Streaming Exclusives Will Drive Users Back To Piracy And The Industry Is Largely Oblivious

[steven36]

from the history-repeats-itself dept

 

 

As you probably have noticed, there's a growing tide of streaming video services popping up to feed users who want a cheaper, more flexible alternative to traditional cable. By and large this has been a very good thing. It's finally driving some competition for bumbling apathetic giants like Comcast, forcing them to at least make a feeble effort to improve customer service. It also reflects a belated admission by the broadcast industry that you need to compete with piracy (instead of say, suing the entire planet and hoping it goes away) by offering users access to cheaper, flexible viewing options.

 

But the gold rush into streaming has come with a few downsides. Studies have suggested that every broadcaster on the planet will likely have their own streaming service by 2022. In a bid to drive more subscribers to their service, said broadcasters are increasingly developing their own content, or striking their own content exclusivity deals, and then locking that content in an exclusivity silo. For example, if you want to watch Star Trek: Discovery, you need to shell out $6 a month for CBS All Access. Can't miss House of Cards? You'll need Netflix. Bosch? Amazon Prime. The Handmaid's Tale? Hulu.

 

Again, on its face this impulse makes perfect sense: you want the kind of content that drives users to your platform. And at first it wasn't all that noticeable, because there were only a handful of services. Even if you subscribed to four of them, you still probably were saving money over your traditional cable bill.

 

The problem is, as more and more companies jump into the streaming market, users are being forced to subscribe to an ocean of discordant services to get access for the content they're looking for. As users are forced to pony up more and more cash for more and more services, it's going to start defeating the purpose of ditching over-priced, traditional cable. But instead of going back to cable, back in March we noted how users are just as likely to consider piracy.

 

And of course that's already starting to happen, with BitTorrent usage seeing some modest but notable bumps, especially overseas. It's minor now, but if you've paid attention to several decades of piracy precedent, it's not hard to predict the outcome of this rush to cordon off everything into far too many exclusivity silos. Disney, for example, is preparing to pull all of its best content off of Netflix (Star Wars, Pixar, Marvel) and make it exclusive to its own streaming platform. In the wake of its acquisition of Time Warner, AT&T is contemplating doing the same thing with old episodes of shows like Friends. You may have noticed a trend:

"Before Netflix got into the Original series game, it made a name for itself by licensing content from other distributors like Warner Bros. TV, Paramount Television, and NBC Universal Television. Licensing deals are great for fans who don’t have cable or are looking to discover new series in full, but now that streaming is king, distributors and production companies have realized that they can make more money by consolidating their content on a single streaming service — hence why Disney, WarnerMedia, DC, and other media companies are creating their own platforms with original content."

You'd be pretty hard pressed to find many people in the streaming or broadcast sector who realize the pitfalls of this gold rush toward streaming exclusivity, even after all of the painful piracy and gatekeeper lessons learned thus far. After all, most industry executives are right that having must-watch exclusive content is necessary to drive subscriber adoption, and that developing original content in house is a better financial proposition than skyrocketing broadcast licensing costs. But few have paused, taken a step back, and considered how the rush to exclusivity at scale could come back to bite the sector at large.

 

That's thanks, in part, to the weird aversion among most journalists and analysts to even mention piracy in their reports or stories. Most reporters and analysts see even mentioning piracy as some kind of bizarre cardinal sin that implies they somehow advocate for the behavior. This tendency to ignore the elephant in the room is a major reason the industry has such a hard time learning that you have to compete with piracy, not engage in idiotic, counter-productive and often harmful attempts to "cure" it with legislation, lawyers, or an endless parade of terrible ideas.

 

The old adage that those who fail to learn from history are doomed to repeat it will likely hold true here. If the current trend holds, by 2022 consumers will be forced to subscribe to an absolute universe of $10 to $15 per month services just to get all the content they're looking for, on the presumption the average household has an unlimited amount of disposable income.

 

If history is any indication, it will take another year or two for the industry to identify and admit this exclusivity parade is driving users back to piracy. At that point, they'll probably burn through a rotating crop of "solutions" (like waging war on password sharing), before coming to this central conclusion: that licensing your content to a sensible but not overwhelming crop of companies actually good at the technical and customer service aspects of streaming (like, Netflix) -- instead of everybody and their mother launching their own streaming product -- wasn't such a terrible idea after all.

