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Monday, August 22, 2022

Streaming..The New Cable TV


Prices are going up. Advertising is coming in. And there are more channels to watch than anyone wants or needs. The streaming business is starting to look like cable TV from 10 years ago, according to Lucas Shaw at Bloomberg.

There are some obvious improvements. We can watch on-demand and cancel with ease. Programming is global. The user interface is generally better. And you don’t have to watch ads, at least if you don’t want. 

But it was only a few years ago that streaming pitched itself as the consumer-friendly alternative to the cable bundle. Many of the most recent changes feel as though they are geared towards a different audience (namely Wall Street).

It may have been inevitable that the disruptor (streaming) ended up copying ideas from the disrupted (cable). For all of the innovation that Netflix brought to Hollywood, it was still making TV shows and movies in the same general manner as everyone else. And nothing — not even a monopoly — grows forever.

Prices are going up, ads are coming in

What do you do when growth in your most lucrative market slows? You raise prices, and/or find a second source of revenue.

Disney is raising prices for almost every major plan and introducing an advertising-supported service in December. Warner Bros Discovery hinted that the combined HBO Max-Discovery+ service will cost more, as it creates three tiers. Netflix and Amazon have been raising prices for years, and both are investing a lot more money into advertising-supported video.

Paramount+ and Peacock don’t have pricing power but they do have ads. Apple TV+ may have ads soon as well.

The total cost of every major streaming service out there now rivals the cost of cable, and that may have an adverse effect on subscriber growth for many of these companies.

The Rising Cost of Streaming

If you want to watch every major streaming service without advertisements, it will soon cost you about $100.

Disney + ”churn will be worse than the rosy scenario implied by management,” Cowen analyst Doug Creutz wrote in a note this week. That’s where advertising comes in. These services can now offer a cheaper, advertising-supported plan when customers threaten to cancel. 

The new focus on advertising is one reason for this next trend.

Executives will talk a lot more about viewership…

Even if subscriber growth slows, overall usage of streaming has grown. Streaming accounted for 33% of all TV viewing in the US last month, its highest share thus far. Amazon, Disney+ and Netflix all saw significant gains.

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