After 20 years of work, tens of billions of dollars invested, and the combined work of thousands of the most intelligent and qualified engineers of our generation, the streaming industry has...
After 20 years of work, tens of billions of dollars invested, and the combined work of thousands of the most intelligent and qualified engineers of our generation, the streaming industry has managed, at long last, to reinvent cable.
Call me when they stop letting me buy netflix on it's own and the bundle is the only option. I think it's unlikely we'd ever see that happen, and the ability to spend less by only getting one...
Call me when they stop letting me buy netflix on it's own and the bundle is the only option. I think it's unlikely we'd ever see that happen, and the ability to spend less by only getting one streaming service is still a big advantage that cable can't offer.
Especially now that studios are selling streaming rights to Netflix and Amazon again. Everytime I open either it’s like the services are back to the 2015/2016 status quo rather than how...
Especially now that studios are selling streaming rights to Netflix and Amazon again. Everytime I open either it’s like the services are back to the 2015/2016 status quo rather than how compartmentalized everything got in 2020.
The problem with cable is that the companies that ran it had absolute control over the distribution of shows on cable - they can make you pay a bundle for whatever they wanted, and there was no...
The problem with cable is that the companies that ran it had absolute control over the distribution of shows on cable - they can make you pay a bundle for whatever they wanted, and there was no alternative. If you, a random upstart, want to serve video to people's home TVs without partnering with cable companies, well, suck it up, you can't.
That is not the case with the internet, and indeed, at this point it is pretty easy to serve video on the internet. That was the power of "streaming" - moving from a closed wire ecosystem to a public one. There is nothing wrong with bundling as a concept - it is simply a form of price discrimination.
As others have noted, streaming does seem to be going down the same enshittification path that cable did. Originally cable was a premium ad free product, but eventually it degraded to be paid and...
As others have noted, streaming does seem to be going down the same enshittification path that cable did. Originally cable was a premium ad free product, but eventually it degraded to be paid and still stuffed with ads. However, I was referring specifically to the bundling that the headline was referring to. These services will bundle or even merge. And a "discount" can often be anything but.
Sure, on face value, it sounds good. Maybe you have the option to sign up for either service for ten dollars or both services combined for $18. But the thing about these streaming services, is that if they are bundling, they have a really strong incentive to get you to sign up for as many streaming services as possible. If you only subscribe to Netflix, maybe you watch it ten hours a week. But if you subscribe to both Netflix and Hulu, you're probably not going to spend ten hours on each. Maybe you only watch each 6 hours a week; you only have so much time each week to watch TV.
Streaming services are not like old school broadcast TV. For a broadcast station, their costs do not scale with audience size. If there are a million people in a station's broadcast area, it costs them the same to operate the station whether 10 people are watching or 10,000 people are watching.
But streaming requires feeding data to each customer. That costs money. Each additional active customer requires more bandwidth and licensing fees. To a company like Netflix, their ideal customer is someone who signs up for Netflix and then rarely if ever uses it. They'll likely make more money off of someone who pays $5 per month and rarely uses the site than someone who pays $10 per month and watches multiple hours per day. Again, a streaming service's ideal customer is one that subscribes but then never watches anything.
So what effect does this have on bundling and prices? It means they have an incentive to really push bundles hard. Cable companies are infamous for this. They might charge $50 a month for basic cable by itself and $50 for internet by itself. Then maybe they charge $60 for both combined. If you already have internet with the cable company, it costs them almost nothing to also provide you TV service. So they can actually make more money by offering what seems like a steal of a deal. It's the same mechanics behind giant fast food value meals; McDonalds can make more profit offering you a drink twice the size for 10% more cost.
So what we'll see with streaming is something similar. Yes, you will, technically, be able to sign up for individual streaming services. But in reality you will be heavily, heavily incentivized to bundle. An a la carte Netflix subscription by itself might have its price jacked up to $50/month. And if they did that today, people would feel cheated and revolt. But your other option will be to pay $60/month and get access not just to Netflix, but also Hulu, AppleTV, Amazon Prime video, etc. The price for the a la carte options will go through the roof, but the streaming companies won't actually expect anyone to go for those options. Rather, the jacked up prices on the individual services will just be used as a method of making the bundled packages feel like a great deal.
