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Understanding Google’s Latest YouTube TV Price Hike

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YouTube TV price raised by 25%

This month, Alphabet’s (GOOGL) Google raised the price of its Internet-based television service, YouTube TV, by ~25%, marking its second hike in 14 months. A YouTube TV subscription now starts at $50 per month, up from $40 per month. The prices became applicable for new customers on April 10, whereas for existing customers, the price changes will take effect on May 13. In February last year, Google hiked YouTube TV subscription fees to $40 per month from $35 per month. In both cases, the price increases followed the addition of channels to the service.

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Revenue diversification

The YouTube TV price hike could help Google a lot. It could generate more cash that the company could reinvest in the video service to make it even more attractive for subscribers, as well as increase Google’s non-advertising revenue and diversify Google parent Alphabet’s revenue sources. Alphabet’s non-advertising revenue rose ~30% year-over-year to $6.6 billion in the fourth quarter.

Costs of Internet TV services going up

Other Internet television providers have also raised their services’ prices recently. Last month, AT&T (T) announced new prices for its DIRECTV Now service, raising its base package’s price by $10 to $50 per month. Dish Network (DISH) hiked the starting monthly price of its Sling TV service last year to $25 from $20.

In January, Hulu updated its video service prices, lowering its on-demand video service prices and raising its streaming television service prices by $5 to $45 per month. Hulu is co-owned by Walt Disney (DIS) and Comcast (CMCSA), which hold 60% and 30% stakes, respectively.

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