It seems only yesterday that streaming pitched itself as the consumer-friendly alternative to the bloated cable bundle.
Yet as it stands today, online video prices are going up, advertising is arriving, and there are way more channels to watch than anyone wants or needs.
Streaming is starting to look a lot like cable. As someone once said “TV is TV is TV.”
“There are some obvious improvements,” notes Lucas Shaw at Bloomberg. “We can watch on-demand and cancel with ease. Programming is global. The user interface is generally better. And you don’t have to watch ads, at least if you don’t want.”
But if you were to subscribe to every major streaming service without advertisements, it will soon cost you about $100.
In addition to which, most if not all SVODs are introducing not just ad-supported tiers but linear-style channels that mimic the lean-back experience of the armchair pay-TV viewer.
TV Rev’s new report, “FASTs Are The New Cable,” aims to establish that free ad-supported streaming TV channels are the new cable TV.
We’ve got to this point, in North America at least, because the market is saturated.
Netflix lost customers in the US and Canada for the second quarter in a row and has fewer domestic customers today than it did a year ago. (It peaked at about 75 million at the end of last year.)
As reported by Shaw, Disney+ added about 100,000 customers in the US and Canada, “which is not growth when your base is 45 million.”
The major streaming services added only 2.7 million customers in the US this past quarter, according to research firm MoffettNathanson, and most of that came from Paramount+.
Netflix woes seems to have alarmed Wall Street, but Bloomberg suggests that there should be greater concern paid to Disney.
While Disney+ has added almost eight million customers domestically over the last year, “a quarter of negligible growth suggests it is reaching some kind of plateau. Disney’s cable networks used to reach about 100 million people, so the company needs to more than double its customer base to get close to that kind of penetration.”
READ MORE: The Walt Disney Company Reports Third Quarter and Nine Months Earnings for Fiscal 2022 (The Walt Disney Company)
In response, Disney is raising prices for almost every major plan and introducing an ad-supported service in December.
Meanwhile, Warner Bros Discovery hinted that the combined HBO Max-Discovery+ service will cost more, as it creates three tiers. Netflix and Amazon have been raising prices for years, and both are investing a lot more money into advertising-supported video.
Paramount+ and Peacock don’t have pricing power but they do have ads. Bloomberg suggests that Apple TV+ may have ads soon as well.
READ MORE: Apple (AAPL) Set to Expand Advertising, Bringing Ads to Maps, TV and Books Apps (Bloomberg)
Shaw points out that streaming’s overall share of viewing is likely to dip in the fall when the NFL returns although Amazon has skin in the game. It’s the exclusive home of TNF from this season.
Bloomberg doesn’t enlarge the point but it could be that streamers with a diversified portfolio of content that includes live sport (Disney with ESPN would be the other main player in the US; the Warner Bros. Discovery purchase of BT Sport in the UK would be another to watch, alongside its Eurosport division) would be able to stem churn to greater extent than SVODs with drama content alone.
ESPN will raise the price of its streaming service by 43% next month, betting that it can help cover the escalating cost of sports rights without losing subscribers who are grappling with soaring inflation.
Bloomberg does think there is some growth to be tapped by streaming players in markets outside the US, notably in Asia (although profit margins in some countries here are small — the average Disney+ Hotstar customer there only pays $1.20 a month).
The other scenario which has been predicted by analysts for years now is that streaming services will consolidate — either through merger or through bundling by a service provider into a package that looks a lot like cable.
“If streaming is going to start stealing business ideas from cable, it might as well go all the way and bundle services together. If you could pay $35 or $40 a month for Netflix, HBO and the Disney services, would you ever cancel? Probably not.”
Amazon and Apple already offer programming from other streaming services within their video services, and now YouTube is reportedly trying to do the same.
Currently one of the fastest-growing channels in advertising, Connected TV apps such as Roku, Amazon Fire Stick and Apple TV offer a highly effective way for brands to reach their target audience. Learn the basics and stay on top of the biggest trends in CTV with fresh insights hand-picked from the NAB Amplify archives:
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