Company officials aren’t providing a timeline for profitability, either. Paramount, on track to lose $1.8 billion on its streaming service this year, also has seen its streaming subscription growth taper off so far this year. But reaching that target will require raising its subscriber count from roughly 90 million to 130 million, a potentially lofty target following a quarter with just 1.7 million net subscriber growth. Discovery appears the most likely of the trio to succeed, with company executives still forecasting streaming profitability by 2024 following the merger of its two platforms. HBO Max and Discovery+ parent Warner Bros. Three other companies, however, have much less room for error: Warner Bros. Amazon and Apple, meanwhile, can simply keep their fees low and subsidize streaming losses through other parts of their wildly profitable businesses. Netflix might be losing subscribers and enduring a rightsizing of its stock price, but at least the company already makes money. Three of Disney’s streaming rivals should be able to weather a broad rise in subscription prices. Already, signs of platform saturation are starting to emerge. But as Disney and other streamers institute price hikes en route to profitability, consumers can only stretch their dollars so far. To date, consumers have proved rather willing to increase their streaming budgets as more platforms hit the market and companies gradually raise subscription fees. Disney+ also keeps showing how much more room there is for growth, adding 14.4 million subscribers and beating analyst forecasts in the most recent quarter. On the content front, Disney’s Marvel and Star Wars franchises show few signs of slowing its children’s programming will remain a must-have for families and its bundling opportunities make for good value. On the price front, Netflix, which charges $9.99 to $19.99 per month depending on the streaming plan, has shown that customers will pay a premium for a high-value service. “And we do not believe that there’s going to be any meaningful long-term impact on our churn as a result.”Ĭhapek’s prediction certainly isn’t a slam dunk, but it’s easy to see the logic. “We believe, because the increase in the investment over the past two and a half years relative to a very good price point, that we have plenty of room on price value,” Chapek said. It’s incredibly expensive to produce content and secure subscribers, and the monthly fees charged by entertainment companies aren’t nearly enough to cover those costs. This development boils down to simple economics. The hikes offer some of the clearest evidence to date that the streaming industry’s unprofitable subscription pricing matrix, ostensibly designed to reel in customers in a fiercely competitive field, is quickly approaching unsustainability. (The price for an ad-free bundle of all three platforms will stay unchanged, while a bundle with ads will cost an extra $1 per month.) Those increases follow Disney bumping the monthly price of ESPN+ from $6.99 to $9.99, with the change set to take effect later this month. will rise from $7.99 to $10.99, while Hulu’s ad-free offering will jump from $12.99 per month to $14.99 per month. Most notably, the cost of a Disney+ subscription in the U.S. On the same day that Disney announced its trio of streaming brands-Disney+, Hulu, and ESPN+-combined to surpass Netflix’s subscriber count for the first time, the entertainment conglomerate unveiled significant price hikes across its three platforms starting in December.
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