‘Max’ Again Hikes Streaming Prices As Customers Head For The Exits

Failures

from the higher-prices-for-a-shittier-product dept

Now that streaming subscriber growth has slowed, we’ve noted repeatedly how the streaming TV sector is falling into all of the bad habits that ultimately doomed traditional cable TV.

That has involved chasing pointless “growth of growth’s sake” megamergers and imposing bottomless price hikes and new annoying restrictions — all while simultaneously cutting corners on product quality in a bid to give Wall Street that sweet, impossible, unlimited, quarterly growth it demands.

Warner Brothers Discovery ‘Max’ Streaming service has been the poster child for this dysfunction. Born from the disastrous abomination that was the AT&T–>Time Warner–>Discovery series of pointless mergers, the service has continually gutted what made some of HBO’s original programming great, instead chasing the bottomless well of low-quality, cheaply produced, lowest common denominator, mass engagement porn.

This week Max raised prices on all of its service plans a buck or two, whether we’re talking about ad-based and or ad free versions. The company’s annual ad-free plan at $170 per year is now $20 more, and its Ultimate ad-free annual plan jumped $10 to $210 per year. At the same time, customers on Max’s cheaper plans lost access to several features, including 4K and HDR streaming.

This kind of stuff, where you consistently charge more money for fewer features and less quality, is what ultimately happened in both U.S. telecom and cable TV. Both sectors have perfected this approach of consistently shoving you into a pricing funnel where, if you want all the perks and features you originally enjoyed, you can expect to steadily pay more and more for them — even as overall quality declines.

But unlike traditional cable or broadband, which locks you into service either through forced bundling or (in telecom’s case) regional monopoly, customers fortunately still have the ability to cancel streaming services — assuming they don’t mind missing out on some of their favorite shows. So customers are increasingly signing up for a service, binge watching, then cancelling again.

This is, as Ars Technica observes, bad news for an industry that’s trying to give Wall Street consistent, improved quarterly returns:

“This week, Andrew Georgiou, head of WBD’s UK and Ireland business, discussed the challenge this poses for streaming companies: “Netflix is a mainstay but we are starting to see real SVoD churn, people cycling in and out at an increasing rate,” he said, per Deadline. “That phenomenon is a huge cost to business and reducing that churn, increasing engagement and reducing the cost of ‘winbacks’ is something we all need to focus on.” WBD CEO David Zaslav has called high churn rates a streaming business “killer.”

Having covered telecom and media for decades I know that this is where the industry will start making it difficult to cancel service. That will likely mean everything from simply making it steadily more difficult to find the cancel button (a la AOL or the Wall Street Journal), to finding “creative” ways to bundle services together in increasingly complicated ways (perhaps with broadband or wireless access) to minimize churn.

This will involve, like in telecom and cable, making it more and more difficult to understand what you’re paying for (was I paying for Netflix already via my promotional deal with Verizon FiOS, or was I subscribing to a Hulu plus Netflix bundle via my Disney and Charter cable cross promotion?), inevitably resulting in you paying for some services you’d forgotten completely about.

This shift will, I expect, involve more telecom and media cross mergers like the AT&T Time Warner disaster. It will also, again just like in cable TV and telecom, involve making it more difficult than ever to actually know how much you’re paying (likely via strange new hidden fees).

Ideally you’d handle customer “churn” (defection rate) by lowering prices, improving customer service, expanding innovative features, and ramping up product quality. But given that nibbles away at Wall Street’s improved quarterly earnings, the alternative is consolidation (tax breaks, huge debt loads, short-lived stock bumps) and anti-consumer creative pricing and feature set fuckery.

That opens the door to disruption by alternative tech (or piracy), starting the cycle all over again.

To be clear, I still think streaming TV holds a lot of value. Streaming customer satisfaction remains far higher than cable TV ever was. These more annoying trajectories, which you’re only starting to see emerge, will take several years to play out. But the path is pretty clearly set, thanks to executives who are utterly financially disincentivized to learn absolutely anything from cable TV’s rocky history.

Filed Under: competition, consolidation, max, mergers, streaming, tv, video
Companies: warner bros. discovery