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The End of Cheap Tech Perks: A New Age for Consumer Services
For a tantalizing period, the tech economy spoiled consumers with a slew of affordable services. Companies generously subsidized shipping costs, rides, short-term rentals, food deliveries, and streaming media. In the low-interest-rate environment of the 2010s, Big Tech absorbed a significant portion of these costs, making these services particularly budget-friendly for users.
This era of heavily subsidized consumer services appears to be definitively over. Recent consumer hits include sustained price hikes, underscoring a new trend. Comcast announced higher prices for its streaming service, Peacock, timed with the Paris Olympics. Warner Bros. Discovery and Comcast, while not traditionally considered ‘Big Tech,’ have adopted similar strategies of losing money to gain market share. Now, they’re pivoting towards profitability, as indicated by ongoing price increases.
Industry's New Focus on Advertisements
The race to profitability is also marked by a renewed emphasis on advertisements. Streamers are increasingly shifting towards ad-tier platforms, moving away from their more expensive, ad-free offerings. This shift is altering the landscape for cord-cutters who haven’t seen an ad in years, now being reintroduced to promotional content. The ad-supported streaming model is ushering in a wave of new sentiment similar to the excitement that once surrounded cheap, subscription-based services.
Industry analysts suggest that user engagement could become more valuable than direct subscription revenues. This potential shift could even lead to declining prices for ad-tier subscriptions if user attention outweighs the monetary value of their subscriptions. A recent report by Bank of America mentions a “cautious optimism” in the short term and potential “disruption” in the long run, driven by innovations in ad formats and in-platform shopping opportunities.
The Path Forward
If these strategies pan out, it could signal a return to a focus on content quality. For now, though, consumers will have to endure higher prices for the full range of services, such as accessing the entire Sopranos catalog at $16.99. While the age of cheap, subsidized tech perks has concluded, a new chapter of advertising-driven services might be on the horizon.