Plus, this will also be used as a way to ensure you continuously subscribe. A common problem streaming companies currently face is people hopping on and off to watch a single show. When a new season of a favorite show comes out, they'll subscribe for a month, binge it, then drop the subscription. But bundling can be used to make this strategy much more difficult. The streaming companies that are bundling their services just need to stagger their flagship releases so that there's always a marquee release on one of the streaming services every month or so. You could still in theory jump from one to the next as releases come out, but then you have to pay the ridiculously inflated a la carte price. Do that and you'll feel cheated and like a sucker, so you'll go for the "better deal" and select the big bundle that provides the streaming companies the highest profit margin.
In summary, streaming services have a lot of incentive to encourage you to bundle. The more services you're signed up for, the less you cost each of them. They will make far more money on a big bundle they sell you, even if it seems like a great deal. In time, they will inflate the cost of their a la carte services and coordinate their schedules with other streaming services to push the bundles as hard as possible. It's the same dynamic that's been happening in cable for decades. In the long run, yes, you will be able to still buy a subscription to a single service. But the price will be so inflated that bundles seem like an amazing deal, and everyone will end up signing up for massive bundled packages. In the end, they just reinvented cable.
I have one big problem with this: What incentive would all the competing streamers have to force bundles on their customers? In cable, it happened because the cable company could package channels...
I have one big problem with this: What incentive would all the competing streamers have to force bundles on their customers?
In cable, it happened because the cable company could package channels together in bundles and customers didn't have a choice. Cable companies effectively had monopolies on premium TV distribution in the regions they operated.
There is no such monopoly on content distribution over the internet, which is a big part of why every big studio has able to roll out their own service in the first place.
I agree with your sentiment, but to say that streaming costs have doubled is a rather egregious exaggeration. If you were paying $9.99 in 2007 for Netflix streaming, that's over $30 today just...
I agree with your sentiment, but to say that streaming costs have doubled is a rather egregious exaggeration. If you were paying $9.99 in 2007 for Netflix streaming, that's over $30 today just with inflation. Unless Netflix was even cheaper than I remembered, I'm actually paying less for Netflix today with 4K UHD content than I was paying for it when it first started with mostly SD content.
You might check your numbers. I ran it through an inflation calculator. $9.99 in 2007 is worth $14.82 in 2023. Keep in mind also that computer technology has actually been a massive deflationary...
You might check your numbers. I ran it through an inflation calculator. $9.99 in 2007 is worth $14.82 in 2023. Keep in mind also that computer technology has actually been a massive deflationary force on the economy, economists have actually baked this into their calculations of inflation. Every year you can buy far more capable computers for the same amount of money. Getting more for the same dollar. That is deflation.
The point being that Netflix's standard package now costs $15.49 a month, so slightly higher in real dollar terms. At the same time, they've put in more restrictions on password sharing, numbers of simultaneous streams, etc. At the same time, Netflix's own content delivery costs have gone down massively over time as internet technology has grown ever more capable. It costs Netflix a fraction of the cost to deliver the same stream to their customers as it did a decade ago. Now this is compensated by the fact that they offer more original programming, but previously they had to pay for licensing all their content. Streaming resolution has also increased. However, I still think that even with increased resolution, it's still cheaper for them than the old model. In theory, there's nothing stopping them from sending out blu-ray discs in the mail like they used, so it's pretty clear that even high definition streaming is now cheaper for them than sending things snail mail.
Yeah, It looks like the online calculator I used bugged out or something. The higher resolutions are not a small upgrade, though. It’s significantly more expensive to send 4K than HD even without...
Yeah, It looks like the online calculator I used bugged out or something.
The higher resolutions are not a small upgrade, though. It’s significantly more expensive to send 4K than HD even without the extra bandwidth needed for HDR. The costs to deliver content has gone down almost certainly but we don’t really know enough about those costs to say they have been enough to offset the costs of the higher bitrate content. The overall size of their library has also gone up, which incurs additional expenses.
https://www.bls.gov/data/inflation_calculator.htm That calculator says $10 in 2007 is $15 today, though I think that's what you were saying but you were accounting for their claim of costs...
