The video streaming industry experienced considerable growth during lockdowns amid the Covid-19 pandemic, and it looks like the trend is here to stay.

Viewers are increasingly preferring to use video streaming platforms like Netflix and Disney+ over traditional TV.

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In fact, according to Nielsen, streaming’s share of US TV viewership passed 40% for the first time in June 2024, highlighting its increasing popularity against broadcast and cable.

Video streaming first became popular because of its cheaper prices and ability to offer a more convenient watching experience compared to traditional TV. However, as streaming platforms started to switch their focus from reach to profitability, price hikes became inevitable. Unfortunately, price hikes also mean that everyone’s favorite streaming platforms are getting more expensive than ever.

Subscription prices keep increasing

According to Forbes Home’s 2024 survey, 44% of respondents stated that their subscription costs have increased in the last year. Similarly, major streaming platforms including Netflix, Hulu, and Disney+ have all raised their prices in the last 12 months.

FilmTake revealed that the total price of subscribing to all the top nine streaming platforms in the US has increased by 20% in 2024 compared to 2023. According to 9meters, Netflix’s premium plan now costs around $23, an increase from $20 in 2022. Another example is Disney+, which Quartz reported had increased its monthly subscription price from $14 in 2023 to $16 in 2024.

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The Media Leader cites Searchbloom’s study, which reports that Apple TV+ and Disney+ are leading the charge when it comes to increasing prices since launch. The two platforms recorded an average annual price increase of close to 20% between 2019 and 2024. While Apple TV+ increased its prices on average once every 17 months in the five years, Disney+ updated them once a year.

Macroeconomic factors trigger video streaming price hikes

Like any industry, streaming is affected by economic pressures and inflation. Thus, to ensure profitability, streaming platforms must adjust their prices.

Furthermore, as the streaming industry grew, other tech giants, content creators, and independent players started to get involved, which increased competition. In the last decade, the market leader, Netflix, has begun a content war by increasing its spending on film and TV content. The streaming provider was spending less than $2bn in 2012 on content, which grew to $13bn in 2023 and is expected to reach $17bn in 2024. In the race for streaming customers, Disney and others also increased their content production.

The increasing content investment pushed streaming companies to try several strategies to boost profitability, like launching ad-supported or more affordable models or platform bundles. However, none of these proved as effective in raising profitability as price increases.

Price hikes can cause customer churn

A 2024 Deloitte survey in the US found that nearly 40% of respondents do not believe streaming services are worth their price. The survey also found out that nearly half of Americans would cancel their favorite streaming platform subscription if the price were increased by $5 per month.

According to Forbes Home, while 44% of subscribers in the US said that they would cancel their Disney+ subscriptions if the membership price is increased, this percentage is 40% for Hulu, 35% for ESPN+, and 33% for Netflix. The survey also suggested that 45% of respondents cancelled at least one of their subscriptions due to expensive fees.

Considering these, streaming companies must devise formulas to ensure viewer retention while ensuring profitability. Offering cheaper ad-supported plans might be a winner as it can allow streamers to generate both advertisement and subscriber revenues.