Have you heard the term “streamflation”? It’s a phrase being used to explain the increasing prices for entertainment streaming services.
On average, the cost of a major ad-free streaming service has increased by roughly 25% in the past year, with more increases to come. These increases account for the roughly $219 per month that consumers pay for subscriptions. That’s $2,628 per year!
Let’s take a quick look:
- YouTube TV – in 2018 it cost $40; compared to 2023 at $73.
- Netflix – in 2018 it cost $11; compared to 2023 at $15.49.
- Disney+ – in 2019 it cost $7; compared to 2023 at $14.
- ESPN+ – in 2018 it cost $5; compared to 2023 at $10.
- Peacock – in 2018 it cost $5; compared to 2023 at $6.
- Apple TV – in 2019 it cost $5; compared to 2023 at $7.
And don’t forget about music streaming such as Spotify, Tidal, and Apple Music – all of which carry a monthly fee.
Some fees can be reduced if viewers are willing to accept advertising as part of the service. For example, Netflix has prices of $6.99 per month for ad-supported viewing, compared to $15.49 per month for ad-free viewing.
Why the steep increases? Because most streaming services have been losing money to the tune of millions, if not billions, of dollars. But can companies raise prices and expect customers to stay loyal?
What will you pay?
Group Activities and Discussion Questions:
- Pricing is a complex topic. Discuss the six steps for pricing (determining objectives, estimating demand, determining cost/profit relationships, select price level, set list price, and make adjustments).
- Discuss the various pricing models in class: demand-oriented, cost-oriented, profit-oriented, and competition-oriented.
- Poll students: What do they pay each month for streaming?
- Show video about streaming inflation: https://youtu.be/WNhkP9Q2gNs?si=18CUvNE8Oms-K46f
- Which pricing strategy is being used by streaming companies?
- Divide students into teams. Have each team research the prices being used by the various streaming companies (Disney+, Netflix, Apple, Hulu, etc.). Include both ad-free and ad-supported prices.
- Draw a table on the white board that lists the companies and their prices.
Source: Whelan, R., Flint, J., Rattner, N. (15 August 2023). Streamflation is here and media companies are betting you’ll pay up. Wall Street Journal.