That calculator says $10 in 2007 is $15 today, though I think that's what you were saying but you were accounting for their claim of costs doubling. I'm just clarifying the numbers.
It appears the base Netflix plan without ads is just over $15, so you could argue it's just keeping pace with inflation, but Netflix lost some content when other companies spun up their own streaming services. So you're at least the same amount adjusted for inflation, if not more, for less content. I also think plans were less than $10 and at one point included DVDs, but to be fair I don't think that those early comparisons were ever all that realistic. It's true that Netflix solved a lot of the problems with media distribution before, whether it be cable TV or DVDs etc., but I can also acknowledge the pricing realistically wasn't going to last if they were going to offer an ever growing catalogue.
I think one of the big issues with streaming services is that they don't work like music streaming where music streaming is generally not exclusively licensed. Whether you have Spotify, Apple Music, Pandora or whatever else is out there, you can probably access much of the same music with some exceptions here or there. But most video streaming is exclusive licensing, the instances where it isn't exclusive would be the exception.
But since it is exclusive, if you try to get access to a similar amount of quality shows you had access to in the past, that's probably where some people have the perception that streaming costs have "doubled" or such.
I absolutely was around for the days of cable, which is why the present situation does not look the same to me. With cable, actual distribution and sales was handled by a local monopoly, your...
I absolutely was around for the days of cable, which is why the present situation does not look the same to me.
With cable, actual distribution and sales was handled by a local monopoly, your cable company. They are the ones who forcibly corralled channels into bundles, as a means to inflate the average cable bill. They had this power because consumers didn't really have a choice, it was their way or the highway.
Netflix, Peacock, Max, etc are not stuck using a single common distributor with a regional monopoly. They distribute their content over the internet. They don't really have anything to gain by forcing bundles like this. From their perspective, bundles are useful as a tool for price discrimination or cross-promotion. A bundle is not bad in principle, it is bad when it is the only option for the consumer. I will eat my hat if Netflix ever stops directly selling subscriptions and forces people to get it in a bundle through some cable-like intermediary.
The big selling point of Netflix is that you had whatever you wanted, on demand, for a great price, with no ads.
I remember this selling point, and I also remember believing it to be unsustainable as a wholesale replacement for linear TV without a substantial price increase or reduction in content variety. It seems I was correct. Streaming was cheap because it was flooded with venture capital, and because streaming does not compensate creators as comprehensively as traditional distribution (you know, what the strikes were all about). It was easier for Netflix to have "everything" when "everything" was shows that already had their first runs on cable or broadcast, they didn't have to pay residuals, and they were flush with money from investors turned on by their skyrocketing userbase.
It feels weird to consider bundling the main difference between cable and streaming. I didn't start using Netflix because I didn't like bundling that cable services did. I started using Netflix...
It feels weird to consider bundling the main difference between cable and streaming. I didn't start using Netflix because I didn't like bundling that cable services did. I started using Netflix because I wanted to be able to watch whatever episode of a show whenever I wanted instead of at a mysterious TV schedule.
After 20 years of work, tens of billions of dollars invested, and the combined work of thousands of the most intelligent and qualified engineers of our generation, the streaming industry has managed, at long last, to reinvent cable.
Call me when they stop letting me buy netflix on it's own and the bundle is the only option. I think it's unlikely we'd ever see that happen, and the ability to spend less by only getting one streaming service is still a big advantage that cable can't offer.
Especially now that studios are selling streaming rights to Netflix and Amazon again. Everytime I open either it’s like the services are back to the 2015/2016 status quo rather than how compartmentalized everything got in 2020.
The problem with cable is that the companies that ran it had absolute control over the distribution of shows on cable - they can make you pay a bundle for whatever they wanted, and there was no alternative. If you, a random upstart, want to serve video to people's home TVs without partnering with cable companies, well, suck it up, you can't.
That is not the case with the internet, and indeed, at this point it is pretty easy to serve video on the internet. That was the power of "streaming" - moving from a closed wire ecosystem to a public one. There is nothing wrong with bundling as a concept - it is simply a form of price discrimination.
how is this at all like cable?
