Fads keep coming and going. The latest fad in the US for some time now is to cut the cord and replace the cable or satellite TV connection with an Internet platform like Netflix or Hulu. Streaming is turning out to be more popular than television ever was.
Streaming TV Service Prices On the Rise
The cable and satellite TV seems to be nearing extinction as streaming takes over. The cable or satellite television was the only form of TV back in the day.
With the advent of Google and YouTube, streaming video on demand became popular but it couldn’t beat the television. Because the cable and satellite TV operators knew the industry was monopolized by them, they freely raised subscription charges while providing poor quality content and inefficient customer service.
As the Internet started becoming huge, TV was pushed to the back burner. People were getting frustrated with the rising prices and the deplorable quality of content and transmission. Besides, the Internet was quick and easy and far cheaper than cable TV costs.
Cable TV did not give subscribers the option to choose their preferred channels. Viewers had to pay for a bunch of channels they never watched.
Streaming, on the other hand, offers the option to pick and choose only those channels that you want to watch. So subscribers get to choose an a la carte menu and pay only those channels, making streaming cheaper than cable or satellite television.
However, the situation seems to be changing. Streaming services are slowly raising their prices and this is only supposed to grow in the coming days.
Streaming may still seem cheaper and more efficient than cable or satellite television. However, as streaming services gain a firm foothold in the industry it is unlikely that the services will be cheap anymore. Subscribers have already started to get a taste of this as services slowly raise their prices.
The hike in subscription charges is not going to be abrupt or drastic at this point because streaming companies are testing the audience. They want to know if the number of subscribers drops when prices are hiked.
It goes without saying that the streaming industry is very price sensitive. If one service increases their charges subscribers will automatically opt for a cheaper option. This will stiffen the competition among streaming platforms over who offers better pricing.
Although the situation still isn’t as bad as it was with cable and satellite television, subscribers fear that streaming services are taking the same route. Price hikes were the norm with cable and satellite television operators. Viewers had no choice but to bear with it.
But the unprecedented price hike of streaming services in the last few months has already started to discourage many users. And yet streaming companies believe that the prices are still too low for their business.
Streaming service price hikes started earlier this year. In March, YouTube TV increased its monthly subscription charges to $40 from $35. Then in June, both Sling TV and Directv Now raised their prices by $5.
In July, PlayStation Vue increased its monthly subscription charges to $45. This is upsetting to viewers because the main reason why people switch to streaming services is to save money. It does not seem like the price hike will stop anytime soon.
Streaming platforms blame changes in programming deals for the price hike. The cost of programming has risen over the years, the reason why cable and satellite TV operators have no choice but to increase the subscription charges. Because streaming is still a new service, companies provide steep discounts and free trial periods to attract customers.
This is done by negotiating fair programming deals to keep the rates as reasonable as possible for subscribers. But in the long run, this is unprofitable for the companies.
Every streaming company has their own justification for the price hike. Cable and satellite TV operators are also known for hiking subscription charges frequently. Their consumers, however, did not have the option to voice their demands for certain channels.
In the case of streaming, consumers are ready to pay more if they get to watch the channels and the content that they want to. Some channels are more popular than others and consumers want their streaming service to add them, even if that means paying a little extra.
AT&T has said that it was apprehensive about its price hike and expected a drop in the number of subscribers but was surprised to find that it did not happen. It only goes on to show that consumers of today give entertainment a lot of importance and are ready to pay more for quality content.
AT&T, which owns the streaming platform DirecTV Now has claimed that the service has been a loss for them because subscribers mostly opt for the cheapest plan.
Streaming providers are always under pressure to offer more quality at cheaper costs. They hope to make it up with the help of targeted advertising. AT&T, on the other hand, plans to change the satellite platform of DirecTV into a premium video streaming platform with a monthly price tag of $90.
AT&T is already infamous for data collection and sharing. It intends to do the same with this internet-based platform, with targeted ads. It is questionable if subscribers will allow both the steep price every month as the collection and selling of their data.
More Channels and More Content
There are several popular channels that are available only on streaming platforms. The higher the number of channels, the higher the subscription charges. Newer channels draw more customers, and the providers hike prices to cover the cost of the number of channels being added.
But better content and more channels mean a higher cost. Some streaming companies deliberately stay away from the bigger channels to avoid rising costs. The case in point is the sports streaming service Fubo TV, which has increased its prices from $35 to $45. However, it has said that it won’t add ESPN anytime soon to keep costs low.
While the prospect of new channels is always exciting, it remains to be seen if streaming services keep hiking prices to take over cable and satellite television.