Welcome to the Age of Streamflation: The Myth of Cord Cutting

Just a decade ago, consumers began to question the wisdom of shelling out upwards of $100 per month for cumbersome cable packages that offered hundreds of channels—yet paradoxically, little worth watching.

Streaming platforms promised an enticing alternative, à la carte television, at a fraction of the cost. We binged through entire seasons of shows like The Walking Dead, Breaking Bad, and Mad Men. This was the moment that cord-cutters began turning their back on standard cable TV packages.

However, as we scroll down our bank statements in 2023, an unsettling realization dawns. The cord-cutting revolution once heralded as a cost-effective rebellion against the old guard, has inadvertently evolved into a pricier proposition. The golden age of affordable streaming is over as platform providers engage in a precarious dance with consumer tolerance for price hikes.?

Streamflation: The Hidden Cost of Cutting the Cord

Cutting the cord used to be a way to save money, but those days have long gone. Popular streaming services like Netflix, Disney, and Apple have all raised their prices. Netflix’s Basic plan now costs $11, up from $9.99. and its Premium plan is currently $22.99. Disney has also doubled its price to $13.99 a month. Even Apple has increased its price by 40%. In short, streaming is getting more expensive across the board.

The Wall Street Journal coined the term “streamflation” to highlight the average cost of a significant ad-free streaming service surging by nearly 25% within a year. However, streaming giants are not content with direct subscription revenue; they are also exploring monetization through advertising. Amazon Prime Video, long a cornerstone of the Amazon Prime membership package, has announced plans to introduce limited advertising, effectively introducing ads into a platform once heralded for its ad-free experience.

Those who opt for an uninterrupted viewing experience must pay even more on top of their $139 per year Prime membership.

Hulu’s ad-free subscription has ballooned by 27% to $17.99, indicating an industry-wide shift toward capitalizing on both ends of the consumer spectrum: those who seek affordability are increasingly nudged toward ad-supported plans, while those who prefer an ad-free experience must reconcile with escalating costs.?

Viewers crave the simplicity of watching their favorite shows and movies on their terms, without the headache of juggling multiple subscriptions draining their wallets.

A family household that has a cable package for sports channels, Netflix, Amazon Prime, Apple+, and Disney for streaming, and a Spotify family package for music streaming could quickly find themselves hitting $200 a month. This bifurcation in pricing and ad-inclusion strategies forces us to ask a critical question: Can these platforms raise prices by as much as 30% without experiencing significant customer churn??

The streaming landscape has reached a pivotal crossroads, compelling us to reassess the value proposition of cutting the cord. With rising prices (aka ‘streamflation’) and the creeping intrusion of advertising combined with cost-of-living pressures and decreased expendable income, many will be tempted back into the murky waters of piracy.

Stream or Steal? The Revival of Online Piracy

Recent?data from the European Union’s Intellectual Property Office (EUIPO) and an Australian survey revealed a concerning reversal in the downward trend of online piracy since 2020, with cost being the primary driver. In Australia, this has led to a startling statistic: 39% of the population resorted to piracy for some form of media in 2022, marking a 5% increase compared to just two years ago.

Interestingly, despite substantial efforts by IP owners and ISPs to curb this illicit behavior, such as blocking access to notorious sites, tech-savvy consumers continue to find workarounds, including VPNs and proxy web addresses. This suggests that the conventional tactics to stop piracy are proving less effective in the face of rising streaming costs.?

Additionally, the struggle to maintain profitability pushes streaming services to introduce advertising as an alternative revenue model, which could further alienate audiences.

This shift back to piracy is fraught with ramifications for content creators as well, who are already navigating an opaque compensation structure complicated by the absence of transparent streaming numbers. These creators could see their royalties diminish, impacting an ecosystem already in flux.

Is ‘Binge and Cancel’ the Future of Streaming Subscriptions?

As the price of streaming services continues to climb, many consumers take a tactical “binge and cancel” approach to consuming content. Many subscribe to Netflix for just one or two months to binge-watch all the shows that interest them, then cancel their subscription. The following month, they might switch to Disney+ for a month.?

By subscribing to a service for only one or two months each year, you can essentially ‘time’ your subscriptions to coincide with the release of new seasons or series you’re particularly keen on and then opt out once you’ve caught up.

This strategy also offers the benefit of avoiding ad interruptions if you choose ad-free plans during your short subscription stints. In a world where ‘streamflation’ is becoming the norm, this flexible approach could be the future of responsible media consumption, giving you the freedom to curate your entertainment diet without breaking the bank.

The Bottom Line

The journey from traditional cable to streaming was initially heralded as a triumphant march towards affordability and choice. However, the escalating costs of streaming subscriptions, punctuated by the new phenomenon of ‘streamflation,’ have led us to a complex juncture. Consumers are caught in a squeeze between rising subscription costs and the influx of advertising on platforms that were once ad-free sanctuaries.?

Simultaneously, the industry’s countermeasures against piracy are losing effectiveness as price-sensitive consumers find increasingly sophisticated ways to sidestep restrictions. This intersection of trends highlights an urgent question about the sustainability of the current streaming model.

2024 may see some much-needed consolidation of the streaming landscape. Apple, with its knack for strategic timing and its unparalleled?$3 trillion market valuation, is well-poised to be the catalyst for this upheaval. As analysts keenly watch for signs that the tech behemoth will attempt to acquire Disney or Netflix, it feels like there are a few plot twists on the horizon.

The narrative has come full circle. Cord-cutting, which began as a savvy escape from exorbitant cable bills, now leaves consumers questioning the financial logic of maintaining multiple streaming subscriptions. ‘Binge and cancel’ is a tactical strategy allowing content consumption without long-term financial commitments. The next chapter in the streaming saga is yet to be written, but one thing is clear: the rules of engagement are changing, and so must we.