A tsunami of price increases for digital services is coming

The companies' results for the third quarter are now being published. Most of the companies from the S & P3 index publish moderately higher than forecasted results. At the same time, companies try to improve their results in the coming quarters by increasing margins and the prices of their services. Price increases by Apple and Google could trigger a series of increases in the subscription and digital services market.

Apple and Google prices up

Apple announced an increase in the price of its services this week. Primary monthly subscription of Apple Music will increase in price in Poland by PLN 2 to PLN 21,99 (in the US the increase will be $ 1 and will reach $ 10,99), and the family variant by PLN 5 to PLN 34,99 (in the US by $ 2, giving a total of $ 16,99). Apple One service packages, which include Apple Music, are also more expensive.

A raise YouTube Premium Family Package prices from $ 5 to $ 22,99 Google also announced (Alphabet company). Apart from the US, there was also an increase in other markets, including in Great Britain, Canada and Japan. The announcement of the increase by Apple and Google at the same time may also be a signal to other service providers that the time has come to raise prices. Many digital services on the market are keeping their prices despite high inflation, which in the US was 8,4% in September. y / y, in the European Union 10,9%, and in Poland as much as 17,2%. Soon, we may face a festival of increases in the prices of digital services.

An important trend that we observe is significantly higher price increases, the so-called "Family subscriptions", i.e. those that can be easily shared, often contrary to the terms of service. Providers rightly fear that in times of recession and consumer spending cuts, they will be more likely to break policies and grant access to such subscriptions to people outside the family. The increases are therefore intended to limit the resulting decrease in income for companies.

Goal - improvement of companies' results

The increases are to raise margins and improve companies' results. We will know the effects of the increases only in the reports for the fourth quarter of 4 or even in 2022. Now is the season of publishing the results for the third quarter of 3. This week we are waiting for the publication of the results of large technology companies. Today the results will be published by Twitter, Alphabet and Microsoftand in the following days also Apple and Amazon. The other big companies that will publish their results this week are Visa and Mastercard as well as Coca-Cola and McDonald's. In the current market situation of increased volatility and expectations for further rate hikes by the FED (next meeting on November 2), the publication of companies' results is closely watched by investors.

The results published so far show that the results largely exceed the forecasts. In the case of the S & P500 index, out of 98 companies that have already announced their results for the third quarter, 3 exceeded the forecasts, 73 were in line with forecasts and 5 were below analysts' forecasts.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.