The Economics of Streaming

By Janie Walenda

It’s impossible to understate how dramatically television has changed in the last decade. Streaming services have completely overhauled how we watch TV as well as how we pay for it.

While initially services like Netflix seemed like a steal compared to cable, as streaming services have multiplied and continued to raise their prices, opting for streaming over cable seems like less of a bargain. Does the original content on streaming services make them worth it, despite the rise in prices?

Once upon a time, Netflix was simply a DVD rental company. In 2007, however, they launched their streaming service, which grew steadily thanks to deals with various movie studios. While services like Netflix and Amazon Prime were active during the mid-2000s, the real game-changer came in the 2010s with original streaming content. With the debut of “House of Cards” in 2013, followed by shows like “Orange Is the New Black” and “Stranger Things,” Netflix completely reinvented the television-watching model. Dropping all the episodes of a season at once was radically different from the weekly model in cable television.

Now known as “binging,” this model affects what kinds of shows are made, how the plot is paced, and how we watch television. By the late 2010s, Netflix was completely dominating the new field of streaming, something other movie studios could not allow to happen.

In 2019 and 2020, the number of streaming services exploded, with studios like Disney, Warner Brothers, Paramount and even Apple creating their own streaming services. This transformed streaming into a competitive field and resulted in Netflix losing its stranglehold on the industry. For the consumer, this means that it takes multiple streaming services to watch the same content that was all on Netflix a few years ago.

For example, “Friends’’ was streaming on Netflix for many years alongside a large collection of Disney movies. Now the iconic sitcom has been relocated to HBO Max, while all the Disney properties are on Disney+.

So just how expensive are all of these streaming services? The most common price starts at $4.99- $8.99 a month for basic plans, with HBO Max being a noticeable outlier at $14.99 a month. Netflix recently bumped up the price of all their plans by two dollars, making the basic plan now $9.99. While the price hike isn’t all that bad, it is worrying considering the sheer quantity of streaming services that are out there. Streaming used to be a much cheaper alternative to cable, which ranges from $29.99 to $74.99 a month near Cedarville. However, thanks to the proliferation of streaming services, the monthly bill can easily run at $30 or higher.

So, what makes these services worth it? There are two main reasons to subscribe to a streaming service: to access a streaming library or to watch original content. Many people, my family included, now view streaming services as an alternative to a DVD collection.

Even if we still own the DVD of that movie, we’ll often still pull up the streaming option for convenience’s sake.

This idea of the streaming library is part of the reason Disney+ became so successful so quickly, and why the addition of new streaming services has been harmful to Netflix.

Disney+ has one of the most impressive streaming libraries, as it houses not only all of the Disney and Pixar content, but Marvel, Star Wars, and all of the Fox properties they acquired. For a long time, the only original content on Disney+ was “The Mandalorian,” and the service grew almost solely on the power of its library.

Other new streaming services also have strong libraries. Peacock houses “The Office,” “Parks and Recreation” and “Brooklyn 99,” as well as movie franchises like “Scream.” HBO Max has an enormous catalog, containing “Harry Potter,” “Lord of the Rings,” and all of the DC content, including the DCEU, animated shows and movies as well as many of the CW shows.

But at the end of the day, original content is what makes or breaks a streaming service. After all, if a movie or show isn’t exclusive to a streaming platform, you can likely rent or buy it through iTunes or Amazon Prime, or simply grab a DVD copy.

In the long run, shelling out $10 a month for things you’ve already seen is not the best financial decision. So, it comes down to original content to determine whether or not a particular service is worth the money.

There’s no shortage of original content, to be sure. I counted 26 original titles coming to Netflix last month alone, including a sci-fi action movie, comedy special, historical drama, and a Korean drama. This flood of original content means that we can get sucked into an endless loop of watching. As soon as we finish the movie or TV show we’ve been meaning to watch, something new takes its place. With so much content, it can be hard to filter through what is worth spending our time and money on.

I think most people would agree that even with the price hike, Netflix is still technically worth the money. If you did the math, then you’d find that you’re paying approximately $0.002 per movie per month. But of course, you’re not watching every Netflix movie and show every month. How do you determine if the use you’re getting out of a streaming service makes it worth the price?

There is no one-size-fits-all answer, but there are a few guidelines that can be helpful. How often are you using it? And what are you watching on it?

If you’re just using it a couple of times a month to re-watch some of your favorite movies or TV shows, then you’d probably be better off buying your favorites permanently. And if you’re subscribed to a streaming service because you know that one day you’ll finally get to that show or movie you’ve heard is good, but you keep putting it off, you should probably unsubscribe.

My family recently dropped our Apple TV+ subscription simply because we weren’t actively watching anything on there. On the other hand, while I initially subscribed to Peacock just to watch Macy’s Thanksgiving Day Parade, I’ve kept the subscription because my roommate and I have started watching a show together. While one show wouldn’t be worth a more expensive price, like HBO Max’s $13.99, it is worth $4.99 a month.

At the end of the day, most streaming services are worth the price. But as prices rise, we have to be aware of the time and money we spend and make sure the content we’re consuming is worthy of the price we’re paying.

Janie Walenda is a freshman Global Business major and an A&E writer for Cedars. She enjoys musicals, movies, and rereading the same books 10 times.