Access & Ownership in The Subscription Era of Entertainment

A year ago, I wrote an article discussing how Disney+ would challenge Netflix's dominance in the streaming service industry. On November 13, 2019, only a day after its launch in three countries (United States, Canada, and the Netherlands), Disney announced that the streaming service had already signed up more than 10 million subscribers. In February 2020, Disney reported that Disney+ had 26.5 million paid subscribers at the end of 2019 and 28.6 million on February 3, 2020. Netflix still is considered the top streaming service, with over 167 million worldwide subscribers at the end of the final quarter of 2019.

However, the streaming wars have just begun. By 2022 all major networks are expected to offer streaming services. According to the 2019 annual PricewaterhouseCoopers’ Global Entertainment and Media Outlook 2019-2023 report, the video streaming market was valued at $38.2 billion in 2018, is estimated to grow to $72.8 billion, and has more than 100 companies competing for users' attention. In the golden age of streaming services, one platform could give you access to quality content in high quantities for a single low price per month. But it's now fracturing. As each major tv network launches a Direct to Consumer (DTC) over the top media service (OTT), studios fight for control of the content. How will access to media content change in the subscription era?

First and most obvious is that to watch all the same content as before, consumers will have to spend a lot more money. In other words, accessibility is changing. Many consider Netflix the best thing to happen to the television industry because it improves on all things that tv already was. As YouTube channel Cheddar explains, "When T.V. first entered households, the content was beamed down into your living room for free. This was mostly made possible thanks to advertisers paying for commercials in between shows. However, T.V. moved from analog to digital from free tv to cable paid tv. While at first it seemed like cable would get you out of seeing commercials, by 1981 even pay channels had ads. Despite the increase in advertising time, cable prices for consumers kept going up." After ten years as a DVD mail subscription service, Netflix started its online media streaming service in 2007. For $7.99--just under 1/5th the price of the average cable bill at the time--a subscriber could get a plethora of movies and TV in their house anytime they want--without commercials.

In 2019, over one-third of American households no longer had a traditional cable or satellite TV subscription, according to a study conducted by PwC. By 2021, more than 55% of the U.S. population is expected to cancel cable. TV networks responded to the cord-cutting and switch to Netflix by creating their own streaming platforms. Consequently, all the non-original content will be pulled from Netflix and Hulu (which is now owned by Disney) and will only be accessible if a consumer pays for the T.V. network’s streaming platform. For the studios and TV networks, it is a simple business move. Why would Disney put Avenger's Endgame on Netflix when it could put it on Disney+ and make you pay another $15 a month to watch it?

Simply put, companies like Disney, NBCUniversal, TimeWarner, and CBSViacom want to control access to their content rather than someone else profit off it. While it's understandable from a business perspective, consumers are often the ones who pay the price--literally. The fragmented distribution makes content harder to find, and consumers are forced to pay more. Netflix licensed content generates 80% of U.S. viewership. For Hulu, which has fewer original series, the ratio of licensed to original content is even higher at 97% of U.S. viewership. Simply put, the creation of individual streaming services is hurting consumers.

Accessibility went from fragmented and expensive with cable packages to consolidated and cheap thanks to Netflix, and now it is back to fragmented and expensive with numerous services. A study by UTA IQ found that 67% of consumers already find toggling between multiple services frustrating; fifty-eight percent of consumers found managing numerous logins annoying;  forty-five percent say it's already too difficult to find what they're looking for. Those findings were recently mirrored by a Deloitte study which found that 47 percent of U.S. consumers already suffer from what the firm calls "subscription fatigue," and 56 percent were frustrated by quickly changing licensing deals that make finding their favorite film or T.V. shows a chore.

Consequently, consumers have turned to online pirating. Netflix once helped curtail online pirating because, for one low price, you could access endless shows and movies. As content is spread across paid platforms, consumers are less willing to spend more money for the same amount of content. According to Tech Insider, BitTorrent traffic increased 9.2% in the Americas, 19% in Asia-Pacific countries, and 32% across Europe, the Middle East, and Africa.

Sometimes when people choose to pirate movies and tv shows it is an issue of accessibility especially for American exclusive content. Accessibility is more of an issue outside of the United States. Netflix already has different content in other parts of the country due to different licensing and distribution contracts. While the creation of network-specific streaming platforms might universalize content across the world, it still does not solve the problem of release times. Countries with a delay to get the latest and greatest content, particularly American-produced media, are seeing extremely high growth in piracy. Take Disney+ as an example. Disney+ was launched in America in November 2019 but will launch in the U.K. on March 24, 2020. According to Variety, Latin America won't get the service until the first quarter of 2021. There is no exact date for Asian countries except for India which launches March 29, 2020. While current distribution and licensing deals explain the release schedule, Disney faces the risk of increased piracy with a slow worldwide rollout of Disney+.

