YouTube TV’s price is going up again. Overall, the price hike looks necessary. The COVID-19 pandemic impacted ad spending, which is Google’s (NASDAQ:GOOGL) lifeline.
YouTube TV is Google’s online live television service. The price will increase to $65 per month. Previously, the service cost was $50 per month. So, the latest hike adds $15 to the price. The new YouTube TV price will be effective immediately for new subscribers. The new price will be effective in the next billing cycle for existing customers.
Google hikes YouTube TV price
The YouTube TV price hike was announced in a blog post by the service’s product management boss, Christian Oestlien. The executive noted that the price increase was in response to rising content costs. YouTube TV also took to Twitter to explain the need for the hike.
“We at YouTube TV license content from our content providers to then provide to you. When content prices increase, the overall cost of streaming goes up for everyone,” the service said in a tweet.
YouTube TV has raised its price several times since its debut in 2017. The service cost $35 per month when it launched. The price jumped to $40 per month in 2018 and $50 per month in 2019.
Notably, the TV price has gone up every time Google expands its content menu. For example, the latest YouTube TV price hike follows the addition of eight ViacomCBS channels. The previous YouTube TV price hikes followed the addition of Tuner networks in 2018 and Discovery channels in 2019.
YouTube TV isn’t the only online video service grappling with rising content costs that highlight the need for price reviews. Netflix has also been reviewing its pricing to account for rising content costs. However, the Netflix price hike last year sparked some backlash. The company lost some subscribers in the US. AT&T (NYSE:T) has also been raising the price of its AT&T TV service to reflect high content costs and value addition. Dish Network (NASDAQ:DISH) hiked the price of its Sling TV. There has also been a price increase for Disney-controlled Hulu.
In addition to accounting for the high content costs, Oestlien also noted that the price hike reflects the value that the service delivers.
Google’s ad sales suffer, COVID-19 weighs on demand
The COVID-19 pandemic has hit companies with unexpected expenses, which caused them to review spending to control costs. Many companies have slashed their advertising budgets to preserve cash. The lower advertising budgets have diminished the revenue opportunities for ad-funded companies like Google, Facebook, and Twitter. Google’s ad revenue will likely drop this year.
Currently, Google derives most of its revenue from advertising. The company launched subscription services like YouTube TV and Stadia to diversify its revenue sources outside the advertising sector. Therefore, the YouTube TV price hike could help offset some weakness in Google’s core advertising business. YouTube TV has attracted more than 2.0 million subscribers.