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The era of cheap streaming is officially over

2023-08-10 10:46
It's the end of an era.
The era of cheap streaming is officially over

It's the end of an era.

The disruptive streaming model birthed by Netflix that dangled all-you-can-eat menus of films, shows, and endless entertainment without pesky advertisements for extraordinarily low prices came to an official close on Wednesday.

Disney boss Bob Iger announced during the company's quarterly earnings report that the Magic Kingdom will once again hike Disney+ prices for the second time in less than a year, increasing the monthly cost of its ad-free plan $3 to $13.99 in October. Hulu, which Disney owns a majority stake in, will also increase the monthly cost of its ad-free subscription $3 to $17.99.

The more than 20% hike in prices means Disney+ will now cost twice the original price when the service debuted four years ago, and Hulu's ad-free tier is now more expensive than the most popular Netflix plan.

When Iger launched Disney+ in 2019, the chief executive said he had intentionally set the price of the service well below competitors "to reach as many people as possible with it."

But Wednesday's move to significantly bump prices, marked an acknowledgment by Iger of the media giant's intent to squeeze more revenue out of streaming by pushing consumers to the advertising-supported plans, which have proven to be more profitable.

"The advertising marketplace for streaming is picking up," Iger told investors on the quarterly earnings call. "It's more healthy than the advertising marketplace for linear television. We believe in the future of advertising on our streaming platforms, both Disney+ and Hulu."

Disney's moves are part of a larger trend occurring across the industry landscape. Media companies, looking to maximize profits as Wall Street grows impatient with them swimming in seas of endless red, are quickly abandoning pricing structures that pushed bottomless libraries of content to consumers at too-good-to-be-true, one-size-fits-all prices.

Paramount, Warner Bros. Discovery, NBCU and even Netflix have all raised prices this year in a drive toward profitability. And as Iger announced Wednesday for Disney, password-sharing crackdowns are also en route.

The announcement puts to an end much of the initial allure that led to the popularity of streaming. When Netflix first offered its pioneering service for only $8 a month, millions of people signed up, eager to have access to the company's expansive catalog for just a fraction of the cost of the traditional cable bundle. That served as the genesis of the streaming era, with legacy entertainment companies such as Disney racing to launch their own direct-to-consumer products at unsustainably low costs.

Now that is all over.

Those massive libraries of content are growing more expensive (not to mention shrinking) by the year. In fact, consumers who bundle just a few streamers together in 2023 will find that the final cost is effectively the same as basic cable. Couple that reality with the introduction of ads into streaming and the end product eerily resembles on-demand cable.

It's an ironic end to the streaming wars. After pouring billions and billions of dollars into constructing supposedly revolutionary streaming platforms, and decimating the business models that had offered the industry stability for decades, the ultimate product looks awfully similar to what companies and consumers were trying to break free from in the first place.