Analyst Believes Netflix, Peacock, Others Still Have Room to Raise Prices, but Are They Right?
Hold onto your pocketbooks, streaming subscribers. If Bernstein Research sales specialist Mark Schilsky is correct, your budget is going to have to expand even more if you intend to keep all the streaming services you’re currently subscribed to.
Schilsky recently spoke with Business Insider about his belief that some streaming services have room to continue increasing their prices without risking substantial customer churn. He cited Netflix, Hulu, and Peacock specifically as platforms that could safely raise their prices.
Disney+ may have some untapped pricing power still, but is “moving in the wrong direction” after it announced its ad-free subscription cost would rise on Oct. 12. Ad-free streaming, in general, has gotten more expensive of late; in the last year, streaming plans with no commercials have gotten 25% more expensive on average. Schilsky also believes Max and Paramount+ have reached the limits of their pricing power with customers.
Is Schilsky’s analysis correct? Only time will tell for certain, but there’s definitely reason to believe he’s right in regards to Peacock. That streamer executed its first-ever price increase this year, rising from $4.99 to $5.99 for its ad-supported Peacock Premium plan and from $9.99 to $11.99 to stream with no commercials on Peacock Premium Plus. That increase is relatively small compared to other recent price hikes from subscription video-on-demand (SVOD) services, and Peacock offers more live sports than any other SVOD on the market at one of the lowest price points of any streaming platform. Live sports rights are expensive, and NBCUniversal reportedly is actively pursuing regaining NBA rights once they become available following the 2024-25 season. If that league’s games wind up on Peacock in the next few years, another price increase is all but assured.
Netflix seemingly also has the user loyalty needed to absorb a new price increase. Churn data after the company’s recently executed crackdown on password sharing has been encouraging, and Netflix still captures a larger percentage of monthly TV viewing than any other streamer. If Hulu can charge customers $17.99 per month to go ad-free, Netflix has at least some room to increase the cost of its $15.49 per month Standard plan, at the least. Netflix has pledged no price increases are coming to the service until at least 2024, but after that all bets are off.
Hulu might not have as much room to increase as Schilsky suggests, however. As just mentioned, its ad-free plan is jumping in price to $17.99 per month on Oct. 12. The service hosts many well-regarded series, but it can certainly be argued that “The Bear” is its first true mega-hit. Will users stick around just for new seasons of that show amidst continuing price increases? Churn data gathered by The Streamable indicates that Hulu has fairly consistent churn metrics, but price jumps are always associated with a new wave of cancelations.
Surveys released last week show that the industry-wide churn rate has hit 47%, and that the expense of streaming is the biggest factor in causing cancelations. There may be some room for streamers like Peacock and Hulu to increase in price, but they’ll risk losing customers to free ad-supported streaming platforms if they do.
Peacock
Peacock is a subscription video streaming service from NBCUniversal that includes original shows, blockbuster movies, and classic television series. Peacock is home to “Yellowstone,” and “The Office,” as well as original hits like “Poker Face” and “Bel-Air.” You can also watch live sports including NFL, MLB, WWE, Olympics, Premier League, NASCAR, French Open, College Football and Basketball, and PGA Tour. Premium Plus subscribers can stream their local NBC feed in all 210 markets.