Will streaming services continue to raise rates, insert ads and crack down on passwords next year?
Will streaming services continue to raise rates, insert ads and crack down on passwords next year?
Amazon Prime Video is the latest streaming service that hopes ad revenue will boost its profit margins. It told customers that advertisements are coming to the platform at the end of January and is offering a new ad-free tier for an extra $2.99 a month.
This year was one of correction for the streaming sector, with services hiking subscription prices and cutting their content spending after facing subscriber loss.
For me, the price of my Max subscription went up by $1 a month and I was booted off my cousin’s Netflix account during the password-sharing crackdown. Now if I want to keep watching Prime Video without ads, I’ll have to pay up.
“Like you, I’m also a victim, right? We’re all victims,” said J. Christopher Hamilton, a professor at Syracuse University who said his favorite streamer is Apple TV+. He’s a fan of the dystopian drama “Silo.”
“They went from $6.99 to pretty much $10,” he said.
But streaming customers are sort of spoiled, argues Ross Benes, an analyst with Insider Intelligence’s eMarketer.
“For years, most streaming services operated at a loss,” he said.
Cheap subscriptions were a tool to reach as many customers as possible, Benes added. “So now that they’re raising the prices and jamming ads into the programming, that’s more reflective of what it costs to run that service.”
It’s also more reflective of an oversaturated market where there aren’t many new subscribers to go after. Meanwhile, streamers are spending less on content — and customers have noticed, said Grace Lee, an analyst with AlixPartners.
“The customer churn has been aggravated over the course of last year and this year,” she said.
Churn, meaning the number of subscribers bailing after binging the new season of their favorite show. So, how will streamers stay afloat in 2024?
Lee predicts we’ll see more bundled subscriptions. “Whether it be a streaming service or other service like retail or telecom.”
Benes expects the volume of streaming ads to grow. “Hulu used to be, like, four minutes of ads per hour. Now, it’s closer to 10 minutes of ads per hour. You’re gonna see more of that.”
And Hamilton thinks we should temper our expectations around content. “You’re gonna have less of these big, gigantic franchise period projects.”
Oh, one more thing. Hamilton said to look for mergers and acquisitions to thin the streaming market by the end of 2024.
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