The numbers they posted suggest they could still easily be in profit with these charges, they just wouldn’t be making 20m profit.
The subscription currently costs $0.99/month or $10/year. With the new API pricing, he’d have to pay around $2.50-$5 per month per user. This means not only would the subscription have to become non-optional, but that he’d probably have to bump its price to $5/mo to just have API and server costs covered. Factor in super heavy users, the App Store cut, and a bit of margin to live off of and you’re looking at $7-$10/mo.
A few users will pay this much but I’d bet that most will not. It’s as much as a streaming service costs for a free service. The user falloff would be immense, and this is exactly Reddit’s goal: they want to herd users into its official app and site where they can be subjected to ads, data harvesting, algorithmic feeds, and incessant A/B testing to juice “engagement”. Whether that happens by way of third party app devs throwing in the towel or from users being priced out of using them matters not.