Streaming companies are turning to additional price hikes and password crackdowns as the industry struggles to consistently turn a profit.
Paramount chief financial officer Naveen Chopra teased price increases for the company’s streaming service Wednesday at the Morgan Stanley Technology, Media and Telecom Conference.
Warner Bros. Discovery head of global streaming and games JB Perrette said Tuesday at the same conference that Max will be implementing a password-sharing crackdown in 2024.
Both strategies have been commonplace in the sector as executives are increasingly being pressured to make streaming profitable. In the 17 years since Netflix launched the streaming revolution, only three U.S. video subscription services have managed to turn a profit: Netflix, Hulu, and most recently Warner Bros. Discovery.
Although Paramount currently doesn’t have plans to raise prices in 2024, Chopra said “we do anticipate future price increases.” The last time Paramount+ increased its price was in June when it raised the monthly price of its ad-supported tier by $1 to $5.99 and its premium tier by $2 to $11.99. Netflix and Disney+ also hiked their prices in 2023.
“It really wasn’t until Q4 that the price increases we did [were] rolled out across the entire subscriber base,” Chopra continued. “So yes, we do see upside in pricing in terms of what we’ve learned from the price increase that we did last year.”
In its most recent quarter, Paramount was able to narrow its direct-to consumer loss to $490 million.
Warner Bros. Discovery’s Perrette said that Max will be cracking down on users who share their passwords with non-subscribers outside of their household in late 2024. Perrette called Netflix’s crackdown on the practice “extremely successful.”
Disney CEO Bob Iger also complimented Netflix at the conference. He called its tech the “gold standard” while outlining his plan to take on the streaming leader.
Streaming’s growing retention problem
While these moves could help streamers generate more revenue and subscribers in the short term, price hikes and password-sharing crackdowns could be exacerbating the industry’s churn problem.
In the last four years, the weighted average churn rate for U.S. streamers has almost tripled to 5.5%, according to a new report from the streaming analytics firm Antenna.
In other words, although streamers gained 164.7 million gross subscriptions in 2023, they also recorded 140 million cancellations, leaving them with a net of 24.2 million new subscriptions.
On top of that, gross subscriptions are slowing down. Subscription growth fell to 10.1% year-over-year in 2023, down from 21.6% in 2022.