We’ve illustrated repeatedly how as streaming subscriber growth has slowed, streaming giants have had to pivot to some bad industry habits to ensure Wall Street gets those sweet improved quarterly returns. That’s included everything from utterly pointless layoff-creating mergers and price hikes, to annoying new restrictions and a steady increase in ads (that you have to pay more to avoid).
Streaming giants want to drive users to advertising because there’s greater profit potential in charging more for ad placement and collecting user behavioral ad data than there is in subscriptions. So that’s the direction the industry is headed, whether consumers like it or not. Some people don’t mind the ads; personally they just remind me that I’m living in a shallow dystopia.
Last year, Netflix stopped selling its cheapest $11.99 ad-free tier in the U.S. and UK. Last week, it started warning customers still on that plan in the UK and Canada (and soon the U.S.) that the plan will soon be shut down. There is a $7 per month ad-based plan, but you’ll need to pay extra if you want to do anything with it (multiple concurrent streams, 4K, share your password).
Reddit users aren’t pleased:
“$5.99 (sic) with new features … those new features … they’re adverts
”
Superficially, the argument is that this is “progress” because users are paying less money for a cheaper tier, for now.
But the price of that introductory ad-based will also rise endlessly, disproportionate to product quality, feature restrictions, and shrinking device support. The need for improved quarterly returns (at any costs) creates a consumer “pricing funnel” that forces consumers to pay more and more money for a product that’s often getting worse (the traditional cable and broadband industries perfected this thanks to monopolization) with a steady uptick in monetizable restrictions.
Want to avoid ads? That’s extra. Want to share your account with your college-aged son? That’s extra. Want to watch things in (now fairly standard) 4K? Sorry, that’s extra. Want privacy? Pay for it. Though it’s going to take some time, Wall Street’s need for impossible, endless growth will result in the recreation of traditional cable — and all of that industry’s worst impulses.
To be clear, consumers still find value in streaming services like Netflix, and it remains an improvement over traditional cable because of cost and the ease of cancellation. But with “subscriber churn,” becoming an issue as cost-conscious users binge watch a service catalog then cancel, I can absolutely guarantee that these companies will find creative new ways to make cancelling annoying and difficult.
I’m not sure what that will look like quite yet. I’m sure it will include making the “cancel” button more elusive, but I also suspect it could come via confusing promotional bundles increasingly tethered to other subscription services; all designed to make cancelling service more of a headache on other fronts.
You’re also going to see a growing number of harmful sector mergers as executives (who have run completely out of ideas) try to boost stock valuations and grab tax cuts via purposeless consolidation. Consolidation whose only result historically has been more debt, higher prices, worse quality products, and layoffs.
And as more and more subscribers get annoyed and head to the exits (and alternatives like piracy), executives will blame absolutely everything (VPNs! China! Regulation! the wokes!) for their inevitable downfall, having learned absolutely nothing in the process.
