Highlighting a content cost issue that's plaguing traditional and Internet-delivered pay-TV services alike, YouTube TV announced it is raising the price on its baseline package by an additional $15 per month as it bulks up of its programming lineup.
YouTube TV said the price hike – from $49.99 to $64.99 per month – took effect today for all subscribers. While the rising price of content factored into the decision, YouTube TV reasoned that the higher price also reflects the overall value of a no-contract service that features a cloud DVR with unlimited storage, support for six accounts per household with individual recommendations and three concurrent streams.
"We don't take these decisions lightly, and realize how hard this is for our members," Christian Oestlein, VP of product management at YouTube TV, explained in this blog post. "That said, this new price reflects the rising cost of content and we also believe it reflects the complete value of YouTube TV, from our breadth of content to the features that are changing how we watch live TV."
The price hike enters the picture as YouTube TV expands its content programming slate. YouTube TV pointed to the addition of "highly-requested" content such as PBS and brands and channels from Discovery Communications, including HGTV and Food Network, and today's launch of more channels from ViacomCBS, including BET, CMT, Comedy Central, MTV, Nickelodeon, Paramount Network, TV Land and VH1. More channels, including BET Her, MTV Classic and TeenNick, will be joining YouTube TV at a later date.
YouTube TV might represent a good alternative to traditional pay-TV services, but the sheer size of this price hike and the bloating of its overall channel lineup definitely raised some eyebrows:
OH VEY -- @YouTubeTV moving from $50/month to $65/month— Rich Greenfield, LightShed (@RichLightShed) June 30, 2020
the skinny, cheap bundles have become fatter more expensive bundles -- much like their predecessors
better UI and still cheaper than cable/satellite but still.... #ouch https://t.co/cX3gdMbpEs
"YouTube TV last raised its price in April 2019 from $40 a month to $49.99 a month. Today's 30 percent increase will likely cause some subscribers to think twice about staying with YouTube TV, which acknowledged that reality in its blog post."https://t.co/c3NvdPnZi5— The TV Answer Man (@SwanniOnTV) June 30, 2020
Although YouTube TV's price increase comes alongside the addition of more channels and content, it also comes at a bad time, with the overall pay-TV industry struggling in a pandemic that is causing consumers to tighten their belts further. And the absence of live sports – the glue that's been holding pay-TV packages together – has only amplified the problem.
The overall US pay-TV industry lost 2.15 million subscribers in Q1 2020, including a loss of 341,000 subs in a virtual multichannel video programming distributor (vMVPD) market that includes YouTube TV, Hulu, Sling TV, fuboTV, AT&T TV and Vidgo. Craig Moffett, analyst with MoffettNathanson, warned last month that he expects Q2 2020 pay-TV results to be even worse.
YouTube TV implemented a similar price hike last year following a distribution deal with Discovery. Despite that increase, YouTube TV has managed to be a bright spot in the OTT-TV group, adding 300,000 subs in Q1 2020, according to Moffett's estimates. However, this latest 30% boost on the subscription price will make it tough for YouTube TV to maintain that momentum.
YouTube TV isn't the only vMVPD that's been raising prices. Among recent moves, Hulu announced a price hike on its live TV service last November. That was soon followed by a price increase by Sling TV, the Dish Network-owned OTT-TV service.
Those price increases and the corresponding moves by some services to add channels are quickly obviating the earlier advantages they held over more traditional pay-TV services.
- US pay-TV losses rocket to 2.15M subs in Q1 as virtual MVPD market unraveled
- Pandemic just one of big problems plaguing pay-TV, Dish's Ergen says
- Comcast sees broadband and mobile gains but greater video pain in Q1
- AT&T loses 1.03M pay-TV subs in Q1
- Verizon sheds 84K Fios video subs, adds 59K Fios broadband customers in Q1
— Jeff Baumgartner, Senior Editor, Light Reading