Will More Services Lower Prices?

Will More Services Lower Prices?

July 20, 2021

This week, Disney announced that its ESPN+ sports streaming service will be getting a price hike. The price rises from $6 per month to $7 per month or $70 per year for an annual subscription. Responses to the price hike are as wide as the market, but according to Jared Newmann from TechHive, this is evidence that we need more streaming services, not fewer. He has a point, but there are nuances worth considering.  

Streamer's Spotlight: Do We Really Need More Streaming Services?

To be fair to Disney, ESPN+ is not entirely *expensive*. Even a bump in price from $6 to $7 leaves the streaming service as one of the cheapest options for sports fans. Nevertheless, there aren't many services like it. And as we've discussed in an earlier newsletter, the lack of sports streaming options beyond traditional cable has made accessing sports incredibly expensive.

So is Newmann right that more options are better? Yes, and possible no.

1. The 'Yes' Case: Price Competition

Let's consider the Econ 101 case. Technically speaking, more competition in the market should lead to more competitive pricing. After all, if every service is competing for our dollars, then they should also be trying to minimize price increases to attract customers.

Particularly in the US, there are now hundreds of streaming services on the market. YouTube TV and Hulu + Live TV are definitely competing in price against AT&T TV. The fact that the first former two have the same price, which comes in under AT&T TV's price point, is a good indication that there are competitive pricing effects happening there. For all intents and purposes, they'd probably have higher prices if they could get away with it.

2. The "No" Case

The problem with the idea is that more competition in the streaming market doesn't appear to act in the same way as other types of markets. If you go to the store to buy apples and see Gala apples from two different farms, you're probably going to buy the cheaper ones.

That is, of course, unless you're trying to buy oranges. The price of bananas doesn't compete with the price of apples.

Obviously, market competition among streaming service providers isn't literally apples and oranges. But it's not exactly apples to apples, either. ESPN+ is not competing with Netflix, which is not competing with Paramount+. The market supports a wide variety of services, each of which serves different purposes and different types of customers.

Prices can still easily rise even with a metric ton of services, so long as those services are niched down enough to the point that they aren't directly competing against each other.

3. Really, It's Complicated

Are more services really better for prices? The best answer to that is, "Yes, but...". Not all streaming services are competing against each other. This is why consumers tend to have multiple streaming service accounts.

Obviously, prices can't rise too much or people start looking for alternatives, but if that happened, innovation would occur and someone would just create an alternative to the alternative. The problem is not that we need more streaming services, especially for streaming services that rely on licensed content (e.g., live TV and sports streaming providers).

Original content is the solution to rising prices, but that's not possible for sports streaming. So don't expect a more diversified market for live TV and sports to really have much of an impact on prices.

This Week's Streaming Guide

1. New History Channel Series 'Man Vs History' Premieres TODAY

This new series attempts to find the true history behind some of America's most interesting folktales. Watch on the History Channel TODAY at 10 PM EST. -

2. 'Turner and Hooch' TV Series Remake Comes to Disney+

The cop/pup crime-fighting duo lives on for a new generation on Disney+. Available to stream this Wednesday (July 21). -

3. Apple TV's Hit Show 'Ted Lasso' Comes Back with Season 2

The acclaimed drama returns to Apple TV+ this Friday. -

4. The Delayed Olympics Kicks Off this Friday

Although the first events technically started on the 21st, the Olympics Opening Ceremony kicks off the event this Friday, July 23, at 7 AM EST. -

News and Industry Developments

1. ESPN+ Hiking Prices for the Second Time in 2021

The service jumped from $5 to $6 and now to $7 per month. -

2. Disney+ Renews Loki for Season 2

If the end credits scene wasn't enough confirmation, hopefully, this will be: Loki is definitely coming back for a second season. -

3. Paramount+ Orders a Grease Prequel Series

Titled "Rise of the Pink Ladies", the prequel series will examine how the femme gang in Grease began. -

4. Investors and Observers Looking to See What's New at Netflix

In the company's upcoming quarterly report, many are hoping to hear information about new ventures from the streaming giant. -

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