Getting Less, Paying More; Discovery+ Raises Price, Netflix May Too

Warner Bros. Discovery’s
WBD
streaming service Discovery+ said it is raising the price of its ad-free subscription from $6.99 to $8.99, a 28% hike, effective immediately. It’s just the latest in a wave of price hikes by most of the streaming services as they struggle to meet Wall Street expectations of profitability by next year.

Discovery+’s ad-free tier is getting more expensive in Canada too, rising the same amount, but in Canadian dollars. The service’s “ad-lite” ad-supported tier will stay unchanged at $4.99 in the United States, but rise to CN$5.99 in Canada. The price hikes will show up in bills beginning Nov. 2.

“This is the first time discovery+ (sic) has increased the price of a monthly subscription in these markets since launching in January 2021,” WBD said in a brief news release. “This will allow us to continue to provide can’t miss-stories in the food, home, relationships, true crime, paranormal genres – plus so much more.”

Meanwhile, the Wall Street Journal reported today that Netflix
NFLX
plans to raise the price of its ad-free tier within a few months after the settlement of the SAG-AFTRA strike by actors. Talks between the two sides are set to resume Wednesday, optimism for a settlement rising after the studios and streamers settled a contentious five-month strike with the Writers Guild of America last week.

Netflix price hikes are being considered in several of the more than 190 global territories where streaming giant operates. Netflix last year launched an ad-free tier, then killed off its cheapest ad-free tier. The least expensive ad-free tier now costs $15.49 a month. Hulu and Disney+ recently also substantially hiked monthly prices of their ad-free offerings, to $17.99 and $13.99 respectively.

Discovery+ features phalanxes of relatively cheap unscripted reality TV shows, but virtually the entire corpus of its offerings are now part of WBD’s far larger Max service, which includes programming from HBO, DC, CNN, and other parts of the media conglomerate. Max’s least expensive ad-free tier now costs $15.99.

Most of the major streaming services are launching ad-supported lower-cost subscription tiers, and raising prices on their ad-free offerings as they balance profitability imperatives against the increasing willingness by viewers to cancel and churn through subscriptions that don’t feature the latest must-watch shows.

Initial returns suggest the ad-supported variants both generate more average revenue per user than low-cost ad-free tiers and may be less prone to churn and all the retention/reacquisition costs that come with it.

Alongside the price hikes, the services are reducing how much programming they’re making available, mothballing or killing off lightly viewed shows, and ordering less original programming to save money.

After years of hypertrophied “Peak TV” production, peaking at 600 original scripted shows a year, new program orders were already starting to bend downward even before the writers strike shut down many productions, and left others in perdition for five months. But coupled with expected higher labor costs after the strike settlements, services likely will order fewer shows, kill them off faster, and take them off line entirely more quickly if they don’t find an enduring audience.

The streamers are providing more value in other ways, though those ventures also will cost customers, eventually.

WBD’s Max, for instance, has added a feed of CNN live programming plus some news-focused streaming-specific shows, such as Who’s Talking to Chris Wallace? That feed is now in beta mode, available on the site.

Max this week also is launching an add-on tier of sports programming featuring games from the NHL, NBA and Major League Baseball, beginning with this week’s MLB playoffs. The sports tier will initially be free but will soon begin charging $10 a month in addition to the base subscription.

Apple TV+ has been selling a $12.99 monthly add-on for all Major League Soccer games, an offering that became immediately more popular with the Miami franchise added Lionel Messi, a seven-time winner of the world’s best soccer player award, to its roster in mid-season.

Disney is also reportedly considering a live-sports tier in Disney+ outside the United States as it ponders its future with cable behemoth ESPN and the tightly enmeshed ABC broadcast network, which the company is considering selling with other linear TV assets.

And Netflix is reportedly diving deeper into consumer products and merchandise tied its popular franchises such as Stranger Things, Army of the Dead and Bridgerton. The company has generally held off licensing efforts until a show proves itself a hit, but the Wall Street Journal said the company is now accelerating in-house merchandise production. It’s also continuing to create immersive live fan experiences similar to those it’s operated the past three years for some of its biggest franchises.

Merchandise, games and other licensed products are a well-worn path to higher profitability in more traditional corners of Hollywood. Disney, WBD and other studios with enduring franchises such as Marvel, DC, Star Wars and more generate billions of dollars in revenue from their product spinoffs.