The big media companies that dominate modern streaming wrapped up their investor calls last week. For the most part, executives repeated their statements from the previous quarter. But the data from ad-free tiers is so good that the industry leaders want to raise prices on with-ad subscriptions.

In this issue:

• Q1’s trends continued into Q2

• But whoa-nellie are ad revenues great!

Recapping the investor calls

Since this quarter’s calls echoed statements from last quarter, I’ll start with a few highlights. You can listen to the investor calls at the following links:

• Amazon (Prime Video, MGM+, freevee)

• AMC Networks (AMC+, Sundance Now)

• Alphabet (YouTube with Live TV, YouTube Premium)

• Comcast (Peacock)

• DISH (SlingTV)

• Disney (Disney+, Hulu, ESPN+, Star+, Hotstar+)

• Netflix

• Paramount (Paramount+, Pluto)

• Warner Bros. Discovery (Max, discovery+)

“Optimizing” content

Like they said at the beginning of the year, streamers are canceling projects that don’t drive traffic and focusing budgets on their tentpole brands. This trend won’t be as noticeable this year since many productions were locked. But in 2024…

Consolidation continues

On top of Paramount’s merging of Showtime into Paramount+ and Warner Bros. Discovery’s (re)launch of Max next week, Disney announced that subscribers to the Disney bundle will get Hulu content in their Disney+ app.

Peak investment continues, too

Other than Netflix, the streaming services keep spending more than they make. Execs continued saying “peak investment” to assure Wall Street analysts that losses aren’t forever. Except for Warner. The company expects Max and Discovery+ to be profitable this year and set a $1 billion profit target for 2025.

Did ya know? Ad revenue is better than subs!

The success of advertising was a common refrain, with every company reporting double-digit growth in ad revenues. But it’s the per-user numbers that have them gleeful.

Netflix’s average revenue per member for the with-ads tier is higher than the standard ad-free tier. That’s why the with-ads service now gets “95% content parity”, 1080p high-def streams, and support for simultaneous streams.

Warner execs focused on their approach to advertising. They signed fifteen “foundational advertising partners” to sponsor Max Originals. For example, Mercedes-Benz was Succession’s title advertiser.

Hmm… does that mean ad-free prices are too low?

It was Disney that said the quiet part out loud. The average revenues per user on the Disney+ with-ads tier are so high, Iger happily announced “We plan to set a higher price for our ad-free tier later this year to better reflect the value of our content offerings.”

Iger also said, “We will continue optimizing our pricing model to reward loyalty and reduce churn to increase subscriber revenue for the premium ad-free tier and drive growth of subscribers who opt for the lower-cost ad-supported option.”

Yup, you read his run-on sentence right. Disney+ will raise prices on its ad-free tier in order to drive people to the with-ads tier. Iger doubled down during the analyst Q&A session:

“There's an opportunity for us to really lean into ad-supported and again raising our prices on the ad-free, keeping the prices on the ad-supported relatively modest to maybe perhaps no increases, increasing the delta, driving more subs in a higher ARPU direction.”

Our takeaway: Watch ads or pay the price

A lot of people locked in 2022 pricing by getting a one-year Disney+ Premium subscription before the price increase. They (by “they”, I mean “we”) are going to be in for a shock heading into the holidays when two price bumps take effect all at once.

Now, nobody should be surprised that the House of the Mouse wants to squeeze every penny out of fans’ wallets. And even with 2023’s price increase, Disney+ Premium is still cheaper than Max or Netflix.

But where Disney goes, everyone else will follow and raise ad-free prices. Many consumers will quietly accept the new reality. Old-school cord-cutters will more aggressively juggle their subs. But a lot of people will have to make hard choices — and Disney is betting things will fall their way.

So what do you think?

The Watchlist

The To All the Boys series spinoff XO, Kitty comes to Netflix today, Thursday, May 18th.

Want to read about science news with a refreshing and snarky delivery? Check out Important, Not Important! This free newsletter helps you to think deeply and act decisively about the most pressing scientific news, all while making you laugh.

It appears that White Men Still Can’t Jump, as a remake of the 90s film dunks onto Hulu, Friday, May 19th.

Happy Valley returns for its third season, available to stream Monday, May 22, on AMC+ and Acorn TV.

The second half of How I Met Your Father season 2 drops on Hulu, Tuesday, May 23rd.

Seth Rogen and Rose Byrne reunite in Apple TV+’s new dramedy series, Platonic, landing on the service, Wednesday, May 24th.

Disney+ brings Chinese mythology to life in American Born Chinese, premiering Wednesday, May 24th.