The Economics of Streaming
America has experienced tremendous investment periods from the early years of its founding such as the railroads and electricity to car manufacturing, the Industrial Revolution and the Internet. Today, that spectacular boom is happening in online video streaming with over $100 billion being invested in streaming services — similar to the oil industry two hundred years ago. In fact, the entertainment industry as a whole has invested over $650 billion in streaming services over the last few years — no small number! It’s evidence of a revolution underway in how people access and consume content in the 21st century. In many ways, this exponential growth has been building over years as numerous industries have been transformed, making digital sharing commonplace and required to appeal to the everyday consumer
For the Individual User and Family Household
The cost of access to a Disney+ subscription with its library of 7,500 titles at $6.99 a month is far less than the cost of a DVD. Streaming now offers access to large libraries of content at one flat monthly fee.
Access to so many streaming video subscriptions offers consumers many options today and will affect people differently depending upon their current lifestyle, set up and individual or family household needs.
The average monthly bill spent on video streaming in 2019 is around $73, of which $60 goes to cable service and $13 to streaming services, according to research by Cowen &Co. Projected consumer spending is expected to only grow to $76 by 2024. For family households that intend to keep their existing cable services, they may just to add on streaming services that they want such as Netflix and watching shows on YouTube. They may not add new streaming services.
To some degree, it depends upon how much the individual or family household is already paying, what type of access they have and what they like to watch. Roughly 70 percent of Americans today subscribe to at least one type of video streaming platform. A Wall Street Journal poll discovered that Americans surveyed would be willing to pay roughly $44 a month or for 3-4 streaming services.
Streaming services like Netflix with 158 million subscribers worldwide, have built cult followings for favorite shows such as “Stranger Things” that appeal to both cable TV subscribers and cordcutters. The platform’s popularity is not expected to disappear overnight as new streaming service platforms become available. Disney though is pulling its content from Netflix and bringing all of its entertainment home to its own mother ship, Disney+.
Ultimately, what an individual or family household chooses will be dependent upon a variety of costs such as a smart TV or Internet device, high-speed Internet plan and personal show favorites. One concern that streaming companies have about customers is shared passwords to reduce costs, thus eating into their margins. Apparently, there is some effort underway to prevent this, through regular password reset requirements and limiting how much access a person can have based on their physical locations.
Consumer Benefits:
Choice: Consumers have access to greater selection of content now through streaming video that may align more with their individual preferences and interests.
Higher quality: A lot of time and effort is being devoted to building out original programming for original shows on Netflix, Amazon Prime, Disney+, Apple tv+, HBO Go, Hulu and more. For any consumer frustrated with lackluster content on traditional TV channels or even cable networks, these new shows offer higher quality to some degree. Netflix offers original programming in multiple languages with voiceovers, which can introduce viewers to new stories and ideas.
On demand: Unlike the limitations of traditional TV shows where you need to tune in at a specific time to gain access to a show that was also available only for a limited period of time, streaming video subscriptions offer shows on demand when you want it, wherever you want it (portable) with prior episodes being accessible too.
Access to old favorites: Streaming video platforms such as Disney+ also offer content out of their vaults that consumers love but did not have access to online before as these shows were created prior to streaming services and available only on old DVDs and video cassette tapes. Disney and other content providers have remastered old favorites and brought them online. Popular TV reruns and classic shows have also reappeared and their value has only gone up over time as these platforms aim to keep their new subscribers engaged, according to the Wall Street Journal.
