With programming largely a fixed cost, all that extra revenue will drop straight down to the bottom line. It is a strategy that has turned them into some of the biggest companies in the world. Part one has worked a treat. But part two? That is more questionable. In fact, there are three reasons why they may run into more resistance than they had reckoned with.
First, there is only so much TV we can consume. OK, admittedly my 14-year-old daughter may be an exception to this rule, especially during the school holidays. But the rest of us have jobs, friends, families and hobbies that also make demands on our time. In 2010, when most of us merely paid the BBC license fee, and perhaps a Sky subscription on top of that, the average person spent 242 minutes a day watching the box.
Now that has fallen to 192 minutes. For all the vast expenditure, this is an activity that has actually become a slightly smaller part of our daily lives. Measure it by the cost per minute viewed and the price has exploded over the last decade.
Second, there is escalating spending by the big streamers. Each of them has to throw increasingly extravagant sums at the screen to keep viewers coming back, and, even worse, to stop them canceling their subscription. Netflix is spending $ 14bn a year on its shows, and Disney is spending over $ 15bn. Amazon is spending $ 465m on its upcoming Lord Of The Rings series alone, and spent $ 80m on Wheel Of Time, which sank without trace.
In total, Ampere Analysis estimates that $ 230bn will be spent on content in 2022. And yet people don’t have more time to watch, or money to spend. The law of diminishing returns, one of the most lethal in economics, has already set in.
Finally, this is a product we can get for free elsewhere. There is plenty of programming from the BBC, which we have to pay for anyway through the license fee. There are ad-funded services such as ITV and Channel 4 and 5, an increasingly large range from YouTube, as well as the shows Amazon bundles into a Prime subscription at no extra cost.
In some industries, people will pay a bit more for the quality of a paid-for product. For example, mineral instead of tap water. But it will never be an unlimited amount. Start charging too much and everyone will just go back to the free version instead.
In reality, vast sums of money have been invested in the streaming model on the assumption that viewers will be locked in, and then prices can be steadily increased to pay for all that. The stock market has bought into that idea, and sent share prices skyrocketing upwards on the promise of big profits down the line. And yet, television used to cost nothing.
It is a very rare example of a product that went from being free to being paid for (usually it is the other way around). True, it is unlikely to get back to that. With so many different shows, and so much investment, there will probably always be programs we will pay to watch.
But it is very dangerous to simply assume that we will keep on paying more and more forever. Sooner or later one price rise will be one too many – and there will be a huge crash when that moment arrives.