So, how is that TV and internet bill of yours looking lately? Have you cut the proverbial TV cord and said goodbye to your provider’s television feed, or have you just been piling streaming subscriptions on top of that bill?
Once upon a time, and, yes, it now seems like a bit of a fairy tale, a Netflix subscription was on the order of five dollars. Today it is around three times that. Netflix has three tiers, $10, $15, $19, varying in numbers of screens and video quality. And, again once upon a time, in January 2012, the Netflix share price was around $10. Today it is around US$500. Hmm, subscription price increase of three to four times, share price increase by 50 times.
With a market capitalization approaching a quarter billion dollars, and with record subscriber growth driven by the work-from-home movement (you don’t believe it is work all day long, do you?), you’d think Netflix could toe the line on subscription rates.
At the time it seemed sensible. Add a Netflix subscription for a few dollars on top of a TV subscription. But that was then. Today the streaming marketplace is much more complex, and Netflix is no longer the only kid on the block. You can no longer count on a particular movie or TV series to show up on the Netflix platform. Want to watch a Star Wars movie? Forget Netflix. The rights to that franchise have moved to the owners of the Magic Kingdom.
Netflix faces competition from a broad array of streamers. Think Disney+ ($9) and Crave ($10 or $20) just for starters. Then throw in Amazon Prime Video ($9), although many see that as a freebie that comes with their Prime fast-shipping subscription. How about Apple TV+ ($6), all-you-can-watch sports on DAZN ($20), or BritBox ($9)? There are even more choices in the United States. Each of these streamers needs content, whether it be original material or licensed.
You get the idea. You might be a TV cord cutter, but if you aren’t careful you can quickly find yourself spending more on various streaming services than you did for that TV package.
As a long-time social media colleague of mine, Wolfgang Rupprecht, observes: “It is sad that the market is so balkanized. Early on, Netflix had access to a large selection of material. Now everyone wants to market their own material and expects users to sign up for multiple streaming services. I wish they’d all switch to the supermarket model where all the services offer the same goods, and store choices are mostly based on price and quality of service.”
My reaction is that the supermarket model is not going to happen, at least not any time soon. Worse, because of that balkanization, people are cutting the TV portion of their subscriptions with internet service providers, resulting in increasing internet charges. In Canada at least, the ISPs, who also happen to deliver the TV subscriptions, seem to want to get a minimum of $150 a month from a typical subscriber, be that through internet fees, TV fees, or a combination of the two. And that’s without factoring in a cell phone subscription, or that increasingly rare commodity, a home phone landline.
Rupprecht agrees, stating that the ISPs that are also TV providers need to make up for the shortfall from dropping TV subscriptions and, to a lesser extent, home phone service. Hopefully, he notes, they save enough on reduced fees to their upstream TV show suppliers to allow the overall price to the consumer to come down a bit.
By my reckoning, internet rates have roughly doubled in the past two years. To soften the blow of spiralling prices, the providers run shrill ads about their gigabit or better speeds, not that the typical home user would notice much change once speeds get beyond, say, 100 megabits per second.
Here in B.C., the two main internet service providers have locked horns with lawsuits over the use of the word “fibre” in each other’s advertising, Telus using PureFibre for its system, and Shaw referring to its network as being Fibre+. That suit may be put on hold while Canada’s various watchdog groups work out the merits and downsides to Rogers Communication’s recent takeover bid for Shaw Communications (the TV delivery business and the mobility business, Freedom Mobile).
Whether the Rogers takeover attempt for Shaw and Freedom Mobile comes to fruition won’t be known for several months. The bigger issue for the main providers in Canada is keeping consumers hooked on their internet services, which they know are needed for all those streaming solutions, and hoping to retain most of the revenue stream to which they and their investors have become addicted.
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