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In recent years, consumers have enjoyed a golden age of affordable tech-enabled services, thanks to generous subsidies from companies like Amazon and various venture capital backers. From free shipping to discounted rides and streaming services, Big Tech made it easy for consumers to indulge in the digital economy.
However, as our Chart of the Week illustrates, this era of cheap or free services is coming to an end. Companies like Netflix and Spotify are raising their prices, signaling a shift towards profitability over market share. Even non-traditional tech giants like Warner Bros. Discovery and Comcast are following suit, realizing that losing money to gain customers is no longer a sustainable strategy.
One emerging trend in the industry is the introduction of ad-supported streaming platforms. This model, which incentivizes customers with lower prices in exchange for viewing advertisements, has the potential to disrupt the market once again. As analysts predict, the value of user attention may soon outweigh the direct revenue from paid subscriptions, leading to a potential decrease in ad-tier prices.
With the promise of in-platform shopping and innovative ad formats, the future of streaming services looks bright. As Bank of America notes, there is “cautious optimism” in the short term and “disruption” in the long term as executives and investors explore new revenue streams.
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