this post was submitted on 29 Oct 2023
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I'm not disagreeing with you—the conclusion these services have taken are indeed not logical ones based on historical trends—but I'm curious how you know these services didn't need to raise the fees? Why have you assumed that it's to "grow infinitely"?
From my understanding, almost all streaming video providers except Netflix have been operating on a loss. That can only be sustained for so long before the parent company will need to see it begin to generate a positive revenue stream. The most straightforward way to do that is to increase subscription fees. Furthermore, the number of subscribers of Paramount+, MGM+ or even Disney+ is certainly not trending towards "infinite growth."
I'm not justifying anything, because with five monthly services that have been hiking prices I'm looking at what to slash myself, but I was eager to encourage a bit more discourse on this topic.
then their model is flawed. They sell something at loss in order to attract customers because they know that if they sell it at higher profit margins customers will not come. Customers are willing to buy it as long as it is in a price that they are willing to compromise at. So, when they raise their prices, customers realize that now it is above the price they are willing to pay and step out. Their model is based on hoping that the customers will forget or be bored to cancel a subscription that they cannot afford anymore. However it is a subscription that they wouldn't had been willing to buy in this price in the first place.
So, their initial market share and adoption rate was what it was because of the price of the subscription and the rate of price/value-of-product. Customers are not willing to pay double price and they wouldn't had paid it in the first place. They are not loosing customers. They are not loosing potential profit. They are basing their numbers in a faked artificial audience that opted in only because it was a good deal in the initial price.
And while the free market evangelists would argue that the market would self regulate, you know what will they in reality do? Ask the government for stricter enforcement of anti-piracy laws because huge loss . Loss based on nothing but their imagination of imaginative potential profit based on "if everyone was continuing buying our product with the same adoption rate we would had X billions. So since we don't have X billions, this is a loss". Great math skills and applying of logic.
There are certainly consumers out there with this kind of mentality, but it's a common sales strategy to lure new customers with a reduced subscription fee for the first months only. It evidently works, because businesses have been doing this long before SVOD services, or even the internet for that matter, existed.
I expect that indeed, a significant number of customers cannot be bothered to cancel a subscription once they begin to use it, or, put another way, perceive the value of it to be justified against the increased price. I don't think it's fair to call this a fake audience, because these are real users of which a certain percentage will be retained.
Another factor that probably weighs into this is the competitive race to the bottom among the many SVOD offerings that are available today. Users like you and me perceive a certain dollar amount as the maximum that we are willing to pay, but where does that figure come from? If you are a new player in this space, you are effectively capped to the current market price for subscription fees, whether or not that covers your costs.
The free market effect will gradually resolve this as services that are all currently operating at a loss will correct their price models, which is what I believe is currently happening.
Your claim that this is a tactic happening since for ever doesn't take into account the differences between subscription model and traditional businesses. In traditional businesses, yes, a business may decrease the prices in order to lure customers, but this was never their business model. This was limited time "get to know us". I don't think there was for example any supermarket operating at loss for 5 years before they decide to "ok, lets put the real prices on the shelves now".
of course it is a fake audience. The fact that some users will be retained doesn't make the 100% of the audience real. And also by fake audience it doesn't necessarily mean that the whole 100% of the audience is fake. However, when they present their numbers, and they claim that "because of piracy we lost 5 million subscribers" this is based on the 5 million subscribers who potentially would never be subscribers if they had their "real" price upfront, instead of a price in which they operate at loss.
However, when people are charged for piracy, they are charged based on imaginative loses who are based on a potential profit which would had been achieved if their 100% of customer base had been continuing paying a subscription which they would had never agreed paying if the price was not faked in order to attract them.
the free market will turn to the government to cover their losses and they will push for stricter anti piracy law enforcement. The free market evangelists just want a free to control market. I don't think they will be "ok, customers are leaving after our latest increase in price, then let's just decrease the price to get them back on board"
I am pretty sure they know how many accounts they will lose for every dollar they increase the price. It should be a net positive for them because otherwise they would not do it.
Enforcing terms and conditions that they previously did not is just another price increase in the grey area that is not directly perceived that way.
I agree that "Lost x amount to piracy" does not even make sense in that context. They know exactly what they are doing.
With regards to discounts to lure new customers, I was thinking about conventional subscription based services like newspapers or cable providers. It doesn't seem unreasonable to me that in a sector with heavy competition, such services might be offered at an initial loss if data suggests that retained memberships can recoup it.
I misunderstood what you were referring to with a definition of "fake audience." I wasn't giving any merit to their claims about how it all ties to piracy, clearly that's nonsense. I'm not completely following your train of thought with a "fake price," though.
