The cost of streaming television shows and movies is rising. Over the past couple of weeks, Netflix has been increasing its subscription rates, and this past February there was lots of Facebook chatter about the email Netflix sent to customers announcing, “We’re Updating our Prices – Here’s Why.”
After roping in cord-cutters, many other streaming services are hiking their prices as well. Now that they have gained a foothold in the market and can count on more consumers cutting the cord, they are able to pass the cost of quality content on to consumers. Many viewers have not necessarily cut the cord, but have dialed back on premium cable, kept basic cable, and have added or stacked streaming services on top. These consumers more often are driven by the overall content or a particular show or movie they want to watch, but want to keep their broadcast/cable viewing options intact.
Call this “streaming creep.” Costs have been creeping up and many consumers rarely cancel after the first free month. One study noted that a good percentage of people have no idea how much in total they are spending on streaming services.
All streaming services benefited from the pandemic with more people staying home looking for new content and movies to watch, so growth has been across the board. But to keep these subscribers as well as to gain new subscribers, the streaming services must continue to offer top-notch content, and that can be expensive.
For instance, Paramount+ saw a 48% increase in revenue from streaming over the past few months, fueled primarily by viewership of the “Yellowstone” prequel series “1883” and a few other series and movies. Disney spends the most on content, has the largest catalog, had the largest debut among all the streaming services, and continues to grow.
So just how many streaming services do people subscribe to? The numbers tend to vary depending on the source, but it looks like the average was 3 two years ago, (pre-pandemic), with the average now being 5.
While streaming services have certainly been growing rapidly, people are still consuming their video/TV viewing with broadcast TV (26.4%) and Cable (35.6%). 28.9% of daily viewing is from streaming services. With television/video viewing evolving, advertisers have redistributed some of their budgets to other media types, particularly digital, or to OTT advertising.
OTT (over-the-top) advertising is advertising delivered directly to viewers over the internet through streaming video services or devices, such as smart or connected TVs (CTV). The term “over-the-top” comes from the ability to bypass traditional TV providers that control media distribution, giving advertisers the ability to reach their audiences directly.
TV advertisers that are looking to recapture some of the impressions and reach that are no longer as strong as they once were through traditional channels are redirecting some funds to OTT, and challenger or smaller brands that do not have direct broadcast budgets but can play in the TV space for the first time through OTT.
The television/video landscape will continue to change. As traditional TV continues to lose viewers or as new streaming services are launched or premium content sparks interest, consumers will add more streaming services to their viewing line-up.
Sources: Variety, 2/15/22; Screenrant, 11/20/21; CBS Moneywatch, 2/15/22