THB #380: Why Cable Must Die For Streaming To Live

I am deeply frustrated by the coverage of Disney’s pricing adjustments from last week, not because it might hurt Disney or will really impact the marketplace. It’s because it picks the most negative angle of “they are raising prices!!!” while avoiding, usually until late in the stories, the actual strategy involved.

These pieces avoid informing the public accurately in favor of leading with the most clickable tack. Reading the Wall St Journal version of it yesterday, including the repeated quoting of the most anti-Disney, anti-anything-but-Netflix hack analyst there is, Always Wrong Rich Greenfield, was frustrating.

The story doesn’t really even know what argument it wants to make.

1. The clever-clever coinage of “streamflation.” We will see this again.

2. The AVERAGE price of ad-free streaming… what the hell is that? Completely made up, since everyone has different streamers and different deals.

3. Disney raised the price of some offerings and not others.

4. There are no streaming wars. Another lazy (albeit popular) tag.

5. The claim that there were “bargain basement prices” as a strategy really only applies to Disney+.

6. The idea that these price changes are “in a push for profitability,” fighting the idea of churn misses the core reality… they aren’t charging enough to make Streaming work at this level.

Here’s the big problem… aside from the fact that when Disney does it, it is the end of the world and since Netflix did it a couple months ago, their stock targets got raised…

Almost everyone is busy worrying about the quarter-to-quarter minutiae of all this, but the story is not about the price of streaming, it is about the total economic landscape of Home Entertainment (as it used to be called in the VHS and DVD eras).

Most domestic households, for many years, have spent around $100 a month for their incoming television-based entertainment. They are comfortable there. It’s what they are used to. They will throw some more money at it for this event or that (or Netflix). But that is the sweet spot. There is no reason - at all - to make the leap to believe that the number is rising significantly anytime soon.

Netflix, as the leader in streaming, did bend that number for most of the country (70 million or so), adding another $10 to it. Even before streaming this was their number, $10 a month for 3 discs at a time with an unlimited number of circulations.

When the Streaming explosion happened about 4 years ago - everyone else of size jumping in within a year - it broke that long history of complacency. (Of course, the number started at $50 or less and like the proverbial lobsters in the pot, it doubled over the decades.)

A lot of people think of the a la carte of all this as giving people a choice. I have always seen it, in great part, as forcing a happy (if ever complaining) customer base to make choices most don’t really want to be making.

In this sidebar, I write about the 15+ different streaming choices that I chew on in any given month.

But even that is thinking too narrowly. The central figure in all of this is the $100 bill.