The pirates are back - Anew study from the European Union’s Intellectual Property Office (EUIPO) suggest that online piracy has increased for the first time in years. In fact, piracy rates have bee…::We analyze a new study where the EUIPO suggests online piracy is on the increase within the European Union.
There are certainly consumers out there with this kind of mentality, but it’s a common sales strategy to lure new customers with a reduced subscription fee for the first months only. It evidently works, because businesses have been doing this long before SVOD services, or even the internet for that matter, existed.
I expect that indeed, a significant number of customers cannot be bothered to cancel a subscription once they begin to use it, or, put another way, perceive the value of it to be justified against the increased price. I don’t think it’s fair to call this a fake audience, because these are real users of which a certain percentage will be retained.
Another factor that probably weighs into this is the competitive race to the bottom among the many SVOD offerings that are available today. Users like you and me perceive a certain dollar amount as the maximum that we are willing to pay, but where does that figure come from? If you are a new player in this space, you are effectively capped to the current market price for subscription fees, whether or not that covers your costs.
The free market effect will gradually resolve this as services that are all currently operating at a loss will correct their price models, which is what I believe is currently happening.
There are certainly consumers out there with this kind of mentality, but it’s a common sales strategy to lure new customers with a reduced subscription fee for the first months only. It evidently works, because businesses have been doing this long before SVOD services, or even the internet for that matter, existed.
Your claim that this is a tactic happening since for ever doesn’t take into account the differences between subscription model and traditional businesses. In traditional businesses, yes, a business may decrease the prices in order to lure customers, but this was never their business model. This was limited time “get to know us”. I don’t think there was for example any supermarket operating at loss for 5 years before they decide to “ok, lets put the real prices on the shelves now”.
I don’t think it’s fair to call this a fake audience, because these are real users of which a certain percentage will be retained.
of course it is a fake audience. The fact that some users will be retained doesn’t make the 100% of the audience real. And also by fake audience it doesn’t necessarily mean that the whole 100% of the audience is fake. However, when they present their numbers, and they claim that “because of piracy we lost 5 million subscribers” this is based on the 5 million subscribers who potentially would never be subscribers if they had their “real” price upfront, instead of a price in which they operate at loss.
However, when people are charged for piracy, they are charged based on imaginative loses who are based on a potential profit which would had been achieved if their 100% of customer base had been continuing paying a subscription which they would had never agreed paying if the price was not faked in order to attract them.
The free market effect will gradually resolve this as services that are all currently operating at a loss will correct their price models, which is what I believe is currently happening.
the free market will turn to the government to cover their losses and they will push for stricter anti piracy law enforcement. The free market evangelists just want a free to control market. I don’t think they will be “ok, customers are leaving after our latest increase in price, then let’s just decrease the price to get them back on board”
With regards to discounts to lure new customers, I was thinking about conventional subscription based services like newspapers or cable providers. It doesn’t seem unreasonable to me that in a sector with heavy competition, such services might be offered at an initial loss if data suggests that retained memberships can recoup it.
I misunderstood what you were referring to with a definition of “fake audience.” I wasn’t giving any merit to their claims about how it all ties to piracy, clearly that’s nonsense. I’m not completely following your train of thought with a “fake price,” though.
It’s possible this might result in a harsher stance on piracy again, that’s true. Realistically, though, I think it’s more likely that three things will happen: we as consumers will gradually recalibrate our cost expectations for streaming services, production corporations will cut costs with more reality type content, and smaller companies will either be bought up or go out of business as users settle on a deliberate few services to subscribe to.
I’m not completely following your train of thought with a “fake price,” though.
you said that they now needed to correct to the “real price” in terms that it is a price that will allow them not to operate at a loss. So the previous one was a “faked” (artificial) price, that they knew was below cost, however they chose to go with it in order to lure customers.
I’m not implying that they tried to scam anyone with “fake prices” if this is what you understood.
I am pretty sure they know how many accounts they will lose for every dollar they increase the price. It should be a net positive for them because otherwise they would not do it.
Enforcing terms and conditions that they previously did not is just another price increase in the grey area that is not directly perceived that way.
I agree that “Lost x amount to piracy” does not even make sense in that context. They know exactly what they are doing.
