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Streaming Services Are Now Actively Using Price To Force Us To Watch Ads

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Netflix with ads example

If you ever needed proof that ad-supported plans are not only here to stay, but now the priority for streaming services, you only need to look at recent price increase behavior. In particular, the behavior of Disney+, Netflix and Max, all of which are now actively using price to push subscribers toward their ad-supported tiers.

While relatively late to the ad-supported game, Netflix was the first to really focus in on driving users towards its ‘with ads’ plan. Basic with ads (now Standard with ads) arrived in November 2022 and at an attractive price point. The next year saw the price of the Basic plan increase by $2 to $11.99 a month, resulting in a $5 difference between the Basic and Basic with ads tiers.

That wasn’t enough of a difference, however, as Netflix had already taken extra steps to further encourage consumer choice by beginning to phase out the Basic (ad-free) plan. While this started by simply removing the option for new subscribers to sign up to Basic, Netflix has since begun to force legacy Basic subscribers off the plan altogether.

As a result of the discontinuation of this plan, Netflix subscribers now have to choose between paying $6.99 for the Standard with ads plan and paying an additional $8.50 a month ($15.49) for the cheapest ad-free plan.

Disney+ and Hulu follow suit

Within weeks of Netflix introducing an ad-supported plan, Disney followed suit with its own $7.99/month Disney+ Basic tier. Disney also wasted no time in using the launch of the new plan to increase the price of its ad-free tier (now Disney+ Premium) up from $7.99 a month to $10.99 a month.

The next year saw the cost of the Disney+ Premium tier increase once again, pushing the price of the ad-free plan up to $13.99 a month. At this price, the ad-free tier is $6 more expensive than the ad-supported tier. This also meant the ad-free Disney+ tier increased by $6 in less than one year following the launch of the ad-supported plan.

Similar changes can be seen with Hulu. In fact, considering the Hulu ad-supported plan has been around much longer than many other ad-supported tiers, we can more clearly see how differently the price increases have trended over time.

HuluWith AdsNo Ads
Oct. 2020$5.99$11.99
Oct. 2021$6.99$12.99
Oct. 2022$7.99$14.99
Oct. 2023$7.99$17.99

Since October 2020, the cost of the ad-supported plan has increased $2 to $7.99 a month (a 33% increase). Over the same time, the cost of the ad-free plan has increased by $6 to $17.99 a month (a 50% increase). That said, these figures don’t paint the full picture.

Back in 2018, the cost of the Hulu (With Ads) plan was $7.99 a month. However, in February 2019, and at the same time as increasing the cost of Hulu Live TV to $44.99, Hulu lowered the cost of its ad-supported tier down to $5.99 a month. Considering the same plan costs $7.99 a month today, it is no more expensive than it was six years ago.

Adding to all this, Disney also now offers the option to bundle Disney+ and Hulu together, and the exact same pattern is in effect here too. If opting to sit through the ads with the Disney Duo Basic bundle, subscribers pay $9.99 a month. If wanting to remove the ads, the Disney Duo Premium bundle costs $20 a month, resulting in a 100% ad-free tax.

Max Is the latest to join The Party

To be clear, Max launched its ad-supported plan in 2021, much earlier than Netflix and Disney+. However, it is only more recently that we are beginning to see a change in pricing strategy take effect.

The cost of the ad-free Max plan (HBO Max at the time) first increased in January 2023, taking the price up to $15.99 a month, $6 more than the ad-supported plan.

Max’s latest price increase arrived this week and only affected the ad-free tiers, following the exact same playbook as Netflix and Disney+. As Max’s ad-supported plan made it through the price increase unscathed, the difference in price now stands at $7 a month, or $70 a year.

As we pointed out earlier this week, this round of price increases also resulted in the cheapest annual ad-free plan increasing by $20 a year. That’s $10 more than the price increase for the more expensive Ultimate Ad-Free plan, and $10 more than it normally would have been.

The reason for this is that Warner Bros. Discovery made the decision last year to keep the annual plan at the same price while increasing the cost of the monthly plan. A decision we considered at the time to be a way to further encourage subscribers to upgrade to the cheapest ad-free tier.

With that decision now reversed, Warner Bros. Discovery has again removed that additional price-based motivator for annual subscribers to upgrade to ad-free.

Streaming services want Us on ad-supported plans

Signing up to the ad-supported tiers of Netflix, Disney+ and Max at the same time will currently set you back $24.97 a month. That’s not bad considering the wealth of content you get access to. In contrast, opting for the cheapest ad-free tiers will now cost you $46.47 a month.

Is skipping the ads really worth paying almost twice as much? No, of course not, and that’s exactly what streaming services are now banking on.

While we’ve only focused on three streaming services here, they do happen to be three of the most popular. Not to mention, they are far from being the only examples. Just look at Prime Video.

Instead of launching a new ad-supported tier at a cheaper price, and/or increasing the price of the ad-free plan, Amazon simply converted all existing subscribers to ad-supported subscribers overnight, requiring them to manually upgrade to the ad-free tier. If ad-supported plans were not Amazon’s preference then you can be sure that a new ad-supported plan would have launched instead.

The reality is that all of these services are large enough to have the data to really know which plans work best for them. With so many streaming services now beginning to use cost as a way to force subscribers down the ad-supported path, it is clear that the ad route has become their priority.

Still not convinced? Keep in mind that Disney+, Max and Netflix have never increased the price of their ad-supported plans. Not once between them and that’s in spite of the multiple price increases that have rolled through since the launch of these plans.

Of course, that won’t always be the case. Soon enough those plans will begin to increase in price too. By then, however, we’ll all be signed up to the ad-supported tiers after realizing we can no longer afford to go ad free.

John Finn

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