Streaming TV was once a cheaper and more convenient alternative to cable TV, but now it seems that the tables have turned. A new analysis by the Financial Times reveals that the cost of subscribing to a basket of popular streaming services has surpassed the average cable TV package, as streaming companies have raised their prices to cope with the increasing competition and production costs.
Streaming TV Costs Now Higher Than Cable
According to the analysis, the total cost of subscribing to Apple TV+, HBO Max, Disney+, Hulu, Netflix, Peacock, and Paramount+ has reached $87 per month, which is higher than the average cable TV package of $83 per month. This is a significant increase from a year ago, when the same basket of streaming services cost only $73 per month.
The analysis also notes that streaming companies have been losing money as they invest heavily in original content and licensing deals to attract and retain customers. For example, Netflix spent $17 billion on content in 2020, while Disney+ lost $2.8 billion in its first year of operation. As a result, streaming companies have been raising their prices to improve their profitability and reduce their debt.
Some of the recent price hikes include:
- Apple TV+ increased its monthly fee from $4.99 to $6.99 in October 2020, a 40% hike.
- Disney+ raised its monthly fee from $7.99 to $10.99 in December 2020, and then again to $13.99 in July 2021, a total increase of 75% in less than a year.
- Hulu increased its ad-free tier from $14.99 to $17.99 in December 2020, a 20% hike.
- HBO Max increased its monthly fee from $15 to $16 in January 2021, a 7% hike.
- Netflix dropped its basic tier from its lineup for new or switching subscribers in July 2021, effectively doubling the cost for those who want to watch in HD or 4K.
Streaming Companies Crack Down on Password-Sharing
Another factor that contributes to the rising cost of streaming is the crackdown on password-sharing, which is a common practice among users who want to access multiple services without paying for each one. According to a survey by Magid Research, 33% of US streaming users share their passwords with someone outside their household.
However, streaming companies are becoming more aware of this issue and are taking measures to prevent it. For example, Netflix has started testing a feature that asks users to verify their account ownership by entering a code sent to their email or phone number. Disney+ has also implemented a limit of four concurrent streams per account, while HBO Max has reduced its limit from five to three.
These measures are expected to reduce the number of users who can access streaming services for free or at a lower cost, and force them to either pay for their own subscriptions or switch to cheaper alternatives.
Streaming Customers Face Choice Overload and Fragmentation
Another challenge that streaming customers face is the choice overload and fragmentation of the streaming market. With so many streaming services available, each offering different content and features, customers may find it hard to decide which ones to subscribe to and how to manage them.
Moreover, some of the most popular shows and movies are spread across different streaming platforms, requiring customers to switch between them or subscribe to multiple services to watch them all. For example, The Office moved from Netflix to Peacock in January 2021, while Friends moved from Netflix to HBO Max in May 2020. Similarly, Marvel and Star Wars fans may need to subscribe to Disney+ to watch the latest movies and shows from these franchises.
This fragmentation may lead to customer frustration and dissatisfaction, as well as increased piracy. According to a report by Muso, global piracy rose by 50% during the pandemic lockdowns in 2020, as people turned to illegal sources to access content that was not available on their preferred streaming platforms.
Streaming Still Offers Advantages Over Cable
Despite the rising cost and complexity of streaming, it still offers some advantages over cable TV that may appeal to some customers. For instance:
- Streaming allows customers to watch content on demand, without having to follow a fixed schedule or record shows for later viewing.
- Streaming offers more flexibility and customization, as customers can choose which services they want to subscribe to and cancel them at any time without any contracts or fees.
- Streaming offers better quality and variety of content, as streaming companies produce original and exclusive shows and movies that cater to different tastes and preferences.
- Streaming supports multiple devices and platforms, as customers can watch content on their smart TVs, laptops, tablets, smartphones, gaming consoles, and other devices.
Therefore, some customers may still prefer streaming over cable TV for these reasons, or opt for a hybrid approach that combines both options.
