Demystifying Streaming Services: Understanding Technology and Costs
Streaming services have become an integral part of our lives, introducing new terms like “Netflix and chill” and “Watch Parties.” As the costs of these services continue to rise, it’s helpful to understand the technologies involved in delivering the content we enjoy. In this article, I’ll share my experiences working with streaming video and delve into the world of streaming services to provide you, the reader, with a comprehensive understanding of their technology and costs.
My Journey with Streaming Technology
Throughout my career, I’ve had the privilege of working with streaming video content, from its ingestion via Over-The-Air Antennas and content providers to optimizing video streams for seamless playback on trick play servers. The technology has come a long way since my early days as a network engineer, where video broadcast over local networks was still a novelty. Today, streaming video dominates the internet traffic, and consumers have come to expect reliable service.
The Complexities of Live Event Production
My journey led me to live event production, where I coordinated network traffic and device connections for major sporting events. I quickly learned that streaming multiple camera feeds, each outputting multi-gigabytes of video, could put immense stress on a network. Additionally, I gained invaluable experience building and operating a full broadcast TV studio from scratch, selecting cameras, video and audio switchers, graphic generators, control room monitoring, and encoding for distribution to subscribers.
Navigating the Video Ecosystem
As I delved deeper into streaming, I discovered the intricate ecosystem of video, where licensing and transport play significant roles. The US Congress and regulatory bodies like the White House/FCC govern video across the USA, but they are still grappling with understanding and fairly regulating this dynamic industry. And with new technologies such as cryptocurrencies and AI, we have seen that their understanding of technology and regulation still leaves much to be desired. Streaming should be an easy one.
Regulation continues to be an issue with video companies recently meeting with the FCC about if they even have the authority to regulate video streaming companies. As video distributors can be forced to pay as much as $25 to retransmit local TV channels, there is still much to be worked on.
Streaming Services’ Rising Costs and Profitability
While streaming services have exploded in popularity, achieving profitability has been challenging for many. Most are not profitable especially when considering investments and operational costs. Linear, ad-supported TV offered by cable and satellite providers also remains a fierce competitor. However, those who own exclusive and desirable content, like Yellowstone on Paramount+ or The Mandalorian on Disney+, have a better chance of thriving to profitability.
Content is King
Owning exclusive content has become vital for streaming services. Netflix realized this early on and began investing in developing its own content to ensure control and longevity. Disney’s move to host its content on Disney+ showcases the value of owning content in this competitive market.
The Affordability of Streaming Services
With multiple streaming services vying for consumer attention, affordability is a major consideration. Let’s look at the current subscriber base for various streaming services:
Amazon Prime Video
That’s a lot of viewers of the content. Though most of these services are not growing net subscribers very fast. Viewers are being squeezed by their pocketbooks to realize that they can only afford one or two services.
Let’s look at more comprehensive streaming services that also provide Live TV and Local Channels.
Hulu with Live TV
1.86 (2019), Estimated 10 to 13
These numbers are quite small when compared to the overall market. But respectable enogh that the companies should be generating a profit & provide a good product.
Traditional Operators (Cable Companies)
These companies above are all loosing subscribers. And some have lost a considerable amount to force them to look at streaming products of their own. When we look at pricing compared to the above companies, it is still lower that a standard cable or satellite provider. Let’s look at the pricing.
Streaming Service Costs
While many streaming services started with affordable pricing, most have increased their rates over time. Here’s a glimpse of how some services have evolved since their launch:
Price at Launch (USA)
Standard+Ads:$6.99; Standard:$15.49; Premium:$19.99
$6.99 – $12.99
Hulu (ad-supported): $6.99/month; Hulu (no ads): $12.99/month
$7.99 – $13.99
Disney+/Ads: $7.99; Disney+NoAds: $10.99
$9.99 – $19.99
Ad-supported $9.99; Ad Free $15.99; Ultimate $19.99;
Peacock/ads $5.99, Premium (Fewer ads) $11.99;
Essential $5.99; With Showtime $11.99; Yearly about 17% discount
Standard is $6.99 with student pricing and trials and bundles available
Amazon Prime Video
Included with Prime (2006)
Full Prime membership with all benefits is $14.99.
$4.99 – $6.99
W/ads $4.99; No Ads $6.99
Streaming + Live TV
Price at Launch
Hulu + Live TV
$69.99 – $75.99
Hulu + Live TV: $69.99/month; Hulu + Live TV + Disney+ + ESPN+: $75.99/month
Includes networks, NFL Plans start at $349 up to $489
$40/$45/$60 depending on channels; Many extra adds from sports to kids
Pro $74.99; Elite $84.99; Premier $94.99
Entertainment $74.99; Choice $99.99; Ultimate 109.99; Premier $159.99
*USA Pricing – Pricing and service names can vary widely internationally
Streaming services have revolutionized entertainment, offering a vast array of content at our fingertips. However, as costs rise and the number of options increases, it’s is very helpful to be informed consumers. By understanding the technology behind streaming and the factors impacting costs, we can make wiser choices when selecting the services that best fit our preferences and budgets.
Sources: Leichtman Research, C + R Research, Company websites and press releases