Warner Bros. Discovery
Max’s monthly ad-free streaming subscription costs $1 more than it did yesterday. Warner Bros. Discovery (WBD) today raised the prices for ad-free Max subscription plans, effective immediately for new subscribers.
In addition to the cheaper ad-free plan now costing $17 per month, the Ultimate ad-free monthly plan, which supports four instead of two concurrent streams and 4K instead of 1080p resolution, is up a dollar to $21 per month.
Annual subscriptions to the streaming service are also getting more expensive. The annual ad-free plan is $20 more, at $170/year, and the Ultimate ad-free annual plan went up by $10 to $210 per year.
WBD said it will inform current subscribers about the new pricing 30 days in advance of their plan renewing. Subscribers will have to pay the new prices—or switch to a different plan or cancel—beginning on their next billing cycle that takes place on or after July 4.
Max isn’t hiking the price of its subscription plans that show commercials. That move is ostensibly to draw more subscribers to Max’s ad plans, which make WBD more revenue per user on average. Revenue, of course, aids WBD’s plans to maintain profitability for its streaming business.
Subscribers advise each other to cancel… for now
Max’s abrupt pricing changes are similar to its first price hike, which took place in January 2023 (when the video-streaming service was still called HBO Max). Ad-free subscriptions went from $15 to $16 per month. In a statement at the time, WBD said the price hike would enable it “to continue to invest in providing even more culture-defining programming and improving our customer experience for all users.”
Subscribers of the cheapest ad-free plan also lost features, including 4K and HDR streaming. The maximum number of supported concurrent streams dropped from three to two.
With subscription streaming prices incessantly rising with no clear end in sight, some fed-up subscribers are seeking alternative solutions. Ars Technica has seen various users advise others online to “definitely cancel” and then alternate their streaming subscriptions, which could even include eventually returning to Max.
“I’ll pay for a month later this year after House of the Dragon and The Penguin are out. I think staggering subscriptions with different platforms is the way to do it these days,” TheHeyHeyMan said on Reddit today.
Analyst Antenna has reported a skyrocketing rate of people subscribing to video-streaming services, watching what they want, quickly canceling the service, and repeating the cycle. It said that about a quarter of US streaming subscribers have canceled three or more of their video-streaming subscriptions in the past two years.
This week, Andrew Georgiou, head of WBD’s UK and Ireland business, discussed the challenge this poses for streaming companies: “Netflix is a mainstay but we are starting to see real SVoD churn, people cycling in and out at an increasing rate,” he said, per Deadline. “That phenomenon is a huge cost to business and reducing that churn, increasing engagement and reducing the cost of ‘winbacks’ is something we all need to focus on.” WBD CEO David Zaslav has called high churn rates a streaming business “killer.”
It seems that some subscribers, like Reddit user Proteinshake4, are aware of the concern:
As the market evolves and these companies keep raising prices, I adapt as a consumer and cancel. I have a budget and stick to it and won’t pay unless I need it. Consumers of tv [sic] unite and [start] churning.
Some streaming services are trying to fight subscriber churn by bundling their services, including with rivals. But streaming services are intent on doing whatever they think is necessary to drive profits, largely through encouraging ad-tier subscriptions and higher prices.
Growing prices
Max falls under WBD’s direct-to-consumer business, which includes cable HBO subscriptions and WBD’s Discovery+ streaming service, and it recorded $86 million in profits in the first quarter of 2024. The DTC business was also profitable for WBD’s fiscal 2023 year.
In January 2023, WBD CFO Gunnar Wiedenfels made comments at a conference that appear to have been a foreshadowing of a big part of WBD’s approach to reaching and maintaining streaming profitability:
“There’s no doubt that these products are priced way too low. And I think this was partly the capital market-fueled phase of land grabbing. You couldn’t lose enough money and couldn’t grow subscribers fast enough. I think that’s behind us.”
As WBD tries for a second year of streaming profitability, subscribers should prepare for more potential changes that could detract from the perceived value of the service. WBD has said that it will crack down on Max password sharing this year and is also exploring potential new ad formats for Max, like transactional ads. Similarly, WBD should be prepared for the potential of more subscriber churn.