Why Are Streaming Service Costs on the Rise?

Not too long ago, streaming was a cost-effective way to ditch cable and view visual goodies on your own time. While there’s no shortage when it comes to options with streaming services today, many of the key players have raised prices much to the annoyance of subscribers. Even Netflix, one of the most popular streaming content providers, upped its rates in early 2022. YouTube TV recently did the same thing, as did Amazon and Sling TV – but in a more indirect way by increasing the Prime membership fee.

If you have concerns about these cost spikes, you’re not alone. Below, we do a deep dive to figure out what’s going on with streaming service costs.

Streaming Services Can’t Pick and Choose

When streaming was starting to take off on a larger scale somewhere around 2017, it was common for services like YouTube TV to offer a relatively small selection. However, as streaming gained popularity, viewers wanted content gaps filled to justify their investment. In order to do that, streaming providers had to work out deals with various media companies.

Unfortunately, it’s typically not possible for a streaming service provider to only opt for whatever channels their audiences want most. Viacom, for example, owns an assortment of channels and networks the company won’t split up into individual offerings. So, if a streaming service wants one of Viacom’s properties, they have to take them all or get none. Therefore, if YouTube TV wants to give subscribers access to TBS shows, for instance, they also need to carry other Turner channels. To be fair, this is also why you can’t have an a la carte approach to cable television either. Because streaming providers have to ink deals with other companies, these costs end up getting passed along to subscribers.

Media Companies Have a Lot More Pull

Let’s say you’re a small business owner and you sell products or services you get from your own set of suppliers. Now, let’s say those same suppliers raise rates. This means your potential to make a profit has suddenly diminished. In order to offset your cost increases, it makes sense to raise the prices for what you offer to your own customers.

This is what applies to streaming services. Media companies these service providers deal with determine service costs. Plus, many of these companies bundle their services because they own a lot of entities, so rate increases can apply to multiple channels offered by a streaming service provider. And because there are so many streaming players today, these providers don’t have a lot of leverage with media companies. If streaming services play hardball and refuse to fork over more to media giants, the companies can simply pull their channels. In this sense, it’s fair to say streaming services are in a tough spot. On top of this, they often get the brunt of the blame for price spikes.

TV (In General) is Getting More Expensive

Cable TV prices have been increasing, too, so it’s not just a streaming thing. Comcast, one of the nation’s largest cable TV providers, regularly ups its rates a bit each year. In late 2021, the company further increased rates by 3 percent across the board. Because cable TV providers have been dealing with the balancing act of finding a happy medium between what they pay and what they pass along a lot longer, cost increases are typically not as noticeable. Streaming services, on the other hand, started off as the low-cost alternative, so cost increases grab much more attention.

Final Thoughts

It’s primarily the behind-the-scenes wrangling with media companies that has largely contributed to cost increases for streaming services. It’s kind of a catch-22 as well for streaming providers. They have to keep subscribers happy by offering the preferred channels whenever possible, but doing so means negotiating with various media companies. The cheapest option today with viewing is actually over-the-air TV, but don’t be so quick to dismiss it. With a good-quality antenna, you may be surprised at the selection of channels available.

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