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As one streaming era ends, another begins: Chart of the Week

In Technology
June 08, 2024

This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:

For a brief and marvelous time, the latest and greatest consumer services the tech economy had to offer came on the cheap, with generous subsidies from the companies themselves.

Jeff Bezos picked up your shipping costs. Various VC benefactors chipped in to pay for your rides, short-term rentals, and food deliveries.

Others helped pick up the tab for your TV, movies, and music. All of which now streamed directly to your device(s).

You made a contribution, of course, but in the low-interest-rate environment of easy money in the 2010s, Big Tech helped you pay.

But as our Chart of the Week shows, this era could not be more over.

This week, consumers were hit with more price hikes from Max and Spotify, which took their turn in what seems like a never-ending cycle of price hikes. Recently, Comcast announced price hikes for Peacock that coincide with the Paris Olympics.

Warner Bros. Discovery and Comcast, of course, are not quite the Big Tech names synonymous with losing money to gain market share. But while you were getting a deal on all your new digitally enabled habits, these companies were scrambling to copy the same playbook.

The biggest takeaway they copied was losing money. And the rush to raise prices today shows them running in the other direction.

This next development in the industry also comes with another catch: ads. The second prong in the fork of potential profitability.

As our Alexandra Canal notes, streamers are getting more interested in ad-tier platforms and are thus incentivizing participation away from their premium (read: ad-free, another “innovation” from a bygone era) offerings despite their higher prices.

Now, cord-cutters who haven’t seen an ad in years will finally learn about Buffalo Wild Wings’ BOGO Thursday boneless wings and McDonald’s $5 value meal.

And just as excitement over a paradigm shift helped usher in cheap subscriptions for all over a decade ago, the ad-supported streaming model has the potential to generate a similar level of sentiment. Sentiment that analysts note could cause ad-tier subscription prices to decline if user eyeballs become more valuable than the literal dollars they bring to the table.

As Bank of America wrote in a note to clients Thursday, despite the sector’s headwinds and years of weakness, there’s “cautious optimism” in the near term and “disruption” in the long term as the potential of in-platform shopping and ad format innovation excites executives and investors alike.

If this works, maybe these companies can finally go back to making good content.

Until then, $16.99 will give you the entire Sopranos catalog.

Ethan Wolff-Mann is a Senior Editor at Yahoo Finance, running newsletters. Follow him on Twitter @ewolffmann.

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