Secondly, and perhaps most concerning, is the issue of ownership. The issue of ownership goes beyond TV and film. It seems like every day, yet another company announces a new cloud or platform service for people. These services trade in ownership for ease of use. One way to understand it is like this: Uber connects drivers with passengers, Airbnb connects spare rooms with travelers, and Spotify connects listeners with music. Consumers can now use a car without owning a car, get a room while traveling without paying for a hotel, and listen to music without owning the MP3 file. While the costs for the same services are lower than the traditional methods, people give up their sense of autonomy and ownership. If we as society increasingly depend on platforms, our economic system could regress to a feudal-like state.

Jared Bauer from YouTube channel “Wisecrack” explains that before free markets, economies were regionally based and self-contained. Economist Karl Polanyi describes three types of economic systems: reciprocity, house holding, and redistribution. Redistribution is where one feudal lord controls and redistributes all the resources. Platforms operate similarly. Studio-specific streaming services and other tech companies like Spotify, Airbnb, and Uber own their assets and distribute them to use. Therefore, a new kind of feudalism has emerged. Companies are like lords, and subscribers are like serfs paying rent to access products and goods. An article by Evgeny Moroz argues that we will all be indentured to our platforms. Moroz points out that "when Google and Facebook finally destroy all competition and make the world dependent on their platforms, these neo-feudal lords will then increase their control over how economic resources are accessed.” Political theorist Nick Srineck goes further, arguing that big companies are "becoming owners of the infrastructure of society...ending private property for the passes and having everything provided as a service by quasi-monopolistic firms." Simply put, consumers don't own anything anymore. We gave up ownership of our songs, cars, tv shows, and movies for ease simplicity.

As a result, we have to lease everything. Naturally, the lack of ownership means companies are in control. Instead of owning C.D.s, we access music from Spotify, where it can be taken down. Instead of dealing with the storage space for hundreds of movies and tv shows, we entrust studios and tv networks to provide content for us. Complications arise when different media companies start fighting each other over who has access to what. The recent Fox-Disney, AT&T-TimeWarner, Comcast-NBCUniversal, and CBS-Viacom mergers show us that entertainment companies are becoming increasingly consolidated. While HBOMax, Disney+, NBC Peacock, CBS All Access have figured out which company owns which content. The future is uncertain. Disney or any one of the major entertainment giants could certainly decide to sell any one of their subsidiaries or assets to another studio, not to mention the possibility of more mergers in the future. Consequently, this changes which platform a consumer needs to pay for to get access to the same content.

Whether you like it or not, streaming services are here to stay. You will have to pay multiple monthly subscription fees to access your favorite content. T.V. networks will give and restrict access to certain movies and tv shows depending on the brand/image, market, and profitability. However, streaming services are still technically the superior option to cable because if one keeps themselves on a strict content diet and opts for the cheaper end of the subscription plans, then many people are still paying less than a cable bill. Perhaps most important, in the subscription era, consumers will have greater purchase power. The benefit of paying for multiple streaming platforms as opposed to paying a blanket bill for cable is that consumers can put their money where their mouth is. If a subscriber does not like the content produced, they can cancel their subscription. Since it is predicted that a large majority of a studio's revenue will come from streaming services subscriptions, studios would need to change to prevent a loss of subscribers. Afterall the networks are competing with each other for your money.

We don't know what the future of streaming will look like. That's the most exciting and scary part. The transition away from licensing and distribution could be jarring or could happen slowly over years. Competition between the streaming platforms could inspire a new golden age of original T.V. shows and movies or could incite a new wave of remakes and sequels, as a safe bet. From synchronized sound and color creation to augmented reality and real-time storytelling, the evolution of technology has always paralleled the evolution of entertainment and storytelling. Like U-Matic, Betamax, VHS, DVD, Blu Ray, streaming services are the next step in how we distribute entertainment. Yet, at the same time, the pipeline between the camera to the screen is shorter than ever before. If T.V. networks and studios find a balance between creativity and profit, and consumers hold T.V. networks and studios accountable, then streaming services might just help usher in a golden age of storytelling and entertainment.