The prices of streaming services like Netflix are rising by the highest percentage since April 2024. Inflationary pressures are being felt at every level of the U.S. economy, and they can be felt all the way down to streaming costs.

According to the Bureau of Labour Statistics’ “CPI: Cable, Satellite and Live Streaming Television Services,” inflation rose by 2.7% YoY – the highest since April 2024. As noted by Yahoo:

“This all comes as Netflix is set to report it Q2 earnings on Thursday evening. Wall Street expects the streaming juggernaut to have revenue rise by 16% over last year and EPS to come in with a beat at $7.07. All eyes will be on how many subscribers Netflix’s ad-tier has gained compared to the last quarter and with inflationary pressures impacting streaming, we will see an uptick in that.”

Netflix has already increased prices five times since 2020 (per 9Meters.com).

Streaming Services Have Changed Their Models To Compete

The Launch Of Ad Tiers Changes Everything

Most streaming services are also introducing ad tiers, where subscribers get a cheaper package with advertisements; by May this year, Netflix reported more than 24 million users who’d chosen that tier (per THR). Speaking at Disney’s Q4 2024 earnings call, Disney CEO Bob Iger admitted this is a more profitable model, explaining its significance.

“It’s not just about raising pricing,” he explained, in what seemed to be something of a H๏τ-mic moment. “It’s about moving consumers to the advertiser-supported side of the streaming platform.” It’s rather amusing to see streamers embrace the advertisement model that used to be ᴀssociated with the networks.

Prices Are Still Rising In Spite Of The Ads

There have long been questions about the profitability of streaming services; the focus has previously been entirely upon subscriber numbers, where there’s substantial churn, which meant it was difficult to estimate the true value of individual shows. The addition of an ad tier has changed that, because now viewership generates profits in and of itself.

As Yahoo note, all eyes will be on the ad tier subscriptions when Netflix‘s Q2 earnings report is unveiled; they’re what have materially moved the financial needle for streaming services. What is clear, though, is that costs will continue to rise alongside inflation, and that things are not going to get cheaper.

Sources: 9Meters.com, Bureau of Labour Statistics, THR, Yahoo