The Internet Isn’t (and shouldn’t be) Cable
In the beginning, there was Blockbuster. Next, there was a small company that mailed DVD’s to your house to watch with your family and friends: Netflix. Then, the blockbuster-killer and innovator in all things video media decided that they wanted to take their Movies-on-demand idea to the next level: Provide a central, digital repository for customers to watch all the movies that are already being mailed to them any time they want from the internet.
There it was. This was the idea that made Netflix the powerhouse it is today. This was also the idea that led many content publishers (Disney, NBC, Universal) excited at first, and then nervous. You see, Netflix really was revolutionary. Publishers had no good way of getting their older IP in front of customers on a regular basis - had no way of making good money off of old TV shows and movies. People bought VHS and DVD’s, shared them with their friends, and that was that. People consumed way less media - and even though the individual content was more expensive (in the form of physical media), people probably paid less on average due to the cost of entry per product.
Netflix provided a way for content publishers who otherwise would just be sitting on old content to make money through licensing. At first, not a lot of faith was put into the Netflix model, publishers felt they were giving something away for nothing in return and so they did not provide their best and most consumed content. However, the enduring customer base and increase in views made the content more and more valuable to list, eventually making netflix a place where blockbuster content could be listed and viewed with ease by anyone.
As a long time customer of Netflix, I saw the value of my subscription increase every year. More and more content was becoming available and I was generally satisfied with both the quantity and quality of the selection. Like many people who use netflix, TV became something I could put on in the background, a comforting voice and distraction while I went about my daily life. The Office, in particular, became an excellent show for me to put on in the background while I worked, cleaned, or studied. Plus, being able to switch from The Office, to Daredevil, to Parks and Rec, then to a movie throughout the day with ease was basically a game changer. It kept me on Netflix all day.
Before Netflix was well established, the majority of web media content (including music, movies, tv shows, and porn) were easily accessible through piracy. Services like Limewire, and websites like Thepiratebay made obscure, new, and hard-to-get content easily downloadable and easy to watch. Consumers who were tech savvy enough could grab the latest movies from the comfort of their own homes, and shows on cable-limited platforms like HBO (who didn’t start providing online streaming until 2010), that were nearly impossible to access legitimately online, became viewable for the first time due to piracy.
Netflix (and Hulu) turned this piracy incentive on its head. People who were before pirating content out of convenience were now foregoing their digital theft for the easy-access of Netflix. As the content increased, it became harder and harder to justify the effort of piracy and easier to just pay one flat Netflix subscription and watch the content from there. After all, most of the shows we watched had been there for years - no need to worry about them going away - the platform was rock solid. Everyone I know stopped pirating shows and movies as much. Sure, there were still holdouts with high-cost subscriptions that made very little sense (HBO GO), and as a result a lot of the shows people still pirated were ones that weren’t easily accessible on Netflix.
Today, things are not so clear-cut. Shows that used to be staples of the Netflix subscription (’It’s always Sunny, The Office, Parks and Rec) have disappeared or have been slated to disappear from the service for the first time in what feels like a decade. Star Wars and Avengers films, something that used to be fairly accessible with Netflix are also going away. One might think Netflix has failed to keep the interest of these content publishers, maybe because their subscription numbers are rapidly falling? No, the reason is much stranger. Content makers have seen the success of Netflix and the value of their previously inaccessible IP and decided to reclaim their content control to be used for individually created services. NBC is making a streaming platform for The Office and other shows to be viewed on. Disney just released Disney+, whose main attraction is a single new Star Wars show, and thousands of disney films that no one wants to watch (and a few everyone already watches on Netflix).
You might think, “Great! Now some of my favorite obscure shows are viewable for the first time, at a decent price point” but you would also be wrong. Disney+ costs 6.99 a month) and Peacock (NBC’s streaming service) will cost anywhere from 14 a month. To me, it sounds like I as a consumer will now have to pay $20 a month MORE to watch content that just a year ago I had complete access to. I will have three different bills for this content and three different logins. On three different apps. On three different websites. They might stream in three different qualities, and now there are three different organizations responsible for ensuring that I have access to their content.
Also, with Net Neutrality gone, What is there to stop Comcast (who owns NBC/Universal) from choking Netflix access, or Disney+ access, in favor of their own platform? My guess would be that Comcast, Disney, and the like have made a calculation that because consumers are so used to the convenience of streaming that we will simply give in to their separations and pay money for the additional content, no questions asked. However, I see a different reality.
I think that the only reason we all switched to Netflix in the first place was because of how agnostic it’s content was to begin with. I think Netflix is just convenient enough to be easier than pirating, and that adding hurdles, costs, and logins to previously existing content might push some over the edge enough to stop paying all together. I think that this decision is going to enable piracy - after all, Piracy seems nefarious to the content creators, but only ever existed as a market force to begin with - consumers want the content and they will get it however they see fit. There is no morality in economics - Businesses do their best to cut corners to deliver to consumers for the lowest possible cost and highest possible profit (see above), I see no reason why consumers shouldn’t do the same to businesses.
Sourcing:
https://www.sandvine.com/hubfs/downloads/phenomena/2018-phenomena-report.pdf