What’s Next for Streaming Services? 📺

After years of chasing revenue and subscriber growth, streaming services plan to increase prices and demonstrate to investors they can turn a profit.

Kieran Ryan

July 11, 2024

What’s next for streaming services? Higher prices.

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Last week, Max (FKA HBO Max) raised prices for some of their subscribers.

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Streaming businesses have been chronically unprofitable, and investors are losing their patience. After years of chasing top-line revenue and subscriber growth, investors want to see them turn a profit.

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One thing they have going for them is that these businesses have turned out to be “stickier” than many predicted. Q1 2024 churn rates:

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Netflix: 2%; Apple TV+: 8%; Hulu: 5.8%; Disney+: 4.8%; Amazon Prime: 4%; Max: 6.5%

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Subscribers tend to stick around not only because of brand loyalty but also because there is a hidden switching cost. Younger generations share a positive sentiment toward algorithms and their ability to learn and mirror their preferences. Many consumers may hesitate to move on from a particular streaming service because its algorithms have learned their preferences.

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Unfortunately, prices going up is the only thing I’m sure about these days.