> “The price of streaming services is reflective of the economic realities and costs that it takes to produce and distribute the content,” Schmitt says.
Lies. Things are priced to maximize the amount of profit, which is Quantity * Price - Cost.
If you hike prices by 10% and lose 5% of customers - that's good business. $100 * 100 is less than $110 * 95
Someone who knows microeconomics better can correct me, but looks like companies can raise price and make more money as long as the demand continues to be inelastic
1. The margins are very high in streaming. i.e. very little of the cost of streaming services is delivery of the video. This matters because in low-margin industries losing customers also reduces costs by a measurable amount.
2. The profits are in many cases currently negative, which is caused by
3. The demand (from the streaming services) for prestige content is larger than the producers who are considered to have a high-likelyhood of generating prestige content, so the cost of content (to the streaming services) is going up as the services throw more and more money towards production.
My understanding that investors think Disney is "spending too much" and that includes both content for Disney+ and also some of the new developments at their parks such as the crazy-expensive Galactic Starcruiser.
I asked ChatGPT the opposite quesiton (why becoming cheaper) :D
Streaming services such as Netflix, Disney Plus, and HBO Max are becoming cheaper for a few reasons. First, the streaming market has become more competitive in recent years, with many new players entering the market. This has increased the pressure on existing streaming companies to offer lower prices in order to remain competitive.
Second, streaming companies are able to offer lower prices because they have become more efficient at delivering content to users. With advances in technology and the growth of high-speed internet access, streaming companies are able to deliver more content at a lower cost.
Finally, streaming companies are also able to offer lower prices because they have become more successful at monetizing their content through advertising and other means. This allows them to generate revenue from their content without needing to rely as much on subscription fees.
Overall, the combination of increased competition, improved efficiency, and alternative revenue streams has led to lower prices for streaming services like Netflix, Disney Plus, and HBO Max.
Note 3 out of 5 of those services are run by beneficiaries of the old school cable bundle where yearly price increases have always been part of the business model for 30+ years.
To me the question is: Is Netflix worth it? As a proud reader of Hacker News I must ask myself the question: Does Netflix make me smarter? Or does it make my brain run empty? Is it waste of time?
I’m ok paying for what I use at the cost the market will bear especially if they spend it making excellent products. I look at what happened to traditional tv and dread a return.
Lies. Things are priced to maximize the amount of profit, which is Quantity * Price - Cost.
If you hike prices by 10% and lose 5% of customers - that's good business. $100 * 100 is less than $110 * 95
Someone who knows microeconomics better can correct me, but looks like companies can raise price and make more money as long as the demand continues to be inelastic