velera How Credit Union Innovation Can Drive Gen Z Engagement May 2024 Banner

Peacock’s Price Hike Hints at Delicate Balancing Act for Streaming Platforms  

Peacock, TV, entertainment, streaming

Peacock, the streaming service owned by Comcast’s NBCUniversal, continues to demonstrate strong appeal, with management revealing during a Thursday (April 25) Q1 earnings call that it added 3 million new paid subscribers in the first quarter alone. Since its launch in July 2020, Peacock has amassed a total subscriber count of 34 million. 

Now, the platform is set to raise prices for its premium and premium-plus plans starting July 18, as it aims to capitalize on its broadcast and streaming rights to the upcoming Olympic Games in Paris this summer. 

“With more programming hours on the NBC broadcast network than any previous Olympics and over 5,000 hours of live coverage on Peacock, the Games are on track to generate the most advertising revenue in history with $1.2 billion in ad sales commitments,” Mike Cavanagh, president of Comcast, told investors and analysts on the earnings call.

The price hike will see the ad-supported Peacock premium plan increase by $2 to $7.99 per month, while the ad-free premium plus plan will also rise by the same amount to $13.99 a month, Reuters reported on Monday (April 29). This will mark the second price increase for Peacock in the past year, following adjustments made last August.

The announcement comes amid reports that Spotify is considering its own round of price hikes, with increases of $1 per month for individual plans and $2 per month for duos and families. These adjustments are scheduled to first launch in five markets, with plans for implementation in the U.S. later this year.

While management has not officially confirmed the news, Spotify CEO Daniel Ek emphasized the platform’s value enhancements and consumer satisfaction as rationale for potential adjustments during discussions accompanying its Q1 earnings results last month.

“[…] We think consumers like what they’re seeing from Spotify,” Ek said on the call. “They love the offering, and they feel that the value that they’re getting is more than fair.”

However, despite consumers’ embrace of streaming, the competitive pricing approach is not without risks. Findings from PYMNTS Intelligence’s report, “The One-Stop Bill Pay Playbook: Drivers of Consumers’ Bill Payment Priorities,” based on a survey of over 2,100 U.S. consumers, reveal that streaming subscriptions are often the first expenses to be cut when consumers face financial constraints. 

Specifically, more than half of respondents indicated they would cancel streaming subscriptions to reduce monthly bills, surpassing any other service. Only 17% expressed a preference for paying streaming bills over other expenses.

Additionally, insights from a separate PYMNTS Intelligence report, “Subscription Commerce Tracker®,” indicate that 55% of consumers feel overwhelmed by the multitude of streaming options available, with 53% finding the combined cost of accessing all desired content too high.

In fact, recent reports further reveal that approximately one in four U.S. subscribers to major services like NetflixHulu and Disney+ have canceled at least three subscriptions in the past two years, while streaming service cancellations rose to 6.3% in November, up from 5.1% the previous year.

Against this backdrop, the adoption of integrated experiences appears to be a key strategy embraced by streaming companies to retain and attract subscribers in the competitive landscape. Examples include Disney’s bundling of Hulu with Disney+, Netflix’s foray into gaming and Spotify’s expansion into educational video content.

Moving forward, the consolidation of multiple services under a single subscription model while maintaining competitive pricing is likely to remain a critical element for success in this dynamic market.