Netflix and Discovery+ price increases
Netflix will reportedly raise its prices in the U.S. and Canada for its ad-free subscription tier a few months after the Hollywood Actors strike. The company last raised prices in January 2022 and before that in October 2020. Warner Bros. Discovery increased the price of its ad-free Discovery+ from $6.99/month to $8.99, while keeping the ad-supported version at $4.99/month. This hike comes after losing 1.8m DTC subscribers in Q2. This is the first price increase since launching in 2021. WBD rolled the Discovery+ library of basic-cable reality-lifestyle programming into HBO Max back in the Spring, rebranding the combined service as "Max" and pricing the ad-free version at $15.99.
The Circana Take:
- Streaming providers are widening the price gap between their ad-supported and ad-free services so that more subscribers “trade-down” to ad-supported tiers. That’s because they are finding they can generate higher ARPU through ad-revenues. Further, the growing cost of content requires rate increases for services where subscription revenues can’t be offset with advertising dollars.
Apple pursuing Formula 1 streaming rights
Apple continues to focus on sports streaming content for Apple TV+. After recently picking up MLS streaming rights in August and an unsuccessful attempt at getting NFL Sunday Ticket in December, the company is now considering making an offer for Formula One. They already have a Formula One movie in the works featuring Brad Pitt and are reportedly willing to pay $2b/year - twice its current value.
The Circana Take:
- As with cable TV decades ago, sports rights are looking like they will now result in higher streaming prices; this time due to providers over-paying for rights.
AMC+ launches ad-supported tier
AMC Networks added an ad-supported tier to its AMC+ streaming service priced at $4.99/month. The ad-free plan remains $8.99/month. The ad-supported tier is currently available directly to subscribers through its website and apps. The same content as the ad-free tier will be available including The Walking Dead and spinoff series The Walking Dead: Daryl Dixon, and Anne Rice’s Interview with a Vampire. Subscribers will also have full access to AMC’s other streaming services - Shudder, Sundance Now, and IFC Films Unlimited, along with linear networks AMC, BBC America, IFC, and Sundance TV.
The Circana Take:
- AMC Network, as with many other targeted services, did a great job reaching super fans with their SVOD offerings. Growth now requires reaching a broader customer base who is likely less willing to pay for ad-free services. Notably, viewers are increasingly being acclimated to AVOD offerings. As such, this launch is well timed.