As others have noted, streaming does seem to be going down the same enshittification path that cable did. Originally cable was a premium ad free product, but eventually it degraded to be paid and still stuffed with ads. However, I was referring specifically to the bundling that the headline was referring to. These services will bundle or even merge. And a "discount" can often be anything but.
Sure, on face value, it sounds good. Maybe you have the option to sign up for either service for ten dollars or both services combined for $18. But the thing about these streaming services, is that if they are bundling, they have a really strong incentive to get you to sign up for as many streaming services as possible. If you only subscribe to Netflix, maybe you watch it ten hours a week. But if you subscribe to both Netflix and Hulu, you're probably not going to spend ten hours on each. Maybe you only watch each 6 hours a week; you only have so much time each week to watch TV.
Streaming services are not like old school broadcast TV. For a broadcast station, their costs do not scale with audience size. If there are a million people in a station's broadcast area, it costs them the same to operate the station whether 10 people are watching or 10,000 people are watching.
But streaming requires feeding data to each customer. That costs money. Each additional active customer requires more bandwidth and licensing fees. To a company like Netflix, their ideal customer is someone who signs up for Netflix and then rarely if ever uses it. They'll likely make more money off of someone who pays $5 per month and rarely uses the site than someone who pays $10 per month and watches multiple hours per day. Again, a streaming service's ideal customer is one that subscribes but then never watches anything.
So what effect does this have on bundling and prices? It means they have an incentive to really push bundles hard. Cable companies are infamous for this. They might charge $50 a month for basic cable by itself and $50 for internet by itself. Then maybe they charge $60 for both combined. If you already have internet with the cable company, it costs them almost nothing to also provide you TV service. So they can actually make more money by offering what seems like a steal of a deal. It's the same mechanics behind giant fast food value meals; McDonalds can make more profit offering you a drink twice the size for 10% more cost.
So what we'll see with streaming is something similar. Yes, you will, technically, be able to sign up for individual streaming services. But in reality you will be heavily, heavily incentivized to bundle. An a la carte Netflix subscription by itself might have its price jacked up to $50/month. And if they did that today, people would feel cheated and revolt. But your other option will be to pay $60/month and get access not just to Netflix, but also Hulu, AppleTV, Amazon Prime video, etc. The price for the a la carte options will go through the roof, but the streaming companies won't actually expect anyone to go for those options. Rather, the jacked up prices on the individual services will just be used as a method of making the bundled packages feel like a great deal.
Plus, this will also be used as a way to ensure you continuously subscribe. A common problem streaming companies currently face is people hopping on and off to watch a single show. When a new season of a favorite show comes out, they'll subscribe for a month, binge it, then drop the subscription. But bundling can be used to make this strategy much more difficult. The streaming companies that are bundling their services just need to stagger their flagship releases so that there's always a marquee release on one of the streaming services every month or so. You could still in theory jump from one to the next as releases come out, but then you have to pay the ridiculously inflated a la carte price. Do that and you'll feel cheated and like a sucker, so you'll go for the "better deal" and select the big bundle that provides the streaming companies the highest profit margin.
In summary, streaming services have a lot of incentive to encourage you to bundle. The more services you're signed up for, the less you cost each of them. They will make far more money on a big bundle they sell you, even if it seems like a great deal. In time, they will inflate the cost of their a la carte services and coordinate their schedules with other streaming services to push the bundles as hard as possible. It's the same dynamic that's been happening in cable for decades. In the long run, yes, you will be able to still buy a subscription to a single service. But the price will be so inflated that bundles seem like an amazing deal, and everyone will end up signing up for massive bundled packages. In the end, they just reinvented cable.
I have one big problem with this: What incentive would all the competing streamers have to force bundles on their customers?
In cable, it happened because the cable company could package channels together in bundles and customers didn't have a choice. Cable companies effectively had monopolies on premium TV distribution in the regions they operated.
There is no such monopoly on content distribution over the internet, which is a big part of why every big studio has able to roll out their own service in the first place.
I agree with your sentiment, but to say that streaming costs have doubled is a rather egregious exaggeration. If you were paying $9.99 in 2007 for Netflix streaming, that's over $30 today just with inflation. Unless Netflix was even cheaper than I remembered, I'm actually paying less for Netflix today with 4K UHD content than I was paying for it when it first started with mostly SD content.
