Sorry, you’re going to pay even more for streaming TV soon. Here are the services most likely to raise prices again. – DIGIWIZ CENTRAL

Sorry, you’re going to pay even more for streaming TV soon. Here are the services most likely to raise prices again.

Chris Rock during his Netflix special.

Kirill Bichutsky/Netflix

Netflix, Disney, and other video streaming providers have raised prices a lot in the past year. Unfortunately, they’re not done, according to a new analysis from Bernstein Research. The analysis predicts which streaming subscription services are likely to raise prices again soon.

Netflix, Disney, and other video streaming providers have been on a price-raising rampage that would make Jerome Powell shudder.

Unfortunately, these companies are not done.

We’ll be paying even more to watch shows and movies online soon, according to an analysis by Mark Schilsky, a sales specialist at Bernstein Research, one of the top internet and media research firms on Wall Street.

When companies try to improve profitability, sometimes their revolutionary products start to look downright ordinary. Streamers are the latest example of this phenomenon.

As a bundle, Disney+, Hulu, Netflix, Max, Peacock, Paramount+, and Apple TV+ subscriptions went from $76.43 a month to $94.43 a month in the past year (Schilsky generated a “weighted average subscription price per month” for each service, factoring in both ad-free and ad-supported tiers as well as share data from Antenna). That’s a 24% surge, versus a roughly 3% increase in overall US consumer prices, according to Schilsky. (This doesn’t even include the implicit price increase from Netflix’s ongoing password sharing crackdown).

“I don’t think these companies are done raising prices,” he wrote in a gut-punching note this week.

Schilsky cited recent comments from media industry executives to support this. One example is from Disney’s latest earnings conference call when company leaders expressed delight that their recent price increases haven’t turned off viewers: “The impact on churn and retention has outperformed our expectations,” Disney CEO Bob Iger said on the August 9 call.

The Bernstein sales specialist also fired up an interesting analysis, using Nielsen data and other industry stats, that shows which streaming services are mostly likely to raise prices again.

His conclusion: Netflix, Hulu, and Peacock have “significant untapped pricing power,” while Max and Paramount+ do not. Disney+ is somewhere in the middle, but is “headed in the ‘wrong’ direction with its recently announced price increase,” Schilsky wrote.

In other words, you’re probably going to pay more for Netflix, Hulu, and Peacock before too long.

Schilsky also plotted some of this data on a chart. The lower a service’s subscription fee is relative to its market share, the more underpriced it is compared to its competitors — all the companies to the right of that dotted diagonal line have room to increase their prices. So you can see which services are likely coming for more of your wallet. And the farther below the diagonal a company falls, the more “untapped pricing power” it has in Schilsky’s analysis.

Note how Hulu, for example, still has room to charge more even after its coming price increase on October 12 (from $14.99 to $17.99 for its ad-free service, while the ad-supported tier is sticking at $7.99).

A chart from Bernstein’s Mark Schilsky showing data on streaming services.

Bernstein Research

What are the caveats here? How might Schilsky be wrong? He suggested some ways.

One of the companies above the dotted line might come up with a mega-hit like “Game of Thrones” — suddenly driving it to the right on the chart with a greater share of viewership, and thus giving it extra pricing power. However, over a longer period, it usually takes a consistent supply of solid hits to drive repeat viewing habits that support higher prices, Schilsky explained.

The other possibility is that we finally get fed up with paying more and more for all these services and people start canceling some of their subscriptions. But Schilsky thinks that’s unlikely, for now.

And if subscribers do “begin to balk” at price hikes, he wrote, “There is always AVOD.”

Read the original article on Business Insider
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