Ted Gioia explains why your streaming services are going to be jacking up their prices — if they haven’t already done so:
I got a request to explain why streaming subscription prices are so damned high — and getting higher.
This came in response to a chart I shared two days ago:
And it’s not just Disney.
All the streaming platforms are jacking up prices. I still subscribe to five different streaming services—down from six previously. Every one of them raised prices this year, and always by more than the inflation rate.
Here’s what Spotify is doing:
What’s going on? And will it continue?
I recently described this as an “endgame strategy” — but that might be confusing to readers.
Endgame is a term drawn from chess, where it refers to a body of wisdom about the final moves on the board. But business is like chess, so I frequently analyzed endgame situations back in my days at the Boston Consulting Group and McKinsey.
I now see these endgame strategies getting implemented in various media, entertainment, and streaming businesses. But almost nobody inside those businesses wants to talk about it.
So let me lay it out for you.
The Entertainment Industry Is Adopting an Endgame Mindset
You pursue an “endgame” strategy when demand for your business hits a wall, and it’s hard to attract new customers. The most typical endgame strategy is to cut back investment into new products and services, while raising prices sharply.
You’re willing to accept some loss of customers, because you’re now squeezing more profit-per-user out of your remaining consumers — who stick with you out of loyalty or habit or inertia.
These are your sheep, ready to be shorn.
Profit per customer is now the key metric driving your business. It’s more important than innovation or growth or artistry or any of those old fashioned ideas.
That’s why, for example, Netflix won’t share data on the number of subscribers anymore. They claim this is no longer relevant to their business model — and they aren’t lying.
Price increases are now the engine of their business.
