Richard Waters’ article describes the latest trend in the digital services industry, where platforms like Twitch, Spotify, and Max have decided to raise their subscription prices. The year 2024 has seen a wave of price hikes among various streaming services, linked to the chronic unprofitability of this business model, especially in the video sector. Despite the increases, subscriber numbers have not decreased, encouraging companies to continue this strategy.
Waters notes that Spotify, despite being in business for 18 years, has yet to report profits, and Twitch, even as a subsidiary of Amazon, also operates at a loss. Warner Bros Discovery, the owner of Max, is an exception, having reported a small profit last year.
One interesting observation is that, for a long time, companies kept prices low to attract as many users as possible. Now, however, they are starting to see price increases as a repeatable tactic. Spotify, for instance, raised its subscription price by $1 last year for the first time in a decade and has done so again this year.
Waters predicts that higher prices will usher in a new phase in the competition among digital services. Consumers, burdened by the cost of multiple subscriptions, may start seeking discounts for bundled services, leading to the creation of new media packages. Examples of this include Disney combining its Disney+ and Hulu services, and the planned bundling of Disney+, Hulu, and Max.
The article also highlights the growing competition from tech giants like Amazon and Apple, who offer unique service bundles. Amazon Prime combines video with free e-commerce deliveries, while Apple One includes six services, including iCloud. Google is experimenting with providing access to its latest AI models for subscribers.
Conclusion and Insights
The subscription price hikes in the streaming industry indicate a shift in strategy as companies strive for profitability. The next phase of competition will be dominated by the race to attract customers through bundled services, potentially leading to a reconstruction of traditional media models. Tech giants like Amazon, Apple, and Google will play a crucial role in this transformation, offering innovative and appealing packages for users.
I invite you to read the full article in English to delve into all the details and analysis by Richard Waters. The full article is available on www.ft.com/content/e77d07d8-2997-40f3-b3ba-3577fb097368.
