Streaming Video Sees Wave Of Price Hikes In Apparent Bid To Mimic Cable & Embolden Piracy

from the history-repeats-itself dept

Mon, Jul 9th 2018 12:05pm — Karl Bode

One of the major benefits of cutting the traditional TV cord and switching to streaming video services was supposed to be the lower cost of service. But because broadcasters dictate the licensing cost of content for both services, it was inevitable that the sector would increasingly mimic its traditional cable counterparts. As a result, numerous streaming video services used the July 4th holiday to obfuscate an industry wide price hike, driving up the monthly subscription costs of services like AT&T's DirecTV Now, Sony's Playstation Vue, and Dish Network's Sling TV.

AT&T's price hike, a $5 bump for all of the company's DirecTV Now streaming TV tiers, is likely getting the most attention because it's the precise type of hike AT&T repeatedly stated wouldn't be happening if regulators signed off on the company's $86 billion merger with Time Warner. AT&T lawyers repeatedly claimed during the recent court battle with the DOJ that the deal would lower prices, not raise them:

"The evidence overwhelmingly showed that this merger is likely to enhance competition substantially, because it will enable the merged company to reduce prices, offer innovative video products, and compete more effectively against the increasingly powerful, vertically integrated 'FAANG' [Facebook, Apple, Amazon, Netflix, and Google] companies," AT&T told US District Judge Richard Leon in the brief...Price benefits should flow to consumers quickly, AT&T's filing said. "[C]ertain merger efficiencies will begin exerting downward pressure on consumer prices almost immediately [after the merger]" AT&T wrote.

As with most megamerger promises of synergies and consumer benefits, that obviously didn't happen. AT&T took on such a massive debt hit from the deal, it's now looking to raise rates wherever and however possible, whether that means a price hike for TV streaming, or obnoxious and misleading fees that can help quickly and covertly pad AT&T's bottom line.

As we've long seen with traditional cable, streaming ops are imposing the rates in quiet unison, engaging in what I've affectionately long referred to as "wink wink, nudge nudge" competition. In addition to price hikes at AT&T, Dish and Sony, Netflix says it's also experimenting with a higher-priced tier specifically targeting customers with 4K and HDR capable sets. It's a tricky balancing act; these services want to pass on higher programming rates demanded by broadcasters, but don't want to undermine the entire reason that customers cut the cord and head to cheaper streaming alternatives in the first place.

On a positive note, many correctly point out that streaming is still generally seen as a real value when compared to traditional cable, something that should remain true for the forseeable future:

"Even after the current wave of price hikes, live TV streaming services are generally much cheaper than the average traditional TV bill. For packages that include major broadcast networks, regional and national sports coverage, and major news networks, the price for live TV streaming still floats around $40 to $50 per month. That's less than half the average $106 that U.S. homes spent on traditional TV service last year, according to Leichtman Research Group."

But that value could quickly be eroded if streaming operators continue to mimic their legacy counterparts, something that's less of a strain for streaming operators that are vertically integrated broadcasters themselves (Comcast, AT&T); yet another advantage compounded by the repeal of net neutrality. Streaming operators have numerous other pitfalls awaiting them as the streaming video wars truly get underway, including the rise of exclusive content deals that could force customers back to piracy if they're forced to hunt and peck between too many pricey exclusivity silos.

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Filed Under: cord cutting, price hikes, streaming video
Companies: at&t

25 Comments

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Anonymous Coward, 9 Jul 2018 @ 12:22pm

Netflix is underpriced
I haven't used the AT&T, Sony, or Dish streaming services, but I do use Netflix and Hulu. IMHO, Hulu with HBO is probably priced correctly but Netflix could double their prices and still be a bargain.

Aside from Hulu and Netflix, the only other thing we usually watch right now is MLB.tv but we also have to have a regular cable subscription due to MLB's obnoxious black out policy. Stop blacking out games and I'll drop cable.
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David Kastrup, 9 Jul 2018 @ 12:26pm

Bit of a disingenuous comparison
The streaming services pricing doesn't include the cost of Internet. Even assuming Internet as a given, it is unlikely that significant use of a streaming service will allow you to use the same data plan you'd use anyway without incurring extra costs.

And it's also not clear which of things like "service fee", "programming fee" and other variations of "bullshit fee", "reality over advertising fee", "competitive disadvantage fee" are to be considered part of streaming service costs.
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tom (profile), 9 Jul 2018 @ 12:28pm

To prevent future versions of this, the DOJ should file perjury charges against the AT&T lawyers for lying under oath plus filing a report with that state's Bar association for possible disbarment proceedings.
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Anonymous Coward, 9 Jul 2018 @ 12:32pm

Re:
Good luck being able to prove they were lying.
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Stephen T. Stone (profile), 9 Jul 2018 @ 12:34pm

Re: Re:
They were creatively interpreting alternative facts.
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ShadowNinja (profile), 9 Jul 2018 @ 12:44pm

Re: Re:
Yeah, it's actually insanely difficult to get a conviction for perjury.

See the baseball player who clearly flat out lied to Congress under oath about not doing steroids who was found not guilty.
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Anonymous Coward, 9 Jul 2018 @ 12:51pm

i wonder how much the judge was given to say 'ok' to this deal? he knew full well, as did the world and it's wife that AT&T were full of shit, yet he still gave the all clear to go ahead! with this opposite happening to what was used as evidence to get the ok for the merger, can it not be rescinded as it was a total fabrication? can the DoJ not go after AT&T now because of the total lies used?
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discordian_eris (profile), 9 Jul 2018 @ 1:17pm

And once again, piracy for the win.
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Gary (profile), 9 Jul 2018 @ 1:20pm

Double the fun...
Cable doubles their price, Netflix looks at that and doubles theirs. Before you know it, The Pirate Bay will double their prices too!
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Anonymous Coward, 9 Jul 2018 @ 1:22pm

Re: Double the fun...
The pirate bay could double their prices every day and keep their users, so they must be doing something right.
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ECA (profile), 9 Jul 2018 @ 1:27pm

Anyone?
Lets see....
Anyone here go out and spend a BIG amount of money, and WISH they had a better job or raise their OWN wages??

