Disney+ Ads And A New Price Increase Are Coming (1 Viewer)

[John Dirk]

Agreed, as long as both parties (the service and the customer) are aware of what is being offered and what to expect. My complaint is the service changing the game whithout notice and expect loyalty from it's customers. paying the same or higher for programing with ads is a breaking of that aggreement.

Well, as much as I hate being in the position of defending streaming providers, is it really? As long as they honor the stated terms of your agreement, they really haven't behaved in bad faith. Part of having freedom to cancel anytime you want entails giving up the security of guaranteed pricing or service levels.

 

[Capt D McMars]

Well, as much as I hate being in the position of defending streaming providers, is it really? As long as they honor the stated terms of your agreement, they really haven't behaved in bad faith. Part of having freedom to cancel anytime you want entails giving up the security of guaranteed pricing or service levels.

What I should have said was Breaking of Trust...but there are a=many choices one can turn to and in the end, it's really about selection...

 

[DaveF]

Agreed, as long as both parties (the service and the customer) are aware of what is being offered and what to expect. My complaint is the service changing the game whithout notice and expect loyalty from it's customers. paying the same or higher for programing with ads is a breaking of that aggreement.

What's this agreement for a subscription service to never increase prices and how do I get that from my internet co?

 

[Richard Kaufman]

I am happy to pay for my subs to streaming services, except those with commercials, which I refer to as "steaming" services.

 

[Carl David]

I have given my fair share of predictions on the way the streaming industry was going in this forum and this price increase with the ad-free option confirms my previous writings.

The way I see it is the streaming TV content has probably peaked about now (or very close to peaking) with less content getting produced into the future.

The industry went full on and partied like it was 1999 with new studios getting built to accommodate the crazy demand that has occurred especially since the COVID-19 lock-downs where everyone was at home for long parts of the day with ample time to binge watch their favourite series etc. Have you seen how many TV shows there are now? I can't keep up.

Has anyone noticed the new $1 billion TV show on The Lord Of The Rings by Amazon? Okay, it's a money maker franchise and it will probably make a profit but that is crazy money and still a big gamble and evidence in my opinion of how crazy the streaming market has got. This gold rush will not yield enough nuggets.

I don't think the streaming companies are going to be able to raise their prices enough to be profitable especially Netflix who have billions of debt. Subscribers will cancel and do without in these difficult times which has already happened when we look at Netflix subscriber losses.

If this happens then that's less revenue to fund new shows. It's a dilemma because they need more subscribers to make new content but they can't raise the prices enough (and keep subscribers) to be profitable so getting that balance seems highly unlikely at this point.

The companies are hoping enough subscribers have gotten accustomed to the streaming method of watching content from the last 10 years and so won't cancel when the necessary price increases happen. However, based on what I have seen this hope is wishful thinking and they may be in for a surprise if they get too arrogant.

Humans are creatures of habit but TV entertainment is only a discretionary segment of their spending and with the increasing cost of living squeeze on households that discretionary spending will be cut ruthlessly even with just a few dollar increases per month.

Having said that, Disney + has been savvy by keeping the new ad service package at the same low tariff price as before which did not have ads so the damage will probably be minimal. I do think the average subscriber will tolerate/accept the ad feature especially as it is still under $10 per month but will that be enough for Disney + to be profitable?

We will have to wait and see.

I also expect the ads to increase on a gradual basis over years should they not want to make price increases which is perhaps more risky.

For example, if the new ad service has 4 minutes of ads per hour after a year this might increase to 5 minutes and so on.

Remember, these companies offered mega cheap services with a lot of content (at a loss to them) which was great for consumers but that is a normal business practice to entice customers away from a older model (cable etc) and accept a more modern revolutionary service.

They can't do that indefinitely and now is the time to really see how the streaming industry is going to fare especially in these difficult financial times. I have mentioned before there will be some consolidation in the market. There will be fewer streaming companies in the future. It's still too early to tell which ones will survive and which will go bankrupt or get bought out etc.

The old dinosaur TV industry is not dead yet and may still make a comeback especially the free analogue TV model but today with digital. Why pay for subscriptions with ads when you can get free TV with them? I am not even sure the streaming content is superior but that is for another thread.

There is one last thing which I don't think I have mentioned before and that is pay-per-movie etc.

One way the companies might adapt if a lot of subscribers cancel is offer low prices to watch content on an individual basis.

For example $1 to watch season 1 of Stranger Things etc.

My guess is this could be a more efficient model as I am sure there are many subscribers who don't watch 100 hours of content every month. Too many people are too busy for that type of binge watching so for those people that just watch a bit here and a bit there the model could potentially work.