 

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[steven36]

Study: Every Broadcaster Will Offer a Streaming Service by 2022

 

 

A  study by the Diffusion Group predicts that every major broadcaster and their mother will be offering their own streaming service by 2022. If you've watched CBS, FX, AMC, Showtime, HBO, and every other channel under the sun already launch their own direct to consumer offering, that's not a particularly difficult or brave prediction to make. Especially given that Disney expects to launch its own streaming service next year, stocking it filled with exclusive access to Star Wars, Pixar, Marvel, and other popular content.

 

The question becomes whether this fracturing creates its own, new problems -- like exclusivity silos that force customers to hunt and peck between numerous services to find the shows and movies they want.

 

"Big media companies are reacting more boldly to changes in TV viewing behavior,” Mike Berkley, TDG’s senior advisor said in a press release. "Consolidating, bulking up on originals, and marketing directly to consumers are driving their strategic direction."

 

According to Diffusion, this shift could cause increased tension between broadcasters and cable operators who are already constantly engaging in harmful retrans feuds. Feuds that tend to result in customers losing access to content they're paying for (without any refunds) every time the two sides can't agree on a new programming contract.

 

"The legacy model is built upon decades of comfortable relationships between networks and operators," notes the group. "If networks extract too much high-value content too quickly, channel conflicts are inevitable."

 

That could get particularly interesting in the wake of the death of net neutrality rules. Blocking, throttling, or otherwise hamstringing broadcaster services could prove popular at major ISPs. Similarly, ISPs that own their own broadcasters (Comcast) could block consumer access to competing content (something history has shown to be a double-edged sword, especially during retrans or carriage fee feuds).

 

Siloing off exclusives within an ocean of independent streaming service also comes with its own challenges, Diffusion states.

 

On the plus side, this rise in direct to consumer offerings should force companies to compete, lowering prices for consumers. On the flip side, if every broadcaster exclusively offers its own content only through its own streaming video service, that could result in users returning to piracy if forced to pay for a dozen individual services just to get a semi-uniform content offering.

 

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[steven36]

Ironically, Too Many Video Streaming Choices May Drive Users Back To Piracy

 

from the adapt-or-perish dept

 

 

To be very clear the rise in streaming video competitors is a very good thing. It's providing users with more choice, lower prices, and better customer service than consumers traditionally received from entrenched vanilla cable TV companies. It's the perfect example of how disruption and innovation are supposed to work. And given the abysmal customer satisfaction ratings of most big cable TV providers, this was an industry that's been absolutely begging for a disruptive kick in the ass since the 1980s.

 

But we've also noted that, ironically, the glut of video choices--more specifically the glut of streaming exclusivity silos--risks driving users back to piracy. Studies predict that every broadcaster and their uncle will have launched their own direct-to-consumer streaming platform by 2022. Most of these companies are understandably keen on locking their own content behind exclusivity paywalls, whether that's HBO Now's Game of Thrones, or CBS All Access's Stark Trek: Discovery.

 

But as consumers are forced to pay for more and more subscriptions to get all of the content they're looking for, they're not only getting frustrated by the growing costs (defeating the whole point of cutting the cord), they're frustrated by the experience of having to hunt and peck through an endlessly shifting sea of exclusivity arrangements and licensing deals that make it difficult to track where your favorite show or film resides this month.

 

In response, there's some early anecdotal data to suggest this is already happening. But because these companies are fixated on building market share, and this will likely be an industry-wide issue, most aren't seeing the problem yet.

 

Others are. The 13th edition of Deloitte’s annual Digital Media Trends survey makes it clear that too many options and shifting exclusivity arrangements are increasingly annoying paying customers:

But the plethora of options has a downside: Nearly half (47%) of U.S. consumers say they’re frustrated by the growing number of subscriptions and services required to watch what they want, according to the 13th edition of Deloitte’s annual Digital Media Trends survey. An even bigger pet peeve: 57% said they’re frustrated when content vanishes because rights to their favorite TV shows or movies have expired.

 

“Consumers want choice — but only up to a point,” said Kevin Westcott, Deloitte vice chairman and U.S. telecom and media and entertainment leader, who oversees the study. “We may be entering a time of ‘subscription fatigue.'”

As it turns out, people don't like Comcast, but they do ironically want a little more centralization than they're seeing in the streaming space. What that looks like isn't clear yet, but it's something that will slowly get built as some of the 300 options (and growing) currently available fail to gain traction in the space:

All told, there are more than 300 over-the-top video options in the U.S. With that fragmentation, there’s a clear opportunity for larger platforms to reaggregate these services in a way that can provide access across all sources and make recommendations based on all of someone’s interests, Westcott said. “Consumers are looking for less friction in the consumption process,” he said.

