By Niko Balkaran
The COVID-19 pandemic changed consumerism in America. Whether for good or bad, it is too early to tell. In the early days, some people realized they could capitalize on those in need by selling products at higher markups.
Hand sanitizers, electronics and even toilet paper were being sold at double the regular cost and sometimes even triple. This was because goods became scarcer as factories shut down. And so, scalpers began to stockpile items to resell at exorbitant prices.
People took to social media to share their stories. Many stories told a similar tale of trying to purchase something but could not because of the high prices. During the height of the pandemic in 2020, when quarantine rules were strictly in effect, the Playstation 5 and Xbox Series X were released. These were the next generation of gaming consoles that offered the promise of having fun while stuck indoors.
Of course, everyone wanted one. But as quickly as they were announced, they were sold out. They popped up again on sites such as eBay, Mercari and StockX. The difference is they were being sold for prices ranging upwards of $800 when the regular retail price was $499.
Sony helped consumers trying to get their hands on the PS5 by using human verification systems. This helped to prevent bots from buying up inventory in seconds. But this supply issue was further agitated because of a semiconductor chip shortage. This made companies unable to keep up with demand.
Even today, some two years after these systems’ release, it is still difficult to get your hands on one. Price gouging is nothing new, as anyone in the sneakers industry can tell you, but it was made more apparent during the pandemic.
Prices from even the regular retailers went up. Sony has even raised the cost of the PS5 in certain international markets. The supply chain issue did not just affect electronics.
Physical copies of books are also becoming more expensive.
“In the first half of 2021, book sales increased 18.5 percent over the previous year, with adult and young adult fiction leading the way,” according to a Reader’s Digest article written by Laurie Budgar, a lifestyle reporter covering finance. “But publishers are struggling to produce as many books as we want to read due to paper shortages, labor challenges and shipping struggles.”
Goods that were in demand and could help pass the time were and are, for the most part, becoming more expensive. This is something that affects everyone, but college students are hit particularly hard because of their limited budgets.
And consumers stuck in their homes for months had a natural tendency to turn to the Internet for entertainment. It’s the home of podcasts, music, movies and television. Nowadays almost everyone has access to a smartphone, tablet, laptop or gaming console. Through these devices it has become easier to connect to the Internet and keep yourself occupied. After all, who hasn’t gone down a rabbit hole reading wiki articles or lost hours to TikTok?
“People were trapped in a small space such as home for over three years of COVID,” said Professor Aghajan Mohammadi, a professor in the Department of Business and Economics. “Families needed some sort of entertainment and engagement, especially kids. Therefore, there were a lot of demand for streaming.”
Streaming services like Netflix and Disney Plus gained a surge in customers who now had more free time on their hands. In just the second quarter of 2020, Netflix had an increase of 10 million subscribers for a total of 193 million, according to an article by Peter Kafka for Vox. The article’s main idea is that the pandemic was good for Netflix. This is a notion that experts on the matter agree on.
Streaming subscriptions around the world passed $1 billion according to an article in The Wall Street Journal.
“Covid has massively accelerated the demand and subscriber growth in streaming services during the pandemic,” said Annisea Wong, a professor of Consumer Marketing at York College.
But it is because of this spike in new subscribers across streaming services that they had to start competing with each other in a way unlike before. Disney Plus brought popular Netflix Marvel shows like Daredevil and Jessica Jones to their platforms. These shows, which initially premiered on Netflix, were canceled due to licensing rights issues with Disney according to an article from Tech Crunch. On the other hand, Netflix had shows like Stranger Things and movies with high-profile celebrities like Red Notice with Ryan Reynolds.
These hit shows helped to break the monotony the pandemic brought with it. These streaming services were also “a way of escaping reality after a long day of college work,” said Stanley Sanchez, a sociology major.
Sanchez transferred from LaGuardia Community College to York this year. He also plans to change his major to Occupational Therapy. Sanchez prefers Disney Plus because he is a fan of the Marvel shows on the platform. Disney Plus was also one of the streaming services he got during the pandemic. Additionally, he got HBO Max during the pandemic.
But with new subscriptions came the price increases. A majority of the popular streaming services, such as Netflix, Hulu, Disney Plus and Amazon Prime raised their prices steadily over the last few years. “Exclusive or Licensed content and carriage fees” plays a role in these increases, according to Wong.
However, they also remove content from the platforms, which causes fear of missing out. Consumers would then have to spend additional money to either purchase a show or movie they want to watch or spend money on a newer streaming service. Sanchez had to wait to continue watching Friends after it left Netflix and moved to HBO Max.
Netflix could justify another price increase if “they actually put the shows they removed back on,” said Omar Faiteau, a York student and Environmental Health Science freshman.
Consumers are forced to pay a higher cost to keep up with prices increasing and content being divided among the various streaming platforms. One in four U.S. adults “spend more than $75 per month on streaming services,” according to a survey of 1,000 respondents in Finance Buzz.
This is $13 less than a “Verizon Trio Bundle with HBO and ShowTime, which was only $89 per month in 2010,” according to Wong. “An equivalent Trio Bundle with less TV channels costs $179 a month now.”
But could it be considered price gouging with these price increases from streaming services?
“Higher demand comes with higher operating costs,” Professor Wong added. “These streaming service companies are not like those traditional cable companies like Verizon and Spectrum where they monopolized the market back then when there were very little options.”
Streaming services initially gained popularity because they offered content for lower prices without ads. Now, with all of them, streaming services have become just as expensive. To gain more subscribers, Netflix has created an ad-tier version of its subscription and plans to start the rollout next year. Disney Plus has teamed up with Hulu and ESPN to offer a combination package to consumers.
In essence, streaming services have become like cable, only without the monopolization. Streaming service bundles similar to cable bundles can work, “as long as the bundles and packages are customizable,” said Wong. However, she is “not hopeful that streaming services/Internet TV will become more affordable.”
As for Sanchez, he is prepared for one possible, if not likely outcome. “If someone is able to put all my favorite movies and shows together in one place, then they will take all of my money.”