Perhaps they could offer bundles like 3 TV shows for $1.50 per month or something like that. There would be minimal bandwidth usage on that type of package as opposed to the unlimited bandwidth for $7.99 model which may even influence subscribers to watch more content than they even want to. Who eats a couple of chicken wings and some fries in a all you can eat for $12.99 food buffet?

As it stands this one size for all is a bit messy as all this content is on offer to all subscribers but each subscriber has their own tastes and preferences.

It would probably maximize revenue and may even allow them to remove content from their servers that does not get watched or maybe even raise the prices for content that is a niche segment which hardly anyone watches.

The industry is still in its infancy so there will still be a lot of trial and error.

It will be interesting to see how it all unfolds in this decade.

 

[DaveF]

I offer that we’ll know the party is over when:

1. Free trials quietly disappear
2. Subscribing requires multi-month commitments
3. Unsubscribing requires calling a human on the phone and arguing about your personal choices (a la NYT)

 

[John Dirk]

I offer that we’ll know the party is over when:

1. Free trials quietly disappear
2. Subscribing requires multi-month commitments
3. Unsubscribing requires calling a human on the phone and arguing about your personal choices (a la NYT)

...And at that point the industry might as well consolidate under the name "Comcast." Cycles...

 

[John Dirk]

I also expect the ads to increase on a gradual basis over years should they not want to make price increases which is perhaps more risky.

I agree. As long as there are shareholders there will always be pressure for increased profits and ROI. In the end, we the consumers will either collectively agree to pay more/accept less, or the providers will have to provide a service level and price we are willing to accept. History is on the side of the providers as consumers practically never use their collective bargaining power effectively.

 

[DaveF]

The industry went full on and partied like it was 1999 with new studios getting built to accommodate the crazy demand that has occurred especially since the COVID-19 lock-downs where everyone was at home for long parts of the day with ample time to binge watch their favourite series etc. Have you seen how many TV shows there are now? I can't keep up.

Has anyone noticed the new $1 billion TV show on The Lord Of The Rings by Amazon? Okay, it's a money maker franchise and it will probably make a profit but that is crazy money and still a big gamble and evidence in my opinion of how crazy the streaming market has got. This gold rush will not yield enough nuggets.

I don't think the streaming companies are going to be able to raise their prices enough to be profitable especially Netflix who have billions of debt. Subscribers will cancel and do without in these difficult times which has already happened when we look at Netflix subscriber losses.

This is similar to my perspective. I'm assuming further industry conslidation in the next five to ten years. Will Netflix tumble and be bought by another company? Seems likely, but it's still turbulent enought that it might be Apple gets tired of this business and lets AppleTV+ stagnate and wither without actually killing it. Or Amazon removes Prime Video from the fixed-rate free shipping. Or Disney decides not to fully absorb Hulu it goes to NBC Peacock?

And don't forget the potential for plain dumb mistakes. CableTown / ATT / Warner / HBO / Discovery+ might skew back to low-cost everything reality, kill WestWorld in a pique of insanity, flood the HBOMax homescreen with Chip and Joanna, raise prices to $25/mo to hit immediate profit, and lose half its subscribers.

And if that sounds ridiculous, I merely point to Quibi as to how badly a masterclass media mogals can run a company.

 

[Capt D McMars]

What's this agreement for a subscription service to never increase prices and how do I get that from my internet co?

it was speaking of changes "without notice"...when changes occure, we all have freedom of choice.

 

[Carl David]

This is similar to my perspective. I'm assuming further industry conslidation in the next five to ten years. Will Netflix tumble and be bought by another company? Seems likely, but it's still turbulent enought that it might be Apple gets tired of this business and lets AppleTV+ stagnate and wither without actually killing it. Or Amazon removes Prime Video from the fixed-rate free shipping. Or Disney decides not to fully absorb Hulu it goes to NBC Peacock?

And don't forget the potential for plain dumb mistakes. CableTown / ATT / Warner / HBO / Discovery+ might skew back to low-cost everything reality, kill WestWorld in a pique of insanity, flood the HBOMax homescreen with Chip and Joanna, raise prices to $25/mo to hit immediate profit, and lose half its subscribers.

And if that sounds ridiculous, I merely point to Quibi as to how badly a masterclass media mogals can run a company.

I think Amazon might be one of the winners to come out of the streaming business.

I have noticed in a few places online this year that many people in the UK have cancelled their Netflix subscriptions and only kept their Amazon Prime subscription due to the fact that they buy goods from Amazon on a frequent basis and so benefit from the free delivery.

Don't know if this trend has been occurring in the USA too but if Amazon can manage to keep their prime subscription pricing low and be profitable then they will probably keep many subscribers and perhaps gain some more over time.

