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Everything in Streaming Has Its Price

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With everyone from pure-play OTT services to simulcasting traditional network broadcasts spending freely on content over the past few years, price increases for consumers of this premium content were inevitable. And despite some of what I’ve written in the past about the oddity of seemingly lock-step subscription increases across a number of premium streaming providers, I’ll at least agree that some of these price hikes were justified.

With the currently ongoing strikes by those who are focused on gaining a better percentage of shared revenues from streaming subscriptions for their labors (again, mostly justified), it would seem likely that holistic pricing for content creation and delivery would stabilize during this lull in the production of premium content. Unfortunately, that’s not the case, and the costs faced on the delivery side of live and on-demand OTT content are about to get much more challenging.

In the last two State of Streaming surveys, we saw a marked shift from operational expense concerns to capital expenditure concerns. Our initial
take on that shift—in which CapEx ranked high on the list of challenges for the first time since early 2020—was that the cost of success for smaller OTT providers was taking its toll.

The working premise, which the Help Me Stream Research Foundation team analyzed and presented at Streaming Media West 2022 and again at Streaming Media East 2023, went something like this: The rise of CapEx concerns stemmed mainly from newer OTT providers that, having been successful at launching their nascent streaming service, were now shifting away from higher OpEx expenses to a less costly approach that included building out their own infrastructure. In other words, they’d received higher-than-expected bills from their cloud service providers and had enough revenue to begin buying their own inhouse kit.

It turns out that this might only be a small fraction of the story, as a more recent survey now shows that CapEx is the top concern, followed by OpEx and then by revenue growth concerns. In addition, even the cloud providers are saying that they’re feeling the pinch of higher prices on everything from bandwidth to batteries, with the added wrinkle of higher borrowing rates. It looks like we might be heading into a perfect storm of cost overruns on both the CapEx and OpEx fronts.

The added costs of delayed productions—coming at the same time that advertising revenues are falling—means that the burden of maintaining quality content delivered at a quality data rate by quality OTT providers will fall mainly on the consumer. And this consumer is already stretched thin, as interest rates rise on automobiles, houses, and personal credit cards.

This column isn’t meant to be a downer, especially because the overall economy seems to be plugging along. But it is meant to ask those of you in the industry to share anecdotes and stories about the pain points you’re facing. We know that everything in streaming has its price, but you are in a better position to help us fully understand what that price entails.

You can share your stories in one of two ways. First, feel free to email your insights to our insights [at] hmsrf.org email address. Second,
please take the Autumn 2023 State of Streaming Survey. We’ve got a section in the survey that touches on pricing and pain points, both from a professional and personal perspective.

Both of these will aid in Help Me Stream Research Foundation’s overall research, which is focused on giving the gift of streaming to emerging economies by considering best practices from the best and brightest in the field. And the survey will help both our team and Streaming Media better understand how to cover the industry during these times of uncertainty.

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