It's possible this might result in a harsher stance on piracy again, that's true. Realistically, though, I think it's more likely that three things will happen: we as consumers will gradually recalibrate our cost expectations for streaming services, production corporations will cut costs with more reality type content, and smaller companies will either be bought up or go out of business as users settle on a deliberate few services to subscribe to.
you said that they now needed to correct to the "real price" in terms that it is a price that will allow them not to operate at a loss. So the previous one was a "faked" (artificial) price, that they knew was below cost, however they chose to go with it in order to lure customers.
I'm not implying that they tried to scam anyone with "fake prices" if this is what you understood.
I see. Whether or not the price covers costs, businesses will often invest into attracting new customers, for instance through marketing campaigns or incentives to switch from a competitor. In such cases, the cost isn't visibly calculated through to the consumer.
However, since the cost is a main factor for purchase decisions, companies might similarly invest in growing their customer base by offering a pricing tier below cost. This doesn't necessarily mean that the service as a whole is operating at a loss, because there might be higher cost tiers that offer premium content or family plans. Different plans might also have degrees of underutilization that reduces service costs. Finally, cohorts of service tiers might change based on external factors like economic recession or competitive offerings.
All this is to say that pricing models are complicated, and breaking even with a SVOD service is extremely difficult in an industry with extremely high production costs, aging licensable content that viewers are losing interest in all while being overrun with complex, regional licensing agreements that affect both. Especially when this is further compounded with macroeconomic factors including inflation and interest rates that affect both corporations operating at a loss and consumers looking to tighten their belts or user decline due to subscription fatigue, an argument could be made that some middle ground needs to be found to simply remain in business.
Nuanced post. Than you!
Why is this being downvoted? I thought Lemmy was a place for discourse? How does this not contribute to an open discussion?
Pretty common take that people feel like they've seen and argued in a lot of other places. In the future, ask YOURSELF why you got downvoted, not the thread. Works way better.
I have genuinely asked myself this, and can't help but find it strange that the only comments in this thread and other almost identical threads are effectively complaining about corporate greed, and never go into any kind of depth about underlying causes and contributing factors.
Why instead is the same old empty rhetoric repeated and upvoted time and time again? This platform seems to be an echo chamber for ignorance.
sure, if you don't agree with what is being replied to you, then these are shallow comments. Your replies here were the deep analysis. Good job
Whether or not the insights are deep or shallow, Lemmy would be an inclusive place where discourse is welcomed and civil interactions are commonplace.
Instead, any comment that invites conversation to go more in depth is downvoted with ad hominem attacks, further adding toxicity to the cesspool that is the comment section behind effectively any post on this community.
downvotes is just a way to show that you disagree with something. It is not there to punish you. People choose some topics to engage actively by participating in the comments while in some other topics they prefer to express their opinion just by agree/disagree (upvote/downvote). Now you call a whole community toxic just because not everyone agrees with you..
This really gets to the heart of the issue: downvoting a comment that one doesn't agree with is precisely what creates a toxic community. Having opposing opinions is indeed exactly what makes conversation insightful. Imagine listening to a debate where one side has their microphone muted; that would be very dull and quite literally an echo chamber.
I personally welcome opposing views and often find myself upvoting entire threads full of constructive conversation, regardless of which side I lean to, because the discourse invites the conversation. Having this additional dimension behind a submitted post is what I came to Lemmy for. Unfortunately, the sentiment on the platform further and further shifts towards a mentality that a comment that doesn't immediately reinforce a comment I agree with must be downvoted.
you're overthinking it. There is not even a "global" karma like reddit. Your up/down-votes are not counting towards your "internet points". They are in a per-comment basis and they're a quick way to interact with opinions. Would you prefer everyone commenting "agree"/"disagree" ?
I'm not sure how some measure of internet karma weighs into the point I'm trying to make. The point rating of a comment determines its positioning in a thread, sometimes even altogether hiding it in some Lemmy clients when it falls below some threshold.
By this measure, the visibility of comments is determined by their individual score, and to reuse my analogy from before, effectively determines the volume at which voices are heard. What I often see here on Lemmy, is that like-minded and reinforcing comments are amplified, drowning out insightful ones.
No, I don't think people should make comments like you've suggested, much in the same way that votes shouldn't be used to achieve the same. Should I be downvoting your comment because I disagree with it? Or upvoting it because this is an interesting point of debate? I choose for the latter.
