Streamers Run Price Hikes
We’ve pulled the plug, cut the cord on cable and sent it the way of the Dodo. This might be why streaming companies feel so confident raising their prices. This week, ESPN+ had the audacity to raise its monthly price despite no live sports. YouTube TV did the same, and if you’re holding last decade’s best-performing stock, Netflix, this matters to you!
The entire TV and movie streaming industry is unprofitable – top to bottom. It’s a structural thing, but don’t worry, this can be fixed. You can either lower costs or raise prices!
Netflix has some all-time fan favorites on its platform; Friends, Star Trek, Parks and Rec. But these shows are part of the problem. They cost a fortune to license each year, and that’s where Originals come in. Netflix is a fully-fledged film studio.
It plows cash into hugely expensive “long-tail” content streams, Peaky Blinders, House of Cards, because it’s on-demand, ad-free, and it gets customers believing that they need Netflix Originals, not just any old popcorn piece. The goal is to spend less on marketing and jack up prices.
It’s what ESPN+ and YouTube TV are doing right now to test their respective brands’ power. You can bet everyone in the industry is watching.
Netflix itself might struggle because it’s obsessed with world domination, picking up subs internationally. These nationalities all have their own viewing tastes; all need their own Originals. The cash burn on serving up recurring entertainment is insane, so a price hike needs to come soon. It’s too bad international subs are the most price-sensitive!