Streamflation Is Here and Media Companies Are Betting You’ll Pay Up

livemint.com:

Call it streamflation. The average cost of watching a major ad-free streaming service is going up by nearly 25% in about a year, according to a Wall Street Journal analysis, as entertainment giants bet that customers will either pay up or switch to their cheaper and more-lucrative ad-supported plans. Disney last week raised the price of its Disney+ and Hulu streaming services for the second time since last fall, following a string of similar announcements by the owners of Peacock, Max, Paramount+ and Apple TV+.

The recent wave of price increases signals a new phase in the streaming wars. After years of charging bargain-basement prices in pursuit of fast growth, most of the big players face a financial reckoning, with tens of billions of dollars in losses piling up. Now, in a push for profitability, they are testing the loyalty of their customers, betting that ratcheting up prices won’t lead more people to cancel service, an industry phenomenon known as churn.

“Can you raise prices by 30% and not increase churn? That’s the big question," said Rich Greenfield, an analyst with LightShed Partners. The price increases come as streaming services are enjoying a larger audience than ever before. Streamers captured a record 38.7% of Americans’ viewing time last month, according to new Nielsen data released Tuesday, which also showed that television viewing fell below 50% for the first time.