The Cheap Streaming Prices of Yesterday Are Never Coming Back
Every few months, I’ll see an article about the subscription fatigue that consumers face in today’s world of streaming services. And it’s completely understandable. In the past, you largely only paid for one subscription service, and that was cable. Whether it was just basic cable, enhanced cable packages, premium channels, or any of the on-demand content, it went through one bill for one company, and often the only choice in town. At least in terms of home entertainment, you could rent for a one-time fee at somewhere like Blockbuster, but beyond that, there wasn’t much else to pay for. But then as cable prices began to rise higher and higher, consumers looked for a new way to consume content without paying more for content they did not care for.
That’s where Hulu and Netflix began to grow. I remember when Hulu first started around 2008, I thought it was amazing. Many of the top networks came together under one streaming service with their network shows either airing a day or week after it premiered on TV, and much of it was ad-supported and free of charge. Netflix, which had been known for its DVD rental mailing service, started its streaming service that was available to all subscribers of its service, and many popular movies and existing TV shows were available.
For a short period of time, the tech savvy started to pick up on the fact that for about $20 for both Netflix and Hulu, as well as Prime Video for $100 per year with Amazon Prime, they could watch top shows and movies for a much lower price than they were paying for cable. TV networks didn’t initially care as Netflix and Hulu were paying to stream the shows, but it wasn’t long before cable TV’s subscriber count began to drop at a rate that made both cable companies and TV networks nervous.
As Netflix grew, many of the shows from TV networks on the platform would ride out their contracts with Netflix and leave the platform. Not to go to another service, but to not be unavailable from subscription streaming services. This was around the years 2012–2017 where TV networks were trying to make their content only available through a digital store like iTunes for episode and season purchases, or by having cable TV. The writing was on the wall that streaming would soon need to be a concern for the TV networks, and as we see today, the top TV broadcast and cable networks all have their own corporate streaming services.
With Netflix finding their top licensed content leaving the service, they too realized that streaming would be the next big thing, as HBO Go, the streaming app for HBO cable subscribers, was very popular. But you can’t build sustainable streaming platform based on content you don’t own, so Netflix decided to follow in HBO and Showtime’s footsteps and produce their own premium shows and movies. Shows like Orange is the New Black, House of Cards, and a reboot of Arrested Development were among the first Netflix original shows, generating a high amount of critical acclaim, buzz, and accolades, all while being an easily accessible service without a cable barrier, something HBO dealt with for many years with their Go service requiring a cable subscription.
The other big thing was the price of Netflix. Initially the service offered licensed shows and movies, so pricing it at $8–10 a month wasn’t so bad, and even attracted a wide audience to subscribe to the service. They kept that price for a long time, even as they added more and more original content to the service, movies and shows produced by industry veterans that garnered critical acclaim.
The downside is that content is expensive. As an example, HBO spent more than $100,000,000 per season in the later years of Game of Thrones. It brought lots of attention to HBO, as well as subscribers, but you still have to spend a tremendous amount of money to produce it. Netflix also spent a ton of money for content, somewhere in the billions of dollars, all to grow the library to where it is now. And you can’t realistically expect them to still charge $9 a month when no one else can.
Netflix initially just started a streamer to compliment its DVD rental service with licensed content, which was why it could cost as little as it did back in the day, same as Hulu. Unfortunately, that’s what got people interested in streaming in the first place was that low price, so that tends to remain in consumer’s minds when they consider today’s streaming landscape, as do the days where a cable TV package only cost $30 a month. In some ways, Netflix and Hulu were testing the waters to see if consumers would pay for an over-the-top service and priced them low enough, and they found that consumers definitely would, at least to a degree.