As inflation continues, many companies have come out and publicly admitted they are raising their prices not just, or even mostly, due to inflation — but just because they can. And streaming services have joined the fray.
Sure, corporations often hide the fact that they are making record profits in financial gobbledy-gook language, but it’s frustrating that more news outlets — who know better — aren’t calling them out on it.
Before going into streaming, let’s take another sector, the grocery industry, as just one of many examples. This article mentions that Kroger has “expanded margins”, which means they are making more profit now, which means they are raising prices more than they need to for inflation. Another article reports that ”profits are at record highs for many of the major food manufacturers …various critics believe these manufacturers are banking on consumers getting used to higher prices for good.”
In this piece by Vox, they report that grocery giant Kroger’s CEO admitted that “Our business operates the best when inflation is about 3% to 4%…A little bit of inflation is always good in our business.” “Some of the retailers that sell many of those companies’ products also weighed in on their buck-passing ability…customers don’t overly react to that.” Translation: they actually like inflation because it gives them an excuse to raise prices at the expense of consumers, who largely will go along with it — especially since in many cases, they don’t realize they’re paying more due to “shrinkflation”, which even outlets like Business Insider have called out.
So now, getting back to streaming services. Depending on the source, overall prices have gone up around 13-17% due to inflation in the US between 2020 and 2023 (NerdWallet, CNBC). Let’s see how some of the prices in streaming compare. I looked at 5 popular streaming services, along with some of the options they offer, and saw that all of them — except for two of Netflix’s tiers — outpaced inflation, in two cases by over 50%!
A huge caveat, though, is that what these services offer is constantly changing.
Some services (e.g. Disney) have more overall content than they used to, although reports are that for Disney they may start reducing the amount of content (will the self-imposed Disney Vault be making a comeback?).
The recent price hike in Paramount+, which is what motivated me to write this, also reflects that Showtime is now automatically bundled. So if you like Showtime, that may be good news. If you don’t, you don’t have any choice but to either pay more than you used to, or go elsewhere (in which case, there are thousands of Paramount-exclusive titles you’ll no longer have access to).
Other services have less content than they used to — Netflix in particular is notorious for getting rid of a large amount of other titles in favor of its own content. Not to mention their recent crackdown on shared passwords, meaning many families who used to share an account now have to pay for two (or more), or go without.
There are other factors. From what I’ve read, streaming rights are not cheap, even for content your company produced apparently. Disney purportedly lost money last year on its streaming services. On the other hand, we’re talking about multi-billion dollar corporations here. Disney’s billion-dollar business can afford it more than its millions of subscribers, who now have to pay 57.22% more for essentially the same service.
I guess the issue comes down to this:
Should companies be able to raise their prices a lot more than inflation just because they can?
If not, how they should be stopped from doing so: is it up to consumers to use their wallets to indicate they’re unhappy with, or unable to afford, these subscription increases, or should there be government protections in place to shield consumers from sudden price hikes during hard times economically?
If regulations on price increases are justified, does it depend on the industry — groceries are vital to living, while watching the Star Wars saga is not (no matter how much people like Baby Yoda)?
I think consumer protections against being fleeced by companies, and/or whose CEOs, are raking in the dough and exploiting economic conditions is something that we should start demanding. It has been done in other countries, including in the US decades ago on fuel prices, and still in a few cases or in some states, such as with milk. The odds of something like this passing in 2023 in the US are slim to none, but enough pressure could at least slow the rate of these increases. Otherwise, if all or nearly all companies in an industry start raising prices without any check on them, from regulations or consumers themselves, then there’s currently not much we can do when nearly all competitors are raising rates beyond inflation.