Why the era of cheap streaming is over

[Music] late last year I got an email it said that the price of my Disney plus annual plan was increasing to $140 but that wasn't the only one Netflix was going up and their most affordable tier would now have ads Amazon Prime would be $3 TV went from $66.99 to $999 a month there are so many great things to watch and they're all spread across so many different Services I want to watch them all but man does it hurt to Fork up so much money every month to do it it kind of makes you wonder how did we all end up in this position where we're paying so much for streaming every month and maybe more importantly can we as consumers do any [Music] better to answer these questions we first need to look at the story from the streamer perspective and we'll start with Netflix the biggest oldest streamer around for most of its history Netflix made money in one way it's subscribers so if Netflix wanted to make more money they either had to add subscribers or raise prices this was always Netflix's strategy as this 2021 New York Times article explains the CEO and founder of Netflix was betting that the company could attract subscribers and raise its prices faster than the debt Clock Was ticking and Netflix had taken on a lot of debt almost $15 billion by 2020 with the purpose of building an entire platform's worth of content ensuring that they weren't reliant on movies and TV that they didn't own like the office or friends this strategy worked and for a long time Netflix grew really reliably even as its prices went up they'd had very steady growth 2015 16 17 18 19 and then the pandemic happens in 2020 and they have their best year ever that's Lucas Shaw by the way managing editor for media and entertainment at Bloomberg News and I'm also the author of the newsletter screen time Netflix got to a point where they realized that their growth was much slower than it had been right growth continues to be slower in 2021 and looking into 20 22 they get nervous and then in 2022 Netflix actually lost subscribers just 200,000 at first and then a million there are only so many people in the population right even if you got everyone there is a ceiling to that but they also knew that they had more customers than it appeared this phenomenon of password sharing Netflix had said publicly that they were not worried about it and I think early on it's true they were not worried about it because password sharing was a way of exposing the service to more people and if people liked it they would convert but at a certain point when when they hit a bit of a ceiling they were looking at the numbers and they said the only way that we're going to be able to grow is if we convert some of those shares into payers this move created a temporary surge in subscribers it made enough of a dent that other companies are following in these footsteps but Netflix isn't the only Trend Setter while all this was going on another company was carving out a slightly different [Music] path Hulu has always had two tiers to it service ad free and AD supported according to this 2019 article Hulu's ad supported option was the most lucrative tier of their business it was so successful they actually lowered the price from $7.99 to $5.99 advertising has been the key to a successful video business forever you know you think about the Cable business you don't think about paying for discret channels but you are paying for a bundle of channels and oh by the way those channels still have advertising so it's not really a foreign concept that's something that that Hulu had done quite effectively as more streamers crowd the market with ever increasing prices pretty much every service including Netflix has introduced a more affordable ad supported tier to their offerings which people seem to appreciate ad supported plans have been driving an increasing percentage of new signups and supplementing each company's bottom line but here's the thing most of these companies still aren't profitable part of it is just they're so new I think we lose sight of that like these companies spent billions and billions of dollars to launch new services and take on Netflix and they tried to condense you know 15 years of Netflix's streaming service into 3 to five and that was that was very expensive so that's it more or less companies fighting debt revenue losses subscriber losses or a mix of those things have raised prices and added ads in hopes to become or remain profitable but what does that mean for us as individuals well if you're like me and have crafted your personality around film making movies and TV then you might be subscribed to a bunch of streaming services indefinitely this isn't cheap but it's the kind of thing that you might be willing to invest in so maybe the answer for me is to do nothing and just accept the increased monthly cost because I find Value in having access to all of the streaming services but in researching this video I found that there is a growing group of people that have a much more strategic approach they're called serial ch ERS which is just the industry way of saying that this type of consumer isn't static they're turning or unsubscribing and resubscribing to Services based around what they want to watch in a particular month according to the analytics group Antenna One in five people were serial churners in 2023 it seems like the answer for these people is that it's worth the effort to hop around they can save money and more selectively access content on their own timeline a more Middle Ground approach might be too subscribe to one or two Services indefinitely and then hop around on the other ones I've opened Max Netflix Hulu and Amazon all within the last month maybe within the last couple of weeks and then Paramount plus and peacock I guess yes I'm a churner for those I I sign on and off depending on what happens and that's fine for me and everyone else their appetite is going to be different maybe other people only want to be permanently signed on for two this approach requires some effort and strategy around your media diet but it could be quite cost effective in the long run and that's one of the reasons that we switched from cable to streaming to begin with the ability to choose what you pay for streaming has changed a lot we're in a new weird increasingly expensive era of it maybe that means it's time we start looking at our relationship to streaming differently and start asking the question how do you make your streaming diet work for [Music] you [Music] he

Channel: Vox

Views: 905,858

Keywords: Hulu, Netflix, SVOD, Vox.com, ads, advertising, discovery+, disney+, entertainment, expensive, explain, explained, explainer, hbo, max, media, streaming, streaming services, streaming video on demand, television, tv, vox, edward vega, ed vega

Id: ObL2xm5NrCk

Length: 6min 40sec (400 seconds)

Published: Fri Apr 05 2024