In the not-too-distant past (read: 2020), streaming services were relatively cheap: Apple TV was $4.99 a month, and Disney Plus was $6.99 a month. But over the last year, prices for the largest streaming services have gone up an average of 10%.
Dan Rayburn, a streaming media expert, says even with increased fees, many streamers are actively losing money.
He told KNX News' Rob Archer and Karen Adams that these companies spent too much money acquiring and creating content and not enough building a sustainable business model. But there is an exception - the original streamer.
LISTEN
"Netflix is the only one that has a profitable streaming business that we are aware of... They've projected five billion dollars of free cash flow this year," he explained.
Meanwhile, Disney hemorrhaged $1.1 billion in the third quarter due to its streaming services, and Rayburn said they are losing so much, "They have no choice but to raise pricing to get to profitability."
Even with price hikes, cord-cutters aren't expected to rush back to cable. Rayburn said content that is exclusive to streaming services, like some popular sports games, will keep people from switching back.
Regardless, Rayburn believes streamers will hit a point where they can no longer raise prices.
"I think we're at a point of where, in the next year or two, these streaming services are going to reach a plateau of where they cannot charge any more," Rayburn said.
Eventually, streamers will have to find other ways to cut costs, perhaps following Netflix, who cracked down on password sharing earlier this year to help boost their revenue.
Follow KNX News 97.1 FM
Twitter | Facebook | Instagram | TikTok