Netflix, Apple and Disney+ have just put their prices up – and Amazon has something in store too. But how many rises can we all take?
A local coffee shop near to me always, bang on schedule, used to put its prices up at the start of November. It did this with the cover of a Christmas range being launched, and figuring people wouldn’t notice as it launched its annual festivities. Of course, over time, people did, but the trick worked for a few years.
It hasn’t stopped Costa Coffee doing the same thing across the country, as it launches its range of coffees with sickly Christmassy syrups spaffed in. And it’s not stopping others giving it a go.
Streaming services are now trying to work out if there’s a way they too can surreptitiously attempt the same thing, ideally on an annual basis. It would be fair to say that they’re not enjoying an awful lot of success there, given the pushback they seem to be getting online to their respective price hikes. Yet if they can ride things out just for the minute, they may just get away it.
We therefore arrived at the start of November, with Apple, Netflix, Disney and Amazon all trying a slightly different approach to telling us they want more money. The commonality between them: they’re burning through lots of cash to compete with each other, and somehow now need to persuade us to pay for it all.
Netflix? It went direct, and it decided to do it fast. Effective now, there are ad tiers running on its service (and it recently celebrated a year of ads with a celebratory investor announcement), where it’s determined, it seems, that the long-term revenue truly lies.
Still, with notice of just a few weeks, it announced and implemented prices rises on its premium tiers. The most expensive Netflix package will now, in the UK, cost you £17.99 a month. Don’t worry, though: the big Christmas movies are just around the corner. And The Crown. That should dissuade us from checking our bank statements.
Disney? It too has introduced advertising, and it gave slightly more warning of what it was up to. It continues to offer an annual option to bring prices down for consumers, but the premium monthly package for Disney+ is now £10.99 a month. Following in Netflix’s path, it’s also introduced its password sharing crackdown too. All that hit on November 1st, but look! It’s got Wagatha Christie too!
Apple TV+ has gone a bit for the jugular meanwhile, with its second – in percentage terms – sizeable price hike in 13 months.
In the summer of 2022, we were paying £4.99 for a monthly subscription to the service. The latest increase has seen Apple knock that up to £8.99, from the £6.99 tier that it was sitting at last month. 27% is a lot in one go, although Apple is coming from a slightly lower price base.
The price rise that many don’t appreciate is around the corner comes from Amazon. Currently, you get access to Amazon’s Prime Video streaming service as part of the broader Prime membership service that the ecommerce giant offers. You pay £95 a year to be a Prime member, and get an assortment of things in exchange for that.
That’s actually not changing: this time next year, unless the sands shift again, you’ll still get Prime Video as part of your service.
The difference though is that it’ll come with adverts, unless you pay an extra fee. It’s been announced that in the US, that premium will be $3 a month to get films and TV shows ad-free. The default though will be advertising very much turned on. We’re assuming the UK will follow suit.
That’s all four major streaming services in the UK set to increase their charges to some degree, even if three of them offer a lower cost version if you’re happy to have the ads on (Apple is the only one not currently committed to advertising on it service). Paramount+ has jacked up prices in the States, but remains in its infancy in the UK. Surely a matter of time though.
We’re clearly deep into the second phase of the streaming market, where the astronomical, loss-leading growth of previous years is giving way to business reality. There are dozens of subscription streaming services now competing for our credit card numbers, and the backdrop of above-inflation rises in the cost of living, against tougher competition, has led to growth plateauing.
For the streamers, they’re competing amongst each other now for a pool of filmmakers, actors, crew and productions too, and the price of actually making things is going up.
Certainly for tentpole productions too, the cost of luring major names isn’t leaving much change from $20-30m in some cases. Apple may not decide to spend $200m on another film such as Martin Scorsese’s Killers Of The Flower Moon, but the fact that it did has set something of a bar.
Which leaves a perfect storm. Streamers have to spend more money to keep the funnel of material active. We have less money across the board to spend on such services. And there are more services than ever to choose from.
It’s against that backdrop that, presumably out of some degree of necessity given the groaning state of some of the company’s spreadsheets, that prices have gone up. It’s a full-on test for a marketplace still in its infancy. And the stakes are high.
We’ve talked about Disney a lot on this site already, for instance. But its streaming business is at the point where it’s had to spend billions to not show us things. Netflix is a company build on other people’s money, and even though it’s turning a profit, there’s a lot of that debt that has to be paid off. We’ve reached the point too where the few companies that can afford billions to be a part of this marketplace have got their seat at the table. Keeping it is going to be increasingly difficult.
We as consumers though are getting pickier. The number of households that are taking all four of these services is narrowing. And also, we’re not in varying degrees of lockdown, thankfully. We’re seeing some spikes certain subscriber numbers as password sharing crackdowns kick in. But once those weapons are deployed, the arsenal for streamers is down to trying to get more money out of their customer bases, and trying to curtail the costs of ever-more-expensive productions.
It feels like, long term, they can’t win on either count. That some degree of reckoning might just be coming. It’s not as if all cards have been played in the UK, either. We’re due for more streaming services, with Warner Bros finally able to launch HBO Max/Max/Whatever it’ll be called by then in 2025.
But who’s going to be adding more subscriptions to their roster by then? If anything, aren’t more of us looking to curtail our spend, and narrow down what services we need the most?
It’s why this current raft of initiatives and price rises feels a little like they’re the dinosaurs of Jurassic Park, pushing the edges of the fence to see how far they can go. And just like in Jurassic Park, there’s a good chance of surviving if you happen to be one of the bigger beasts in the park. Well, that or the one that’ll viciously take down the gamekeeper by joining forces with another, but there are few signs of consolidation and merger in the sector as things stand.
Which brings us back to coffee. The price did indeed go up again, and I still buy a drink. The long term problem for such outlets is that’s pretty much all I buy when I go in now. The budget doesn’t quite stretch to a biscuit, and it’s got bloody no chance of buying one of those branded reusable cups either. I’m getting a bit down to basics. If streamers aren’t careful, and keep pushing those prices, their customer bases might just get to the same point.
