Here are the takeaways from today’s Morning Brief, which you can register to receive every morning in your mailbox accompanied by:
For a brief and wonderful period, the latest and greatest consumer services the tech economy had to offer were cheap, thanks to generous subsidies from the companies themselves.
Jeff Bezos covered your shipping costs. Various VC benefactors have helped pay for your rides, short-term rentals, and food deliveries.
Others helped foot the bill for your TV, movies and music. All now streamed directly to your devices.
You certainly did your part, but in the low-interest-rate, easy-money environment of the 2010s, Big Tech helped you pay.
But as our chart of the week shows, those days couldn’t be more gone.
This week, consumers faced more Max price increases And Spotify, which have taken their turn in what seems to be a never-ending cycle of price increases. Recently, Comcast announced price increases for Peacock that coincide with the Paris Olympics.
Warner Bros. Discovery and Comcast, of course, aren’t exactly Big Tech names synonymous with losing money to gain market share. But while you were getting a deal on all your new digital habits, these companies were scrambling to copy the same playbook.
The main lesson they copied was losing money. And the rush to raise prices today shows they are going in the other direction.
This next development in the industry also comes with another pitfall: advertisements. The second part of potential profitability.
Like our Notes from Alexandra Canalstreamers are increasingly interested in advertising platforms and thus encouraging participation outside of their premium offerings (read: ad-free, another “innovation” from a bygone era) despite their higher prices.
Now, cord cutters who haven’t seen an ad in years will finally discover BOGO Thursday Boneless Wings from Buffalo Wild Wings. and McDonald’s meal valued at $5.
And just as enthusiasm for a paradigm shift helped usher in cheap subscriptions for everyone more than a decade ago, the ad-supported streaming model has the potential to generate a level of sentiment similar. The sentiment analysts note could lead to lower ad-level subscription prices if users’ eyeballs become more valuable than the literal dollars they bring to the table.
As Bank of America wrote in a note to clients Thursday, despite headwinds and years of industry weakness, there is “cautious optimism” in the near term and “disruption” in the long term as the potential of platform buying and advertising format innovation excites executives and investors.
If this works, maybe these companies can finally start creating good content again.
Until then, $16.99 will get you the entire Sopranos catalog.
Ethan Wolff-Mann is an editor at Yahoo Finance, where he publishes newsletters. Follow him on Twitter @ewolffmann.
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