Making More Money by Raising Streaming Fees Isn’t a Crazy Strategy. Just Look at Apple TV+

It’s not the market leader, but Apple TV+ is making money—a lot of money.

Raising streaming fees: Apple TV+ proves it’s not a crazy strategy
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Of all the recent moves in the streaming industry, this one might be the most predictable. The tightening of purse strings—led by companies like Warner Bros., which has been in a near-permanent state of cost-cutting—has pushed many platforms to raise prices or adjust their plans. Some have opted for indirect hikes by introducing advertising and creating more expensive ad-free tiers. While unpopular, these moves might not be as reviled as expected.

Revenue on the rise. Parrot Analytics recently published a study examining two platforms that have reported their profits: Prime Video and Apple TV+. Both experienced significant growth in average revenue per user during the last quarter of 2023. The platforms took steps some might consider risky: Prime Video introduced ads, and Apple TV+ raised its subscription fees in the U.S.

The two examples differ greatly. Prime Video boasts a subscriber base comparable to the one at Netflix, though many are Amazon Prime members who don’t necessarily use the streaming platform. Apple TV+, on the other hand, is a niche player. Despite this, as The Wrap reports, both platforms saw a short-term decline in subscribers but increased profits due to higher revenue per user.

Apple’s strategy pays off. Of the two, Apple TV+ presents the more intriguing case. Prime Video’s ad-supported model launched in January. However, the platform experienced several phenomena in 2023 that may have contributed to this increase, such as strong premieres and an improved catalog. Apple’s price hike occurred in October 2023, increasing its monthly fee from $6.99 to $9.99. This price change drove a 33% profit increase in the U.S. and Canada, offsetting subscriber losses.

Apple TV+ is doing well. This growth in profit is a welcome relief for a platform that has faced financial challenges, including budget cuts and the abandonment of its earlier ambition to become a Hollywood powerhouse. With cost control measures in place and the likely addition of advertising in the future, Apple’s streaming service may yet thrive.

The other platforms are behind. Gone are the days of cheap streaming. Netflix, for example, has avoided a subscriber downturn despite raising prices and adding ads. This suggests a future where platforms adjust to sky-high content costs with increased fees. As a result, consumers may soon have to jump between services or stick to just one.

Image | Apple TV+

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