I get your point. For me (and I suppose for some other people) works a bit different. When I'm not actively participating in a conversation, up/down vote is a quick way to show agreement/disagreement. I cannot upvote something that I complete disagree. However, in cases that I'm actively engaging, I don't use it as a punishment tool so I just abstain. Like here, I weren't downvoting you because it was an active ongoing conversation and I expressed myself by comments. You were actively engaging in good faith (I suppose) so it was fine. But at the same time I could not upvote either the comments in which I was finding myself disagreeing (I think I upvoted 1-2 at the end). However people are "passing-by" and up/downvote to show their view. Don't take it as your punishment. But also you cannot "demand" that since you wrote something that you believe contributes to a discussion everyone should also believe that your points were so well made that should be upvoted even though they disagree. By this logic we should upvote everything that is longer that 5 words.
Certainly, generally I completely agree. Honestly I think it takes a solid dose of critical thinking to cultivate an environment where dissenting opinions are valued to encourage healthy discourse. I personally don't care at all about the score of comments; what irks me is that communities here trend toward bubbling up poor quality interactions.
Somewhat tangential, I find it strange that there would be anything in my specific comments here that can be disagreed with; I think it's a very nuanced stance to suggest that price changes aren't solely driven by corporate greed, but to some (at least small) degree, also affected by other factors.
Perhaps Lemmy just isn't the right platform for me, but it pains me because honestly I believe there's an opportunity for it to be something better: a place where readers can learn more behind an article. I know that's what I often seek in the comments.
do you seriously believe that the CEO of netflix was struggling to survive, was living on a month-by-month paycheck, and was having any cut in their "wage" ?
Some people tend to forget that behind a corporation that presents numbers that are falling behind, there are humans who make profits regardless.
No, I don't believe that, what would lead you to think that's my position? In fact, I appreciate that there is market conformity in compensation, and lowering wages of everybody from chair people down to entry level engineers is not so simple. It is exceedingly difficult to on one hand try to reduce expenses through wage reduction, while on the other continue to develop a competitive platform with industry experts.
I'm not saying there's no middle ground, because there certainly is. Indeed tech companies have been slashing jobs and perks to reduce costs. A recent example of that is with Disney, which included layoffs in Disney+. I'm not quite sure who in particular you're referring to in your last statement and surely I've misinterpreted what you mean with it, but to be clear, I personally don't think it would be fair towards employees to slash their income and expect them to work without making ends meet so that the rest of us to enjoy a recreational service.
That being said, I'm certainly not one to defend executive compensation. At the same time, we should appreciate that this is only a part of a much more complex issue than share price, dividends or executive pay. After all, even if the CEO received no compensation at all, it would make a negligible difference to the balance sheet and, by extension, our monthly service fee.
I want to reiterate that I don't disagree with you: corporate profits are certainly part of the problem. I just want to clarify that there are many more compounding external factors.
what are you even talking about? I never said employees' income should be slashed or expect them to work without making ends meet. I just said, that in such big corps, even though that in the papers they may saw declined numbers or even be below zero, there are still a few people (see executive board) who still make tremendous amounts of money. A CEO will always walk out with millions in their pockets because, well, that was their salary and the company's debts are not their own debts, so, well, capitalism. Ok, the company failed, there is no money to pay off debts and employees, but the money they made from the company is now theirs and cannot be asked back to pay off company debt. Because that's the legal system, the company was different entity. There is nobody liable for it in terms of personal liability.
It is always the lower level employees who take the hit.
I was afraid I had misinterpreted that part of your comment, so apologies. I was thrown off a bit by "humans who make profits," and in particular who you are referring to.
In my opinion, executive compensation is completely out of whack and perhaps the single most outright cause of wealth inequality. It would be unfair, however, not to acknowledge that when a public company is doing poorly, it does affect executive pay through the valuation of their stock, payout of their dividend or other equity based compensation. In principle, I think tying executive compensation with company performance isn't a bad idea, but in reality overall comp is, well, just completely disproportionate.
That being said, even if the compensation was a fraction is what it is today and that cost reduction immediately went towards a lower monthly service fee, it would be nearly negligible. Operational costs of services like these are astronomical, where the majority share remains in content assets; in the case of Netflix this constitutes production, licensing and delivery.
You misunderstand me. Your posts are the old empty rhetoric, your ideas are not new, and you come off like a parrot. After your long-winded explanation, I get the idea that you're just young, which personally makes me want to interact with you less.
I did not find any post here on Lemmy that discussed any of the reasons why subscription services are struggling (at least not the past 60 days that I browsed submissions and comments), which is why I chimed in to the conversation with context. If you did not find that insightful, that's fine.
At least we can agree that we don't enjoy interacting with one another, no less because you are being a jerk.