It's debatable if Amazon can keep the low prices especially with the costs of everything going up at the moment.

They can probably get away with having less content than the other companies too if customers are staying with Amazon due to the benefits of free delivery on their purchases.

A lot of what potentially is going to happen will all depend on what prices the consumers are willing to pay for the services.

I think we will find out in the next year or two what pricing the companies can get away with so that should determine what path the companies will go down.

My thinking has changed on this recently due to the high inflation in the West. My assumption is consumers are not willing to pay more than what the present pricing structure is with very little room for increases to happen.

Previously I thought the range would have been higher but we will probably find out by 2nd quarter 2023 if there is a new wave of cancellations of subscribers of they have stabilised on the whole.

 

[DaveF]

it was speaking of changes "without notice"...when changes occure, we all have freedom of choice.

But Disney is giving months of notice?

 

[DaveF]

I think Amazon might be one of the winners to come out of the streaming business.

Could be. But I'm not really sure what "success" means for Amazon with streaming content.

They own Audible and dominate the audiobook business, which is a distinct business, and does an excellent job of producing audiobooks itself. They own Comixology which is also a separate subscription and, to my understanding, was prevously great but is becoming terrible having been smashed into the Kindle books system without regard for how comics are unique.

But Prime Video is like a hobby for them, a side hustle hidden within free shipping. They're newly attempting major franchise shows with Wheel of Time and the Lord of the Rings series. So there's some indication they're newly engaged in competing with streaming video per se.

I think that Prime Video being separated out and made its own separate subscription service, independent of Prime shipping, is the sign that Amazon really cares about the streaming business.

Or, Amazon creating bundles to bring together some or all of shipping, Video, Audible, Comixology, Kindle, and whatever other scattered services they own.

 

[Josh Steinberg]

But Disney is giving months of notice?

I think he’s referring to the fact that an Amazon Prime account also includes as a bonus access to the free Amazon Freevie service (formerly IMDbTV), and that Freevie is ad-supported. He feels that Amazon Prime switched without warning to a commercial environment.

What happened is that the licensing term for some licensed content on Prime expired, and Freevie was the next service to license some of that same content, so certain programs he was used to viewing without commercials on Prime now have commercials on Freevie.

But I think it’s untrue to say that Prime became an ad-supported service without warning. Licensing terms for third party content end all the time, and new licensing terms are frequently signed. It’s not unusual for a third party show to move from one platform to another. But he’s considering Freevie to be the same as Prime, when it is not. Prime itself has not added any commercials to their service. Prime simply now offers access to the Freevie service through their app as a convenience, but anyone without Prime can still access Freevie.

 

[John Dirk]

Will Netflix tumble and be bought by another company? Seems likely, but it's still turbulent enought that it might be Apple gets tired of this business and lets AppleTV+ stagnate and wither without actually killing it.

It does? Don't they have about 7 billion in net debt? Who would want to buy a company in this condition? At best I could see them being absorbed, probably by one of the large media conglomerates.

 

[Capt D McMars]

It does? Don't they have about 7 billion in net debt? Who would want to buy a company in this condition? At best I could see them being absorbed, probably by one of the large media conglomerates.

Some one fetch a priest!!!

 

[Carl David]

It does? Don't they have about 7 billion in net debt? Who would want to buy a company in this condition? At best I could see them being absorbed, probably by one of the large media conglomerates.

Last time I checked around 4 or 5 months ago Netflix had around $14 billion of debt. Don't know if that has improved or worsened since then.

Going by the loss of subscribers I would lean towards the latter.

 

[DaveF]

It does? Don't they have about 7 billion in net debt? Who would want to buy a company in this condition? At best I could see them being absorbed, probably by one of the large media conglomerates.

Debt can be eliminated. Netflix declares bankruptcy and someone buys their assets. Or anticipating Netflix problems, lenders are willing to take a haircut.

For the right price, someone will want Netflix subscriber base and Stranger Things and perhaps even their remaining licensing deals.

Or not? I’m just some dog on the internet, what do I know about streaming business wheeling and dealing?

 

[John Dirk]

Last time I checked around 4 or 5 months ago Netflix had around $14 billion of debt. Don't know if that has improved or worsened since then.

Going by the loss of subscribers I would lean towards the latter.

Correct but they're also reputed to have 6 billion cash on hand. Since much of that is probably needed to feed the content stream, I was probably a bit generous in my calculations.

 

[John Dirk]

Or not? I’m just some dog on the internet, what do I know about streaming business wheeling and dealing?

Same here, just conjecture. I'd hate to see Netflix go away as they are the pioneers that paved the way for all of the others but they really do seem to have reached an impasse with their present business model. At least the network-owned streaming platforms have vast content libraries to leverage.