Streaming Services Have Realized Their Mistake — But It’s Too Little Too Late

I’ve been reading a lot about Netflix recently. There’s this post about how the Netflix effect has returned. The ‘Netflix Effect’, so that’s what we’re calling it now. I’ve actually discussed something similar in this post:

But even with the successful streaming sites the warning signs were there. There were now so many subscriptions and content became fragmented. It wasn’t as simple as subscribing to Netflix and having everything. You now needed multiple subscriptions. This led to subscription fatigue and this made it harder for any one service to gain traction. The situation is now so bad that there are sites whose sole purpose is to tell you which streaming service has a particular show or movie.

And if this wasn’t bad enough subscription prices began to increase. Netflix has doubled in price for its premium tier with other tiers also receiving slight price bumps. Amazon Prime increased from $79 to $139 a year. Hulu also experienced price hikes as did Disney Plus. Combined with rising prices everywhere and the cracking down on password sharing people began to wonder if all these subscriptions were really worth it.

Netflix’s revenue in the last year has begun to taper off from the explosive growth it had since the dawn of streaming. Disney Plus has lost Disney millions of dollars.

There are now so many streaming shows that new content is not receiving the attention it once was. For example Kevin Feige (MCU daddy) has stated that Marvel will focus on fewer shows. People don’t want to get invested in a show only for it to be killed off with an unresolved cliffhanger.

And that brings us to today. The industry hired too aggressively during the golden age of streaming. So when the market became saturated and profits began to dry up the metaphorical noose started to tighten.

Warren Buffet has a saying, “Only when the tide goes out do you discover who’s been swimming naked.” During the golden age of streaming there was a high tide which resulted in companies making tons of original content. And as a result companies have forgotten how just a few years ago the industry had been plagued by another problem: piracy.

Piracy was only sealed away when the various tech companies created a service that was more convenient than piracy. But now that the landscape has been fragmented again piracy is making a resurgence.

Unfortunately as is the case in all industries the people who felt the consequences the hardest are the ones that are seen as being the most replaceable. And that means writers. Do you think it’s an accident that this strike is happening right when the industry is contracting? I think not.

You know there was also another strike in 2007. When streaming was in its infancy, when piracy ran rampant. And it looks like piracy might be a threat once again. Thankfully in 2007 streaming propelled the industry forward. But in 2023 I’m not so sure.

It’s a pretty good article, I did a lot of research for it. Too bad it didn’t get as much traction as I wanted. It’s here if you want to read it.

So streaming services are returning to the golden age of streaming, right? Companies are realizing their mistake. No, I don’t think so. The article only mentions one company putting shows on Netflix again: HBO.

And in some ways the damage has already been done. Because Netflix is raising prices yet again. Their premium plan is going from $19.99 to a whopping $22.99 a month. Yes, crossing the $20 a month mark. Now, in all fairness you can still watch Netflix for cheaper. As low as $6.99 but then you’ll have to sit through ads. The standard plan (without ads) is $11.99.

You know what else is $11.99? Xbox Gamepass. It has top quality games like Starfield, A Plague Tale, Stardew Valley, Minecraft, and Psychonauts 2. And with Microsoft in an acquisition spree it looks like they may be getting even more high end games.

And one has to wonder: are streaming services even worth it? For me no. Although I’m not that big of a fan of movies and TV shows. Pretty much every movie has the same general structure: a bad guy does a bad thing, a good guy must get stronger and overcome the bad guy, then the good guy eventually wins. Or if not it sets the movie up for a part 2. It’s the ‘hero’s journey’. There really isn’t that much new under the sun.

And even if there’s a movie you really want to see you usually want to see it in the theatre near the release date. By the time they hit streaming you usually forget about them. And of course it doesn’t help that nowadays the trailer basically spoils the entire movie.

Now there are also TV shows which can be more appealing due to going directly to streaming services. But personally I don’t find many shows that interesting. I mean some I will love like The Good Place, but that doesn’t happen so often. The most recent one I watched was probably Zelenskyy’s Servant Of The People but I lost interest mid way through season 2. Oh wait, there was also Loki but that show was really only good for like 2 or three episodes until it went off the rails.

Wouldn’t you rather have more interactive entertainment like video games? For one many video games are free. Yeah, they have microtransactions, whatever. You can play them and never spend a cent. Then there are tons of cheap video game subscription offerings out there. I already discussed. Xbox Gamepass. But what about Apple Arcade? Only $4.99 a month. Yes, cheaper than the ad supported Netflix plan. Then there’s EA Play, Geforce Now, and whatever Ubisoft is doing.

Update: Apple has since raised their Apple Arcade price to $6.99 putting it at the same level of Netflix’s Ad supported tier. Still a good value though.

Then there’s YouTube. It appears that YouTube is rolling out their no-ad block policy to my location which is unfortunate. I never knew how many ads there were on YouTube before. But it still provides a ton of high quality content for free. Plus if you watch YouTube from my app Stratum (iOS, Android) there are no ads. I don’t know why. It think it just plays YouTube through an iframe, no fancy ad blocking tech. I guess YouTube doesn’t want to show people watching from another site ads.

You know, Stratum is an RSS reader, but it makes for a surprisingly good YouTube viewing experience. It hooks into YouTube’s PubSubHubbub so you receive videos sometimes within seconds of them going live and you can get notified about them too. And you can watch videos in app without ads. It is my preferred way of watching YouTube now oddly enough. And no more constantly checking YouTube for the newest videos. I did not intend for Stratum to be a YouTube viewer, but here we are. Enjoy it while it lasts.

So back to streaming services I have serious doubt on the long term viability of streaming. Remember Netflix? They had a huge drop in April. Now in that post I said:

And I don’t think the stock price is ever recovering. And the reason is competition. When Netflix offered streaming movies it wasn’t like anything else on the market. And it took off like a rocket.

But now every company and their grandma has a streaming service. Wikipedia has a list. There’s Amazon, Apple+, BBC, Curiosity Stream, Disney+, ESPN+, there’s an entire alphabet soup of streaming services.

And we’re seeing these services slowly eat away at Netflix’s market share.

Well, guess I was wrong. Netflix’s stock has recovered since then. But how much higher will it continue to go? ¯\_(ツ)_/¯ I still don’t see Netflix as a safe bet. I see Netflix as an old has-been company. Now I’m more bullish on game streaming companies, I think they are the future.

Especially as in addition to the competition from other streaming sites we have competition from piracy. I don’t want to give anyone any ideas but piracy has also advanced quite a bit. Video games also have piracy but the games are like 50GB+ now which is a major hurdle to piracy.

It looks like streaming sites have finally woken up to the precarious situation they are in. But it’s just HBO. Will Disney follow suit? Doubt it. It’s the tragedy of the commons. If everyone put all their content on Netflix again they’d all be better off, but if a single company defects and makes their own streaming site they will be better off. So we have a bit of a Nash equilibrium. Sure, HBO has stopped defecting, but they’re just one company. And not the biggest. Will Disney stop defecting? Doubt it. But even if they do put all their content on Netflix it’s still not going to make a huge difference. There’s just too much competition now.

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