The price of streaming services keeps going up. We have to pay more money to keep up with the shows that are relevant, like Andor orStranger Things, because of the price hikes that have been announced.
This trend is going to continue for a long time. If they want to meet investor expectations, streaming services need to raise their prices. They will have to risk losing subscribers who don't want to pay the high prices.
The ad-supported plan that was launched last week is $1 more expensive than the standard one that was offered back in 2011. In order to make up for the increased cost of its 4K premium subscription, the company has increased the price of all of its plans over the course of the next several years.
The most expensive plan went from $11 to $13 and the standard plan went from $10 to $10. The company said the hike was due to new exclusive content and features. The basic option was raised for the first time to $8.99 and the standard plan was raised for the second year in a row. The standard and premium plans were raised by $2 in 2020.
We paid for a basic subscription, a premium plan, or a standard plan. It isn't the only one. Last year, Hulu raised the price of its ad-supported subscription for the first time, as did Disney Plus and Apple TV Plus.
Licensing content out to other platforms is not profitable for the company.
As streaming services dump more money into building a library of content, they aren't benefiting so much from adding new subscribers as the streaming landscape continues to mature, and most people have locked themselves into the services of their choice 85% of households in the US were subscribed to a streaming service by the end of the year. There was little room for growth because this number only increased by 2%.
According to Eric Schmitt, a research director and analyst at Gartner, streaming TV is in its infancy. The land grab is coming to an end. The service providers need to demonstrate to their investors that they can make money.
Licensing content out to other platforms isn't cash in on services likeNetflix. It pays to get the rights to other studios' content on its platform in order to keep its original content exclusive to it. After it reported losing subscribers for the first time in over a decade in April, the service took action and lost millions of dollars in the months that followed. The company plans to crack down on password sharing next year in a bid to squeeze out existing subscribers, as well as roll out an ad-supported tier. A $17 billion cap on content spending was put in place.
Apple TV Plus is stuck in the same situation asNetflix, as it only makes money by attracting subscribers, not by licensing out the content it creates. An increase in licensing costs is what caused Apple to raise prices last month. It is almost certain that the company will use advertising to reduce some of these expenses.
"I think ad-supported is an inevitable state for almost every service." There have been rumors that Apple is in talks with media agencies to bring commercials to the service, with a recent report fromDigiDay indicating that Apple has been in talks with media agencies to bring commercials to the service The company is building an advertising network around its deal to stream Major League Soccer games.
Even if a streaming service does generate some extra cash by licensing content to other platforms, there is still a problem that results in price hikes. Disney uses a lot of its own content to fill out its libraries.
Disney took a $1 billion hit earlier this year when it ended a licensing agreement early. Disney didn't specify the content in question, but some think it had to do with the company reacquiring the shows from the mid-2010s, like Jessica Jones and Daredevil, which now reside on Disney Plus. Disney has no choice but to raise prices to make up for the lost revenue from ending lucrative agreements like this.
The price of Disney Plus will go from $7.99 per month to $10 per month in December, and the ad-free version of the service will go from $12 per month to $13 per month. 40 percent of subscribers have opted to buy into Disney's bundle that includes all three services at a cheaper price due to the fact that the price of the other two services went up.
The cost of producing and distributing content is reflected in the price of streaming services. The market is catching up with the physics of those costs.
A lot of Paramount's content is licensed to other services.
Disney Plus lost over a billion dollars in direct-to-consumer revenue due to an increase in programming and production costs as well as a lack of straight to streaming cinematic releases. The ad-supported model will be rolled out by Disney on December 8th.
It seems like some services are jumping on the price increase bandwagon because everyone else is doing it. The CFO of Paramount admitted this in an earnings call earlier this month. Pricing is moving higher across the industry with a number of competing services. We think we have enough room to raise the price. Paramount Plus hasn't increased its price in the US just yet, and that's probably because it makes money by licensing a lot of its content to other services
Most of the Star Trek franchise is on the platform, but a lot of Paramount's content is on other platforms, such as South Park, which is on HBO Max. It doesn't help the streamer build out an attractive library by generating income. It seems like Paramount is working on fixing the situation it has put itself in, as it was able to drive up subscribers by adding a new game. In December, the service will release a sequel to Yellowstone.
I expect a lot of people like me to say enough is enough as prices keep going up.
The megamerger with Discovery has created a dumpster fire worthy of an article of its own. Warner Bros. Discovery CEO David Zaslav is focused on making as much money as cheaply as possible, which means axing tons of content and cashing in on movies shown in theaters before eventually moving them to the service. If the current ad market doesn't improve, it's going to be difficult to meet the company's $12 billion earnings forecast.
It's a lose-lose situation when it comes to streaming services. I committed to paying a base price for services, only to get hit with repeated price increases and questionable amounts of value added with low-effort originals and tv shows. Luring people in with a low introductory price and then cranking things up was the plan for many of these companies, but as prices continue to go up, I expect a lot of people will be like me. I will stop buying Disney Plus or Funimation when the time is right.
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