Despite its rapid expansion, the underlying economics of streaming remain challenging, with major media companies grappling to achieve profitability. As always, subscription costs are trending upwards… but this feels like a pivotal moment.
My highly unscientific, anecdotal, armchair research tells me that people – even those who can easily afford it – are willing to churn out of any streaming service if it doesn't feature a show they care about. This raises the question: at what price might we hit the consumer demand's elasticity limit? It looks like we're going to find out soon enough.
Disney+, after experiencing unprecedented growth during the pandemic, announced its second price hike in less than a year, raising its ad-free subscription to $13.99 by October 2023. Hulu, a majority-owned subsidiary of Disney, followed suit, marking its ad-free tier at $17.99. This shift isn't exclusive to Disney. Paramount, Warner Bros. Discovery, NBCU, and even industry pioneer Netflix have all adjusted their pricing upwards this year. Because price hikes alone won't get the job done, Disney is looking to follow Netflix's lead and it's actively exploring measures to crack down on password sharing.
If you didn't know better, you'd think the economics of streaming came as a surprise to big media companies. Spending more on production while simultaneously reducing available distribution channels. What could possibly go wrong?
As always your thoughts and comments are both welcome and encouraged. Just reply to this email. -s [email protected]
P.S. ICYMI: On this week's Shelly Palmer LIVE, I talked about why people are up in arms about Zoom's AI training policy, OpenAI's first nod toward ethical web scraping, and NVIDIA's new AI chips. I did a demo of AudioCraft, Meta's new text-to-music AI model, and I discussed two newly relevant crypto projects: PayPal's new stablecoin and OpenAI's Worldcoin. I also explored some big questions about workforce productivity and gave an update on the SAG/AFTRA and WGA strikes. Watch here.
ABOUT SHELLY PALMER
Shelly Palmer is the Professor of Advanced Media in Residence at Syracuse University’s S.I. Newhouse School of Public Communications and CEO of The Palmer Group, a consulting practice that helps Fortune 500 companies with technology, media and marketing. Named LinkedIn’s “Top Voice in Technology,” he covers tech and business for Good Day New York, is a regular commentator on CNN and writes a popular daily business blog. He's a bestselling author, and the creator of the popular, free online course, Generative AI for Execs. Follow @shellypalmer or visit shellypalmer.com.