You might check your numbers. I ran it through an inflation calculator. $9.99 in 2007 is worth $14.82 in 2023. Keep in mind also that computer technology has actually been a massive deflationary force on the economy, economists have actually baked this into their calculations of inflation. Every year you can buy far more capable computers for the same amount of money. Getting more for the same dollar. That is deflation.
The point being that Netflix's standard package now costs $15.49 a month, so slightly higher in real dollar terms. At the same time, they've put in more restrictions on password sharing, numbers of simultaneous streams, etc. At the same time, Netflix's own content delivery costs have gone down massively over time as internet technology has grown ever more capable. It costs Netflix a fraction of the cost to deliver the same stream to their customers as it did a decade ago. Now this is compensated by the fact that they offer more original programming, but previously they had to pay for licensing all their content. Streaming resolution has also increased. However, I still think that even with increased resolution, it's still cheaper for them than the old model. In theory, there's nothing stopping them from sending out blu-ray discs in the mail like they used, so it's pretty clear that even high definition streaming is now cheaper for them than sending things snail mail.
Yeah, It looks like the online calculator I used bugged out or something.
The higher resolutions are not a small upgrade, though. It’s significantly more expensive to send 4K than HD even without the extra bandwidth needed for HDR. The costs to deliver content has gone down almost certainly but we don’t really know enough about those costs to say they have been enough to offset the costs of the higher bitrate content. The overall size of their library has also gone up, which incurs additional expenses.
https://www.bls.gov/data/inflation_calculator.htm
That calculator says $10 in 2007 is $15 today, though I think that's what you were saying but you were accounting for their claim of costs doubling. I'm just clarifying the numbers.
It appears the base Netflix plan without ads is just over $15, so you could argue it's just keeping pace with inflation, but Netflix lost some content when other companies spun up their own streaming services. So you're at least the same amount adjusted for inflation, if not more, for less content. I also think plans were less than $10 and at one point included DVDs, but to be fair I don't think that those early comparisons were ever all that realistic. It's true that Netflix solved a lot of the problems with media distribution before, whether it be cable TV or DVDs etc., but I can also acknowledge the pricing realistically wasn't going to last if they were going to offer an ever growing catalogue.
I think one of the big issues with streaming services is that they don't work like music streaming where music streaming is generally not exclusively licensed. Whether you have Spotify, Apple Music, Pandora or whatever else is out there, you can probably access much of the same music with some exceptions here or there. But most video streaming is exclusive licensing, the instances where it isn't exclusive would be the exception.
But since it is exclusive, if you try to get access to a similar amount of quality shows you had access to in the past, that's probably where some people have the perception that streaming costs have "doubled" or such.
I absolutely was around for the days of cable, which is why the present situation does not look the same to me.
With cable, actual distribution and sales was handled by a local monopoly, your cable company. They are the ones who forcibly corralled channels into bundles, as a means to inflate the average cable bill. They had this power because consumers didn't really have a choice, it was their way or the highway.
Netflix, Peacock, Max, etc are not stuck using a single common distributor with a regional monopoly. They distribute their content over the internet. They don't really have anything to gain by forcing bundles like this. From their perspective, bundles are useful as a tool for price discrimination or cross-promotion. A bundle is not bad in principle, it is bad when it is the only option for the consumer. I will eat my hat if Netflix ever stops directly selling subscriptions and forces people to get it in a bundle through some cable-like intermediary.
I remember this selling point, and I also remember believing it to be unsustainable as a wholesale replacement for linear TV without a substantial price increase or reduction in content variety. It seems I was correct. Streaming was cheap because it was flooded with venture capital, and because streaming does not compensate creators as comprehensively as traditional distribution (you know, what the strikes were all about). It was easier for Netflix to have "everything" when "everything" was shows that already had their first runs on cable or broadcast, they didn't have to pay residuals, and they were flush with money from investors turned on by their skyrocketing userbase.
It feels weird to consider bundling the main difference between cable and streaming. I didn't start using Netflix because I didn't like bundling that cable services did. I started using Netflix because I wanted to be able to watch whatever episode of a show whenever I wanted instead of at a mysterious TV schedule.
Viva la Pirata!