The Streaming Services That Are Priced Right – and the Ones That Miss the Mark
New pricing and bundling among the streamers have suddenly made Apple TV+ a great deal, while HBO Max is questionable
For SVODs, the price a platform charges subscribers should be directly related to the demand for content it has to offer them. And we do see a close correlation between these two things. If we only looked at the relationship between the number of shows and movies on each platform and the monthly subscription price, the relationship is nowhere near as close. The takeaway is that simply having a greater quantity of content isn’t enough to justify charging a higher price — it has to be content that audiences actually want.
Striking the right balance between raising prices to increase revenue without driving away subscribers is a tricky line to walk. Against a backdrop of increasing economic headwinds, these streamers will need to work even harder to prove their value to subscribers, or risk being an expendable nice-to-have rather than a necessity for cash strapped consumers.
The pricing landscape has shifted a bit since the last time we looked at this. For example, when Apple TV+ made their first price increase since launching, the new price point meant that the platform looked overpriced relative to the competition. However, looking at the data for Q4 we see that as other platforms have increased prices, Apple TV+ again looks like a good deal for subscribers.
This could foreshadow what we will see following HBO Max’s price increase. The platform announced a conservative $1 per month increase, bringing the monthly cost of the platform’s ad-free tier to $15.99 as of Feb. 11. The new price point looks slightly above what we would expect given the total demand for shows and movies on the platform. Notably, the total demand for the Hulu and HBO Max catalogs is very close. The ad-free tiers of both cost $14.99/month before, but with the price increase HBO Max will have to convince current and potential subscribers of the justification for its price premium over Hulu, a platform that has essentially the same amount of demand for its on-platform shows and movies.
Platforms aren’t just increasing prices. The changes announced by Paramount to their streaming pricing look set to dial up the competition for how other platforms are priced. One major change going forward is that Showtime will no longer be offered as a standalone service and will be merged with Paramount+ in the future. This makes sense. Our data shows how the $11 per month price for Showtime on its own made it the most overpriced platform relative to competitors. Compared to Starz, Showtime charged its subscribers more and had less demand for its catalog.
How the Streamers’ Ad-Free Tier Prices Stack Up, U.S., Q4, 2022 (Parrot Analytics)
The new Paramount+ Premium tier (with Showtime) will cost $11.99 per month, where before bundling the two services cost $14.99. This is a smart move that will make this bundle very attractively priced for consumers. Extrapolating from the demand for shows and movies available in this bundle in Q4, we can see that a fair price would have been $13 per month. By setting an $11.99 price point, Paramount+ Premium (with Showtime) will be one of the bundles offering subscribers the biggest bang for their buck.
The streaming pricing wars are heating up.
Christofer Hamilton is a senior insights analyst at Parrot Analytics, a WrapPRO partner. For more from Parrot Analytics, visit the Data and Analysis Hub.
