The Desk appreciates the support of readers who purchase products or services through links on our website. Learn more...

Streamers need to charge at least $15 a month, Kilar says

Former AT&T WarnerMedia CEO Jason Kilar is pictured in an undated photograph. (Photo: AT&T/Handout, Graphic: The Desk)

Former WarnerMedia Chief Executive Officer Jason Kilar says media companies need to charge at least $15 a month for their streaming services and grow their customer base to over 300 million subscribers if they want to survive in the wild west of Internet-based video providers.

Kilar’s pronouncement was made in an editorial published this week by the Wall Street Journal newspaper, one of the few public statements the former WarnerMedia CEO has made since he left the company after it merged with Discovery, Inc. to become Warner Bros Discovery (WBD). His comments come as some former competitors have struggled to turn a profit with their direct-to-consumer streaming services as content spending and marketing expenses outweigh advertising and subscription revenues.

“There will be multiple business casualties in the paid streaming wars and a few business victors,” Kilar wrote in his Wall Street Journal column. “Digital markets for industries that have high fixed costs and relatively low variable costs have tended toward a few, unusually large winners, and I believe such will be the case in entertainment.”

Kilar said he believes no more than three global entertainment companies would ultimately succeed in convincing over 300 million customers to pay $15 a month for their service. The price point is what Kilar’s former company charges for access to HBO Max, which marries the content library of WBD’s multiplex movie network HBO with content from legacy Warner film and television brands.

Other services, including Netflix, have charged about the same amount of money for a few years, but have not reached the 300 subscriber threshold that Kilar said is needed to achieve long-term sustainability. (Amazon and Apple are outliers in Kilar’s outline, he said, noting that they were “both purveyors of streaming” that would be “measured differently.”) He predicts that mergers and acquisitions between media companies over the next two years will ultimately decide who will win and who will lose in the direct-to-consumer streaming war.

“Given the unusually large addressable market and the relatively fixed cost of content at scale, I believe the streaming cash flows of the leading companies will eventually be north of $10 billion a year, far greater than what most entertainment companies have each historically generated,” Kilar wrote. “For a precious few, the considerable investment will be well worth it. Some of the most telling signs of progress will be revealed by a clearly articulated path to compelling cash flows and strong performance on key metrics like average revenue per user, engagement, subscriber acquisition costs, churn and the number of fully owned customer relationships.”

In some ways, Kilar is merely observing and repeating what is already taking place in the market. On Tuesday, Paramount Global’s Chief Executive Officer Robert Bakish said the company’s flagship streaming service, Paramount Plus, will definitely raise the price of its subscriptions in the near future, confirming comments made last month by other executives. The Walt Disney Company announced several months ago that it would raise the price of its Disney Plus service to $11 a month, though customers could lock in the $8 a month price point by agreeing to watch Disney Plus content with advertisements. (Disney’s general entertainment service, Hulu — which Kilar co-founded — is also raising subscription prices this month; the company’s sports service, ESPN Plus, raised its price in August.)

Some reports have suggested an inevitable merger between Paramount and Comcast’s NBC Universal, but that deal would almost certainly be scrutinized by regulators and is unlikely to succeed. Executives have largely downplayed these rumors, though Paramount and Comcast are working together on a joint streaming venture in some European countries.

Kilar said companies with a well-diversified set of distribution pipe “will have the advantage” in the coming years, as their ability to reach consumers across different products and services will help them win the war.

What won’t help them win? Traditional cable channels, Kilar predicts. “It will become synonymous with the landline,” he asserts. “Clear decline and surprising longevity.”

Get stories like these in your inbox, plus free breaking news alerts on business and policy matters involving media and tech.

Get stories like these in your inbox, plus free breaking news alerts on business and policy matters involving media and tech.

Photo of author

About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 11 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
Home » News » Industries » Streaming » Streamers need to charge at least $15 a month, Kilar says