Variety's otherwise excellent report doesn't mention this, but a lot of these customers are going to revert to piracy. It's not clear why this isn't mentioned, but it's kind of standard practice for larger outlets to avoid mentioning piracy in the odd belief that acknowledging it somehow condones it. But if you don't mention it, you don't learn from it. You don't understand that piracy is best seen as just another competitor, and a useful tool to gain insight into what customers (studies repeatedly show pirates buy more content than most anybody else) really want.

 

It's easy to dismiss this as privileged whining ("poor baby is upset because they have too many choices), and that's certainly what a big segment of the market is going to do.

 

But it would be a mistake to ignore consumer frustration and the obviously annoying rise of endless exclusivity silos, given the effort it took to migrate users away from piracy and toward legitimate services in the first place. The primary lesson learned during that experience is you need to compete with piracy. It's not really a choice. It's real, it's impossible to stop, and the best way to mitigate it is to listen to your customers. Building more walled gardens, raising rates, and ignoring what subscribers want is the precise opposite of that.

 

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[steven36]

'Subscription Fatigue' Looms As Comcast Reveals Yet Another New Streaming TV Platform

from the lousy-with-choice dept

 

 

 

So we've noted many times that the rise of streaming video competitors is indisputably a good thing. Numerous new streaming alternatives have driven competition to an antiquated cable TV sector that has long been plagued by apathy, high rates, and comically bad customer service. That's long overdue and a positive thing overall, as streaming customer satisfaction scores suggest. In response, traditional cable TV providers have had to up their game, exemplified by this week's launch of yet another streaming service by Comcast, dubbed "Peacock."

 

The company unveiled the new streaming service this week, stating it should go live next April. And while no pricing details have been announced for non-cable subscribers, Peacock will be free to users that already subscribe to a traditional cable TV bundle from Comcast. According to Comcast, the new service and naming convention reflects a "proud and bold" persona for the nation's least liked company:

"For us, it’s the perfect nod to the legacy without being too on the nose,” said Bonnie Hammer, chairwoman of the upcoming streaming service. “From my point of view, it screams that we are proud and we are bold."

Like the numerous other streaming services from AT&T, Disney, Apple, and others, Peacock is in a race to lock down as many exclusives to its platform as is humanly possible, which will include hits such as "The Office" and "Parks and Recreation," as well as development of (yet another) "Battlestar Galactica" reboot by "Mr. Robot" creator Sam Esmail. Netflix had to spend $425 million to lock down Seinfeld as part of a five-year exclusivity deal. AT&T's HBO Max has meanwhile secured all exclusive streaming rights to "Doctor Who" and "Friends." The streaming exclusivity wars have begun in earnest.

 

But there's one thing that remains overlooked as every company and its uncle rushes to deliver its own direct-to-consumer streaming service: subscription fatigue. Deloitte analysts have been using the term to describe the inevitable fatigue that will set in as users try to figure out which of their favorite shows are exclusive to which platform, which could come to annoy users despite the increase in new streaming options:

"But the plethora of options has a downside: Nearly half (47%) of U.S. consumers say they’re frustrated by the growing number of subscriptions and services required to watch what they want, according to the 13th edition of Deloitte’s annual Digital Media Trends survey. An even bigger pet peeve: 57% said they’re frustrated when content vanishes because rights to their favorite TV shows or movies have expired.

 

“Consumers want choice — but only up to a point,” said Kevin Westcott, Deloitte vice chairman and U.S. telecom and media and entertainment leader, who oversees the study. “We may be entering a time of ‘subscription fatigue.'"

Granted one plus side with streaming is users can sign up for a service for a few months, binge watch to their delight, then cancel. But managing multiple subscriptions (and logins) while tracking the home of your favorite current, ongoing shows could prove annoying, and even moreso if the industry shifts (as many expect) to a harsher crackdown on those who share streaming passwords — something Netflix and HBO used to see as little more than free advertising, but has increasingly been confused with "piracy" by grumbly legacy executives at the likes of Charter Communications.

 

The end result? A slow but steady shift back to piracy among users that find subscribing to a half dozen streaming services too expensive, or hunting and pecking for their favorite paywalled content annoying. It's an issue companies aren't all that worried about as they rush to the competitive trough, but it's likely to be a looming problem as the number of services and exclusivity silos grow.

 

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