Streaming services raise premium subscription rates while embracing ad-supported tiers

Premium, ad-free streaming service tiers have become a primary target of price increases as media companies like Netflix, Max, and Amazon raise the costs of their services — all while keeping the prices of cheaper, ad-supported options stable.

Alexandra Canal for Yahoo Finance:
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“When you want to optimize revenue, you would actually increase the price of the ad-free tier because even if users turn to the ads, you’re still making the same money,” said Marc DeBevoise, who helped launch CBS All Access and now serves as CEO of streaming tech company Brightcove.

DeBevoise explained it all boils down to the additional ad revenue per user. Added on top of the subscription price of the lower tier, the total revenue per user will typically end up matching the premium option.

That’s why companies may decide to increase ad-free pricing since they want to be “economically differentiated in the two plans,” DeBevoise said.

“You want to have the ad-free tier effectively make you more money per user per month, if possible. So I could see [companies] tweaking the pricing for that reason,” he continued. “These are revenue maximizing opportunities, not necessarily trying to push more subscribers [to the ad tier.]”

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MacDailyNews Take: In the chart above, only Apple TV+ does not offer an ad-free tier – perhaps not for much longer.

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