Any company thats doing mergers and spending over 1/2 of there Corp Value is going to Drop a few pennies..and It MIGHT hurt your stock prices.. And how many would DROP the corp stocks?? The Value would go down abit..and LOTS of people would LOVE to buy up those stocks..

BUT its strange that STOCKS are not showing the true value of corps anymore..
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Anonymous Coward, 9 Jul 2018 @ 1:27pm

Re: Re: Re:
Look at what they said: "The evidence overwhelmingly showed"; "it will enable the merged company to reduce prices"; "Price benefits should flow to consumers".

Well, the evidence is part of the court record, and I expect does show that—probably because the lawyers dumped an overwhelming amount of "evidence" onto the court. The company probably is able to reduce prices, if they choose to. And sure, price benefits should flow to consumers—they won't, but they should.

What else would we expect from corporate lawyers? If we want to get out ahead, we need to get an explicit legally binding promise, not just a bunch of "predictions". And they're still not going to do what they promised unless there are some serious penalties involved.
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David, 9 Jul 2018 @ 1:39pm

Re: Re: Double the fun...
The price is the ratio of revenue in relation to user-servicing traffic. Doubling that every day is going to become very painful for the user very soon.

Part of the revenue will be from ads swamping the user, part of the revenue will be from malware payloads, part will be from selling user data to high bidders, like burglars wanting to know when a house isn't occupied.

Zero price means hidden cost. You don't want that to increase exponentially.
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Dark Helmet (profile), 9 Jul 2018 @ 1:51pm

Re: Netflix is underpriced
Just an FYI, a DNS proxy service alleviates the need for a cable subscription to get local MLB.TV streams....
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Sharur, 9 Jul 2018 @ 2:04pm

Re: "lying under oath"
You are correct that perjury is the crime of lying under oath. But were the lawyers under oath?

I would wager not. Unless they are on trial, AND TAKE THE STAND, what a lawyer says in court is NOT under oath, barring swearing that the information in their initial documents is true to the best of their knowledge(which basically amounts to, "this is what my client told me, and I haven't seen anything that proves to the contrary") .

You may think that their in court statements should be under oath, but as the stands (and how it has stood since the ink on the Constitution was wet), they are not under oath.
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Anonymous Coward, 9 Jul 2018 @ 2:21pm

Re: Re: Netflix is underpriced
It's tempting, but ultimately I'm not comfortable violating the ToS.
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Damien, 9 Jul 2018 @ 2:39pm

Re: Bit of a disingenuous comparison
My family of three has had nothing but Netflix, Amazon Prime, YouTube and Twitch-like services for the last decade of our video watching needs. Broadband internet IS a given, and I can assure you that the price I pay per month for the pay services I have now is a fraction of what my cable TV bill was a decade ago.
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Anonymous Coward, 9 Jul 2018 @ 3:24pm

FAAG
Surely they don't plan on actually competing with netflix... They just needed it for the acronym.
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JoeCool (profile), 9 Jul 2018 @ 4:47pm

Re: Re: Re: Netflix is underpriced
Which is yet one more reason I gave up watching Armored Wankball. I don't even watch "The Big Game". I do look for the big game commercials on youtube the next day. Some of them are pretty good.
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Iggy, 9 Jul 2018 @ 5:39pm

If consolidation causes prices to go down because the merged company can lower prices, maybe every company should just be rolled into a single one and be run by the government. Ask the Russians how well that worked.
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John Smith, 9 Jul 2018 @ 8:50pm

Meet the new bill...same as the old bill.
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PaulT (profile), 10 Jul 2018 @ 1:02am

Re: Netflix is underpriced
Yeah, I'll never get the constant complaining about Netflix's catalogue and their occasional price rise (rare and never that much). Just going through my list of saved titles, I could probably watch it for a year with my viewing patterns and there's something added virtually every week that I want to watch. Especially with their ability to download titles to watch offline that's was added, it's a great deal.

I wouldn't call for a price rise, but there's more than enough value to handle one if required.
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DaveinCanada (profile), 10 Jul 2018 @ 9:47am

Re:
yes!! piratey things and stuff.
but seriously tho....
Mike is such a pirate shill.
pretty sure he owns Pirate Bay and Torrentsite.com
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Ravi Arora, 10 Jul 2018 @ 12:30pm

Titanic history
the new bill...same as the
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Personanongrata, 10 Jul 2018 @ 1:00pm

ATT&T Sucks
AT&T's price hike, a $5 bump for all of the company's DirecTV Now streaming TV tiers, is likely getting the most attention because it's the precise type of hike AT&T repeatedly stated wouldn't be happening if regulators signed off on the company's $86 billion merger with Time Warner.

AT&T is a disgrace.

First by lying to the court about post-merger pricing stability and potential efficiencies realized resulting in lower pricing schemes.

Second by having the audacity to raise subscription rates for a clearly defective service (ie DirectTVNow) that suffers from a number of issues (eg clunky user interface/guide that can take up to a minute to load while completely obscuring the display with white splash screen, channels in subscribers programing package that will not stream, movies on demand section that streams intermittently and stops playing with 3 minutes left in every movie, etc) that detract from the overall entertainment value for the subscriber.

Disclosure: We were DirectTVNow subscribers for a little over a year and have just cancelled our subscription.

Our streaming device was/is the ROKU Premiere +
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