Generally speaking, the rise of streaming video has been a great thing for consumers. After spending decades pissed off by cable TV’s high prices and terrible customer service, users now have a bunch of cheaper, more flexible streaming TV options like Hulu, Amazon, and Netflix.
But there’s trouble in paradise. As the market is flooded by companies eager to hide their best content behind exclusive paywalls, consumers are being asked to subscribe to more than a dozen services to access the content they’re looking for. And if the industry isn’t careful, the shift may wind up driving these frustrated and confused customers back to piracy.
Case in point: this week, Comcast NBCUniversal announced it would be pulling its hit TV show, The Office, from Netflix. To watch it online, you’ll soon need to subscribe to Comcast/NBC's looming new streaming service, expected to launch sometime next year.
The Office is one of the most popular shows on Netflix, but that move alone may not be a that big of a deal (the entire series is $50 on Amazon.) But Comcast’s move is part of a much bigger, problematic shift in the streaming space.
Disney has also started pulling much of its Marvel, Pixar, and Star Wars related content from Netflix as it prepares to launch its own streaming service, Disney+, next year. AT&T also say it plans to pull popular programs like Friends from services like Netflix and Hulu as it puts the finishing touches on its own new streaming platform.
Studies say every major broadcasting company will likely have its own streaming service by 2022, and most of them are likely to engage in the same behavior. Superficially, it makes perfect sense for a streaming company to want to hide its own content behind an exclusive paywall, driving new subscribers to its own service.
But a recent study by Deloitte suggested that consumers are already starting to experience what they called “subscription fatigue.” Consumers only have so much disposable income to go around, and by asking them to sign up for more than a dozen streaming services just to access their favorite content, the industry risks driving users to a simpler, cheaper alternative: piracy.
Preliminary data suggests this may already be happening. For years, experts warned the entertainment industry that instead of suing would-be customers, it would be smarter to compete with piracy and provide simple, cheap access to content online. It worked; as services like Netflix and Hulu gained in popularity, piracy and BitTorrent usage rates declined.
But as streaming exclusivity deals have forced consumers to hunt and peck for their favorite programs, there’s been a slow but steady uptick in BitTorrent traffic. Users increasingly find it easier to use custom media PCs running software like Kodi or Plex that make streaming pirated content to your living room a trivial affair.
Consumer frustration is understandable. Want to watch the new Star Trek? You’ll need to pay $6 a month for CBS All Access. Want to watch Game Of Thrones? That’s $15 per month for HBO. Stranger Things? That’s $9 to $16 for Netflix. The Office? $15 to Comcast. Fleabag? Another $9 to Amazon, please. The Handmaid’s Tale? $6 to Hulu; $12 if you don’t want ads.
On one hand, the model is still better than the bloated channel bundles and relentless price hikes that have long plagued traditional cable TV. And unlike cable, users are free to mix, match, cancel, and re-subscribe to these services as they see fit.
But you shouldn’t assume it’s always going to be that simple as the streaming wars heat up.
If you’re old enough to remember the hell that was trying to cancel AOL, or ever tried to cancel a digital Wall Street Journal subscription online, you know companies often go to obnoxious lengths to make cancelling service a pain. There’s no reason to think that streaming providers won’t start using similar tactics as they attempt to prevent customer defections.
The death of net neutrality protections adds another potentially problematic wrinkle to the mix as natural telecom monopolies, fresh off of a wave of problematic media mergers, attempt to use their newfound power to exert dominance over the emerging sector.
AT&T, for example, will charge you $15 a month to stream HBO if bought standalone, but charges as little as $5 (or at times, free) if you subscribe to AT&T wireless services. The company also socks its fixed-line broadband users with arbitrary bandwidth caps and overage fees if they use Netflix, but not when they use AT&T’s own streaming service, DirecTV Now.
Comcast, Verizon, and other ISPs are likely to engage in similar tactics. Owning the broadband network gives ISPs some unique advantages, like making it a bigger hassle to cancel their services if you want to keep getting discounts for telecom services, or by using bogus usage caps to penalize you if you use a competitor's services.
If ISPs begin to use their ownership of the network anti-competitive to disadvantage services like Netflix—or CBS All Access begins making it an absolute nightmare to cancel, who’s going to step in and stop them, telecom and media industry BFF Ajit Pai?
Again, none of this is to say that the rise of streaming competition hasn’t been a good thing for consumers so far. We’re awash in new, cheaper, and more flexible video options than ever before, a vast improvement from the decades spent paying giants like Comcast $150 a month for bloated bundles of reality TV and home shopping channels nobody actually watched.
At the same time, there’s a perfect storm afoot that could result in some significant growing pains for the emerging sector over the next five years. if the industry fails to remember history, it risks creating an entirely new market, rife with entirely new problems, that’s just as expensive and annoying as the traditional cable TV market it worked so hard to supplant.