Home » Amazon, Disney and Netflix want you to spend less on streaming. And so prices increase

Amazon, Disney and Netflix want you to spend less on streaming. And so prices increase

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Amazon, Disney and Netflix want you to spend less on streaming.  And so prices increase

Netflix was born in 1997 as a DVD rental service: beat Blockbuster at its own game (story is here), then in 2008 she dedicated herself to streaming. She arrived in Italy in 2015, and things have changed a lot since then. Prices have also changed a lot: the basic subscription, which cost 7.99 euros per month, no longer exists. For the one in HD you now spend 12.99 euros every 30 days (it was 9.99) and for the 4K version even 17.99 (it was 11.99).

There is one more thing, which wasn’t there 9 years ago: advertising has arrived on Netflix, which is present in 12 markets around the world (including Italy) and is fundamental in the current strategy of the company founded by Reed Hastings. A strategy that does not consist of making us spend more but of making us spend less. Netflix is ​​trying to do exactly the opposite of what we think what he’s trying to do: he doesn’t want to push us towards the more expensive plans but towards the less expensive ones. Indeed, towards the least expensive one possible.

They are trying to do the same thing, with just over a year’s delay Disney Plus e Amazon Prime Video, which confirmed (also for Italy) the arrival of advertising. Why this strategy makes sense, even though it seems to make no sense at all.

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Because Netflix wants us to spend less

The gist of the discussion is in a number: 8.50 dollars, which are an estimate of those who Netflix makes money every month from every single subscriber to the advertising plan in the United States. Where the plan with advertising costs $6.99 per month. What does it mean? It means, as was clearly understood from the company’s turnover in the first months of 2023 (and as the company itself has openly stated), that the subscription with commercials is vastly more profitable than the one without commercials. Despite the fact that the second costs the customer more than double compared to the first. Simply put: Netflix makes much more money from advertising than subscriptions, which is why it’s trying to push people in that direction. To give an example referring to Italy: Netflix cares little about people subscribing to the very expensive 4K plan from 17.99 per month, because from the cheapest one and with the commercials (5.49 euros/month) you still get a lot of money, thanks to the amounts paid by advertisers.

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It’s a undeclared but evident strategy from some moves, at least 4 which materialized in rapid succession:

the disappearance practically everywhere on the low resolution plan, so as to widen the gap between the subscription with advertising and the one without (in Italy, at the moment, the difference is as much as 7.50 euros each month); the continuous enrichment of the plan with advertising, which now allows viewing in HD and also downloading of the contents, so as to make it more attractive; the contemporary upward race of other season tickets, with the 4K one costing as much as $22.99 a month in the United States, almost as if to push people away; there crackdown on password sharingannounced in March 2022 and came to fruition in the spring of 2023, because those who can no longer share a subscription with friends and acquaintances either stop seeing everything or get a personal one. And the one with advertising is undoubtedly the most attractive due to the relatively low expense it entails.

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From subscribers’ TV to advertising TV

The numbers say (again) that the strategy works: in communications to shareholders, the company revealed that the plan with advertising has attracted 5 million users in just 6 months and that it continues to grow in popularity, so much so that it is now chosen by 40% of new subscribers globally.

As mentioned, too Disney is going in the same direction: in 2024, also for Italy, it has already been communicated to customers price increase for 4K both the arrival of a version with advertising for 5.99 euros per month; and the same battle could soon begin against those who shared the password outside the family unit. Likewise, Amazon announced the arrival commercials on Prime Video from April 9th and a supplement of 1.99 euros per month if you don’t want to see them.

In short, they are the streaming giants to a bivio, especially those who arrived first and opened up the market in some way: unaccustomed to the great competition they now find themselves facing, they must demonstrate that they are good not only at gathering tens and tens of millions of subscribers but also that they are capable to keep them. And above all, who they are capable of generating profitswith advertising contracts being the quickest and easiest way to do this.

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The problem now shifts to the other side, that is, to our side we who watch. And that we risk finding ourselves paying a monthly fee to have streaming television that is very reminiscent of the commercial television of the 1980s and 1990s. To a question about this, Eunice Kim, Netflix’s chief product officer, responded to us that “I don’t think there is really a risk of returning to that TV, because they are very distant experiences: unlike so-called linear television, here the user is not subjected to a schedule but chooses when to watch and what to watch, here the commercials are not the same for everyone but they are personalized for each person and are also better integrated into the programming and context”. And there should be many fewer: “Our commitment is to keep advertising pressure light“, i.e. “no more than 4-5 minutes of commercials per hour, compared to the 20 minutes per hour that traditional TV can reach”.

Despite these distinctions and these reassurances, it remains difficult to free ourselves from the feeling that television is somewhat returning to where it started from. Perhaps streaming is like the loves sung by Venditti, which “don’t end, they make immense turns and then return”. While we wait for them, of course.


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