscription costs. Even cable alternatives like YouTube TV and Hulu + Live TV witnessed price surges.

This trend has led to streaming services’ costs rivaling those of traditional cable bundles, ironically what they initially sought to replace.

As prices rise, consumers are pushing back. Data from Antenna reveals record cancellations of streaming subscriptions, with a 6% overall subscriber cancellation rate in October. Lionsgate’s Starz (LGF-A) topped the list for highest churn rate.

In response, streaming services are exploring bundling options. Verizon (VZ) recently introduced a bundle saving over 40% on the ad-supported plans of Netflix and Warner Bros. Discovery’s Max. Paramount Global (PARA) and Apple (AAPL) are reportedly discussing a similar strategy.

Experts like Mark Boidman of Solomon Partners and Marc DeBevoise of Brightcove emphasize the appeal of bundling, seeing it as a way to retain customers and reduce churn.

In essence, the streaming industry’s evolution reflects a balancing act between profitability and consumer affordability.