Prime Time For Commercial TV

Back in 2007, Netflix became the first premium streaming video service. Before that, they were a fledgling company who would ship video disks to a consumer’s home. In fact, many people don’t know that Netflix actually continued its video delivery service until just this past October.

Before Netflix started its streaming service, there were premium cable/satellite channels such as HBO, Showtime, Cinemax and The Movie Channel. They offered first-run movies and series like The Wire, The Sopranos and Dexter without commercials. Of course, you had to have a cable or satellite subscription and pay a few extra dollars a month for those channels, but it was a great way to enjoy unique programming without interruptions.

Netflix basically took the HBO/Showtime model and, with the benefit of in-home broadband internet, offered its commercial-free programming directly to the consumer for $8.99 a month. No need for "The Cable Guy”. With its success, it seemed like everyone jumped into the stream including, among others, ABC/Disney (Hulu, Disney+ & ESPN+), Comcast/NBC (Peacock), Paramount/CBS (Paramount+), Warner Bros/Discovery (Max) and Fox Corporation (Fox Nation). Unlike Netflix, whose only business is streaming, these services are owned by major studios or networks who can afford a gallon or two of red ink. But even those companies are realizing that there are too many streaming services and not enough consumers willing to shell out $10-$20 a month on top of their other TV bills. Something had to give and that something turned out to be "Tier Pricing”.

Before I dip too deeply into the stream, there are two other services who operate under very different business models – Amazon Prime Video and Apple TV+. In essence, they have been loss-leaders for their much larger technology companies. In the case of Prime, for your $139 a year membership fee, they basically throw-in a Prime Video subscription. In Apple’s case, their service is almost a marketing tool for everything else in the Apple universe.

Back to tier pricing. In 2010, Hulu was the first company to realize that not everyone could afford to pay for commercial-free programming. So, they started their "Hulu With Ads” tier. For a while, they were the only streaming company that offered two pricing plans. In fact, in 2020, the CEO of Netflix, Reed Hastings, was quoted as saying, "We want to be the safe respite where you can explore, get stimulated, have fun, enjoy, relax — and have none of the controversy around exploiting users with advertising.” Oh what a difference a couple of years make. Just two years later, Hastings made an about-face and started charging a lower monthly price – with ads. These days, it seems every streaming service offers tier-pricing. Ads for one cost, no ads at another and some even have a third price for programming delivered in 4K picture quality. Today. pretty much every company has commercial plans except the aforementioned two that are playing by a different set of rules – Amazon and Apple.

Well, that’s about to change as Amazon has decided that its Prime viewers deserve to watch ads too. What a nice gesture. So, starting on January 29th, 2024, Prime will join the tier-pricing world by charging an extra $2.99 a month for its no-ad package. So, you can pay your $139 yearly membership fee and get Prime with ads. You can also pay $2.99 extra per month and not get them. It seems odd that Amazon would charge $35.88 a year to go ad-free. Kind of like nickel and diming people. But let's do some math. According to Statista, in 2022, Amazon Prime had around 76 million household subscribers in the United States. Let's say half of those take the ad package. That's over 1.3 billion dollars - a whole lot of nickels and dimes for Mr. Bezos.

BTW, if you don’t want to join Prime, you can get its video service alone for $8.99 a month with ads or $10.99 a month without them. So, if want to watch its video service, Amazon is basically offering its membership for around $31 a year. It should be noted that Prime has said that it will play less ads than other services in its new plan, but that’s to be seen. We’ve actually already been watching ads during Prime’s Thursday NFL games, so that may have been their Trojan Horse.

This leaves Apple TV+ as the last major streaming service that continues to stray far from the ad-tier tree (sorry about that metaphor). Whether they choose to continue to offer just one non-commercial plan is anyone’s guess. I suppose it’s a good thing that there are now cheaper ways to watch most streaming services, but that misses a very important point. Which is, we used to pay one monthly fee to our cable/satellite provider for pretty much all the TV we wanted. Today, there are many choices, each costing a separate fee. It’s like video death by a dozen cuts. Not only that, but there isn’t even one place where all of these choices come together. Whether it’s getting all your cuts (er streaming services) on one bill or finding your favorite programs or channels on one viewer guide, it’s become a video version of hide-and-seek.

So, let’s recap. Back in the days of Cable, we had one bill. That bill would typically be under $100 a month even with a premium channel or two. Today, there are seven streaming services that compete with traditional cable channel providers along with dozens of premium streaming services with various pricing tiers. If you are paying under $100 a month for your video enjoyment, you are either a very educated consumer, sacrificing some channel choices so you don’t need a second mortgage, or you have found a way to mute your brain to commercials. Until recently, there was another option; you were in a username and password pool. Unfortunately, the water is draining from that pool as streaming companies are clamping down on sharing.

While there is no immediate solution to this dilemma, there will be consolidation as well as new technology that will eventually clear-up this mess. In the meantime, there are workarounds that can allow you to at least take advantage of various deals out there and I can help you find them. Since I retired from Radio, I’ve been able to save households hundreds of dollars a year while still receiving their "must-have” channels. Can I do that for you? The first step is a free, no obligation Tech Check. I’ll go through your TV, Cell and Internet bills as well as talk to you about what’s important to your household. After that, if I can’t come up with a plan to save money that we agree on, there is no charge for my service. For a free Tech Check, email hmwellsradio@gmail.com or visit www.lowertechbills.com because you may not have the time to find savings, but I do.