Before broadcasting, most American households — about 105 million of the total 122 million — paid for cable. That’s because while on cable it was the only game in town. It also, for a long time, offered excellent value for money.
Yeah, they all got a lot of channels that they paid for but never watched. But you pay for the channels I like and I do the same for you meant we both got what we wanted. The system worked specifically because everything was included and only a la carte premium experiences were offered (and even then, you needed a base package before you could purchase any premium channels).
Broadcasting changed that and essentially created a system where consumers pay much more per “channel” than before, but can still get exactly what they want. That system gives you less for more, but presumably, everything you pay has a very high value for you.
And, with so many streaming players, we now have a meritocracy. People pay for channels (more services than channels really) that have shows they want to watch. It really is that simple. I pay Disney+ because I love Marvel and Star Wars. Every episode of every series created in those universes feels like an event to me, and that certainly justifies the cost of the subscription.
In fact, when it comes to Walt Disney (DIS) streaming service, I’d gladly pay more as long as the company keeps giving me shows I really want to watch. Price is not the determining factor here, but creating shows that people actually want to see.
that’s why netflix (NFLX) Warner Bros Discovery (WBD) and Paramount Global (PARACA) they all seem to be going full speed in the wrong direction.
Image Source: Netflix
In Streaming, content matters more than price
“The average home cable package is now $217.42 per month,” AllConnect reported in 2020.
That means the average cord cutter can spend $200 on streaming services and still save money. In practice, that is quite difficult to do. You can, for example, stay below $100 with the following options:
- Hulu Live (ad-free) with Disney+ and ESPN+: $75.99/month
- Netflix (Standard): $15.49
- HBO Max (ad-free) $14.99:
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That’s a good selection of live streaming channels with Hulu Live, which is a streaming version of traditional cable, and four additional top-tier streaming services for $106.46 per month. You get less than half the average cable bill, giving you room to add other services if you really want them, while still saving money.
Deciding which streaming services to subscribe to isn’t about price. It’s all about services having shows you actually want to watch. Which is why investors should be very concerned about Netflix, Warner Bros. Discovery (HBO), Comcast (CMCSA) (Peacock), and Paramount thinking ad-supported levels will save their sinking streaming services.
Make better shows and the price doesn’t matter
In its early days, Netflix had a lot of stock content that was new. People had only been able to watch past seasons of shows in order if they bought DVDs or even VHS collections. That was a nice bonus, but Netflix’s real draw was its first chart-topper, including “House of Cards,” “Orange Is the New Black,” “Stranger Things,” “The Crown,” “Narcos,” and a few others. .
Netflix really did operate in a different way than its network rivals. It produced a relatively limited list of programs focused on quality. It also very rarely canceled shows before the creators could tell a full story. That made it easier for me to commit to watching a new series because I knew that if I liked it, it would be available through some sort of conclusion.
At some point, Netflix abandoned that quality-over-quantity strategy, the same one HBO had used to become the leading premium cable channel, and became a content factory. That overlooks the fact that most people subscribe to streaming services based on being excited about the content.
Millions of Comcast customers didn’t subscribe to Peacock even though they got it for free (something that is ending) as part of their cable package. That is, in most cases, because Peacock does not have exclusive shows.
All companies (Disney included) propose to have an advertising level as a way to reduce costs and attract more people to their services. In reality, a few dollars don’t matter to the vast majority of consumers if the content offering is strong enough.
Paramount, for example, launched its streaming service with Super Bowl ads showing it had “Star Trek,” “Spongebob Squarepants,” and a few other things that aren’t top-tier properties. I mean, Snooki from MTV’s “Jersey Shore” was in the ad, and well, she’s not a Mandalorian.
Yes, a small percentage of people may add a streaming service they’re hesitant about because it has a cheaper ad-supported option. The reality is that some existing customers can downgrade their subscriptions to a cheaper level, but a lower price won’t lead to many more subscriptions.
Streaming services need blockbuster shows that people actually want to watch. Disney has plenty of those, Netflix has a few (most of which are nearing the end of their run), and no one else has enough to matter. Getting subscribers requires finding hits, and without hits, price simply doesn’t matter.