Streaming Prices Soar, Google’s Woke Chatbot Debacle
1. Streaming Prices Soar
Streaming prices are rising and even non-industry types have begun to notice.
For those of us in the trenches, the higher prices are no surprise—streaming services are all severely underpriced because they are using an old Silicon Valley trick where you use artificially low prices to create a loyal user base, at which point you slowly “boil the frog” by gradually raising prices at a pace the user hopefully won’t notice.
So not much to look at there, other than that all that griping is a sign of growing dissatisfaction with the way streaming’s played out, and not just from sports fans. The key complaint, aside from cost, is that it’s really hard to find anything on streaming without resorting to Google, and even then it’s not so easy.
Why It Matters
What’s important here is that cost will remain an issue—while churn is indeed real, there are even more people (RAISES HAND) who hold on to services they no longer watch just because the hassle factor of unsubscribing is too high. That, and the overly optimistic expectation that there will indeed be something on there to watch later this month, so why unsubscribe. (RAISES HAND AGAIN).
Sort of the same reason you hold on to that sweater that no longer fits.
But that’s about to change, or at least shift, as streaming services put even more space between the price of their ad-supported and ad-free tiers in an attempt to boost uptake of the former.
Think about it. Right now, the user journey is something like this: there is a series on Service X you want to watch, so you subscribe. The ad-free version is just $8 more than the ad-supported version. Chances are pretty good that you figure that for just $8/month you can enjoy the series ad-free, something you’ve come to expect on streaming, especially for first-run original series.
Now imagine that instead of $8 more each month, it’s $18. Or even $28. Suddenly, that’s a very different kind of math. One where that ad-supported version looks like a much better option.
There are other factors at play here too.
Streaming was originally marketed as a somewhat better version of HBO. Same high end shows. Same ad-free format. Only way more options for binging and where, when and how you could watch it. Meaning that training people to think of services like Netflix as places that might have ads was always going to be an uphill battle.
Then there’s Amazon. A few weeks back, they shifted all of their Prime users to a new ad-supported version of Prime Video. Our most conservative estimate is that this brings over 50 million new ad-supported streaming US viewers to the ecosystem. (Netflix, by comparison, has 23 million worldwide).
That puts a whole lot of pressure on the other services to catch up.
Which is why you are going to see the price of ad-free subscriptions rising at a faster pace than usual. Along with a number of bundling and other deals for ad-supported tiers.
One final note: We’ve talked about something called “15,000 Merits” before—it’s the name of a Black Mirror episode (S1E3) about a world where every surface of a room turns into an immersive ad experience and the only way to stop it is to pay (the currency of the fictional world is the “merit,” hence the title.)
At some level I fear we are not all that far off from this reality, where affluent viewers happily pay to avoid ads and everyone else is forced to suffer through them. This will only serve to make sports rights even more valuable, as live sporting events will be among the only ways to reach those affluent viewers, at least on TV. (Sports, by their very nature, have ads. Nobody wants to listen to announcers blather through all those endless time outs.)
What You Need To Do About It
If you are a streaming service and you want to raise prices on your ad-free version, then you need to do a few things: raise them gradually, offer some extras to people paying all that money for the ad-free version (unlimited downloads, a few extra devices, family rates). Just a little somethin’-somethin’ to let them know your interest is not purely about ripping them off.
If you are a consumer and you’re feeling the pinch of those high prices, know that as of right now the ad experiences on those platforms are really quite tolerable—short and sweet and often correctly targeted. So not the end of the world if you need to go there.
If you are writing about the industry, yes, prices are going to go up. This stuff’s expensive, and worse yet, there are no carriage and retrans fees.
Streamers got to eat somehow.
2. Google’s Woke Chatbot Debacle
Why did Google’s new Gemini AI Chatbot fail? Because it was too woke.
With apologies to the New York Times Pitchbot, that has, more or less, been the headline all week around Google’s problems with its Gemini chatbot.
For those who have not been following, users found that Gemini often responds like a parody of an overly progressive academic, to the point that CEO Sundar Pichai was forced to apologize for Gemini’s flaws and actually turned off the image creation functionality. (If you’re interested in the full story, Semafor has a good overview.)
Conventional wisdom seems to be that Google released the product too soon, that they did not do enough testing, that they shot themselves in the foot and that they’re no ChatGPT.
All of which is relevant to the television industry and its fear that AI is about to replace pretty much everyone.
Why It Matters
AI can do a lot of things right now.
It will eventually be able to do a lot more.
But there will be a whole lot of speed bumps along the way.
Conventional wisdom seems to be that despite Pichai’s pledge that they are “working around the clock” to fix the issue, it’s not something that can be fixed in a matter of weeks.
As Peter Kafka noted in Business Insider, “[N]o matter how hard Google scrambles to fix Gemini's problems, this seems like it's going to be an endless whack-a-mole.”
So there’s that and then there’s the fact that Google is not just getting mocked by right wing media. The calls, as they say, are coming from inside the house. Or at least inside the Valley, with major tech bloggers and tech investors rolling their eyes and one even calling for Pichai to resign.
Point being, Google is taking a huge hit reputationally and that’s not going to be easy to recover from, especially as Google has been making Gemini the poster child of their future initiatives.
To be fair, Google has long suffered from “Magpie Syndrome” where they jump from one bright shiny object to the next. It’s why, for instance, they rolled out the Chromecast dongle and then seemingly forgot about it, even when it became clear that users really needed it to have a remote, a move that helped pave the way for Roku to dominate the US market.
That said, Google’s stumbles may be to TV’s advantage.
For years I have been shouting to anyone who stood still long enough to listen that the TV industry’s real rivals were Google and Meta, not the other media companies. And that if they’d only join forces they could take them down.
Or at least put up a respectable fight.
It will also play out in the TV OS Wars, as I have no doubt that baking some aspect of Gemini into the Google TV OS was on the program and this likely sets that plan back significantly.
But mostly it hurts them in the Coke vs Pepsi, VHS vs Beta, Android vs iOS-style battle to dominate the Chatbot ecosystem, giving ChatGPT that many more months to get users (and programmers) accustomed to its way of doing things.
What You Need To Do About It
If you’re Google, you need to come back with a Gemini that is better than ChatGPT, not just a slightly different flavor.
That goes for your TV plans as well—you need to more clearly articulate why the industry should think of YouTube as “TV”, why your ad targeting is better, and why your TV OS is a better deal for consumers and manufacturers than an independent white label solution.
In other words, you’ve got a lot of work to do.
Good thing they serve food in your cafeteria.
Late nights and weekends.
Check me out on the new XO With Spence podcast from Madhive. Where I sit down with CEO Spencer Potts to discuss everything from my start in the industry to the future of local advertising.
