The live TV streaming market is a competitive place. Sling TV, which is owned by Dish (NASDAQ:DISH), was the first service of its kind when it debuted in 2015, but it didn't stay that way for long. Sony's PlayStation Vue soon made its own nationwide rollout that same year. Other competitors followed, including AT&T's DirecTV Now (now called AT&T TV Now), Disney-controlled Hulu's (NYSE:DIS) Hulu + Live TV, and Alphabet's YouTube TV.
The fortunes of these services have waxed and waned. AT&T's offering surged in its early years, only to crash back down to Earth. PlayStation Vue stumbled, and Sony gave notice of the service's demise, which will come early next year. YouTube TV has shown promising growth. But Sling TV has been the industry leader since day one -- until now. Now, analysts believe that Hulu + Live TV has taken the lead. The service may or may not hold on to the crown, though -- the future is always in doubt in the live TV streaming service market, and Hulu + Live TV's position is becoming more complicated as the service raises prices.
A new champion of live TV streaming
To be clear, Hulu isn't officially saying exactly how many live TV subscribers it has. Live TV streaming services aren't always very forthcoming about their subscriber counts (private companies like fuboTV virtually never say how many subscribers they have).
That may be because the numbers aren't all that impressive compared to different sorts of streaming subscribers; Hulu + Live TV's estimated subscriber count has reached 2.7 million, according to estimates from MoffettNathanson, but that's a small portion of Hulu's total subscriber base. Hulu had 28.5 million subscribers as of last quarter, while Netflix has 158 million. Dish had 2.69 million Sling TV subscribers at the end of the third quarter.
Subscriber counts are important to the companies competing in the live TV streaming space, though not necessarily because of profits. Profits are slim to nonexistent in this space -- losses are more typical. Someday, though, being the top service in this space could be worth something.
In the meantime, live TV streaming services have a way of dragging down their parent companies' profits -- just ask Sony, which finally decided to cut its losses on PlayStation Vue. And profits -- or lack thereof -- are why Disney feels that now is the right time to raise Hulu's prices.
Price hikes and timing
Hulu + Live TV currently costs $44.99 per month, but it won't be that cheap for long. Hulu + Live TV's starting price will soon be $54.99 per month, a $10-per-month increase. Hulu + Live TV includes Hulu's subscription video-on-demand service, which is also available on its own for $5.99 per month.
Hulu + Live TV's price hike may be coming at a bad time; taking the lead and then giving it up again wouldn't be the best look. And recent months have shown streaming companies just how price-sensitive cord-cutters can be. The good news for Hulu is that its new price isn't out of the ordinary for live TV streaming services.
In fact, Hulu isn't even the only service raising prices. AT&T TV Now just did, too: Its cheapest package is now $65 per month, up from $50. It's a trend all across the live TV streaming space, where baseline prices have come way up from the once-standard $40 per month.
The outlier here, Sling TV, structures its offerings differently from the competition's. Sling TV's two $25 base bundles can be combined into a single bundle that's more comparable to the competition's offerings; that bundle is $40, but still lacks some features and channels that can be found with Sling TV's pricier peers.
At its soon-to-be departed $44.99 price point, Hulu + Live TV compared favorably to its competition. It was cheaper than AT&T TV Now (even more with this month's AT&T TV Now price hike), fuboTV, and YouTube TV (it was always pricier than Sling TV, which, again, is a bit of a unique case). The good news for Hulu + Live TV is that most of these services remain more expensive following the Hulu + Live TV price increase -- though the fast-growing YouTube TV will now be cheaper.
For Disney, this move is about achieving something that is awfully hard to come by in this space: profits. "The programming we have on a live TV bundle is quite expensive. For us to reasonably make a profit on it we have to raise the price," Disney direct-to-consumer and international division head Kevin Mayer explained in a recent interview at Recode's Code Media 2019 conference.
Profits, pricing, and Hulu + Live TV's long-term future
For Disney, as well as for the rest of the companies in this space, pricing has to be a balancing act. With profits lean and nonexistent, much of the strategy we've seen has focused on gaining subscribers and outlasting the competition. But there seems to be waning enthusiasm for taking losses and forgoing profits, if the market-spanning price hikes are any indication.
Disney is the latest to give itself a little financial breathing room, but the company needs to be careful. Deep-pocketed tech giant Google won't sweat YouTube TV losses, and the live TV streaming market as a whole relies on appealing to customers who hope to save money by canceling cable and switching to streaming. Prices can only go so high before the whole idea falls apart.