I see. Whether or not the price covers costs, businesses will often invest into attracting new customers, for instance through marketing campaigns or incentives to switch from a competitor. In such cases, the cost isn’t visibly calculated through to the consumer.

However, since the cost is a main factor for purchase decisions, companies might similarly invest in growing their customer base by offering a pricing tier below cost. This doesn’t necessarily mean that the service as a whole is operating at a loss, because there might be higher cost tiers that offer premium content or family plans. Different plans might also have degrees of underutilization that reduces service costs. Finally, cohorts of service tiers might change based on external factors like economic recession or competitive offerings.

All this is to say that pricing models are complicated, and breaking even with a SVOD service is extremely difficult in an industry with extremely high production costs, aging licensable content that viewers are losing interest in all while being overrun with complex, regional licensing agreements that affect both. Especially when this is further compounded with macroeconomic factors including inflation and interest rates that affect both corporations operating at a loss and consumers looking to tighten their belts or user decline due to subscription fatigue, an argument could be made that some middle ground needs to be found to simply remain in business.