Streaming Wars Cannibalism
Five years ago I wrote an article called “Begun the Streaming Wars Have” (Baby Yoda was a big thing at the time). I made some observations as well as some projections, prognostications, and predictions.
I looked it up because I was a little curious as to how well my guesswork had stacked up against history. It turns out I did surprisingly well, I only had one real goof and that was due to a drastic change in circumstance.
“I started on Netflix during a period where I had had to seriously tighten my belt. I could have internet or I could have cable but having both was out, so I picked internet.
My passive entertainment was provided by broadcast TV over a slashwire antenna that I’d rigged up. For movies, I went to Blockbuster. One particularly egregious late fee reduced me to surviving on Chicken-in-a-Biscuit and Value-Rite Bean Dip for a week. that ended my relationship with Blockbuster forever. I’d been burned by them before, they had always treated their customers like purest shit and now there was an alternative. A DVD-by-mail service called Netflix had popped up. What sold me almost instantly was their “no late fees ever” policy.
Mind you that policy wasn’t out of the goodness of their hearts. Since Netflix worked on a fixed monthly fee that was approximately equal to the cost of one DVD. It was in their interest for you to hang on to the disk for as long as possible. If you kept it for a month before returning it? Awesome, you just bought Netflix a new DVD. In fact Netflix would punish frequent returners in those days by sitting on the next mail-out for a day or two after you had sent back a disk.
Blockbuster’s ogreish return policy combined with an industry-standard price drop on DVDs created a situation where it was a smarter option to buy a DVD than rent for a hot release, gambling you could get it back to the store in time. And if you didn’t mind waiting, Netflix would send a less new video right to your door. Then in 2007, long after my belt had been loosened up again, I noticed a tab on Netflix announcing an upcoming streaming service for existing customers. The monthly fee would be unchanged (heh).
Netflix streaming was the final nail in Blockbuster’s coffin and frankly, I did not shed a tear when it shuttered its doors for good.
That’s not to say that my relationship with Netflix was without its hiccups.
When Netflix first started streaming it, effectively, owned 100% of the legal streaming market. At first, the studios didn’t really care. It was just another revenue stream for them and not a bad one at that. The real money back then was in DVDs. In fact, the studios had begun to view ticket sales as a secondary source of income. So long as you didn’t give Netflix streaming access to your top-tier DVD releases, all would be well forever and ever Amen.
Then in 2010, the DVD Boom revealed that it was not an eternal thing but simply an artificial market bubble created by the now nearly extinct Blockbuster Video and their savage late fees. The DVD market completely collapsed and the studios started shrieking, “oh my god, Netflix is eating our lunch!”
The studios got together and presented Netflix with a uniform industry price hike across the board. Netflix crunched the numbers and then did something very, very stupid. They doubled their monthly fee without warning their customers in advance. Bad call on their part. For a company that looked like it could do no wrong, they did it wrong. And for the first time in their history lost a lot of customers.
After bumble fucking around for a bit they got their feet back under them and proceeded forward to complete market dominance in streaming, seemingly convinced that all would be well forever and ever Amen.
The thing is that Netflix’s biggest draws aren’t movies they are TV shows. That’s what people are binge-watching. And the problem is this. The most popular shows on Netflix, ain’t owned by Netflix!
All of the major studios have been gobbled up by super corporations or in the case of Disney became one themselves. All of them now have the financial wherewithal to start their own streaming services, which is exactly what they are doing. And all of them are about to pull their shows off of Netflix.
Netflix owned 100% of the streaming market, which means anyone getting into the streaming business is going to be cutting into Netflix’s market share. They just posted their first quarterly loss of customers since their price hike debacle and it wasn’t a small one. Disney, Amazon, Apple, Warner Media, MGM (yeah they still exist), YouTube Red, Discovery, CBS All-Access and (now that Disney has muscled them out of Hulu), NBC-Universal will all have streaming services next year. And this isn’t even counting small fry streamers like Crunchyroll, Funimation and Shudder. Hell, there’s this guy who runs a far-right blog and he’s gotten into streaming with this thing called Unauthorzed.TV (Give the link a click. It’s worth a look, trust me on this point).” The problem is the fragmentation is going too far. People won’t pay for fifteen different subscriptions. A lot of these services are going to have to consolidate.”
Well, I certainly got that one right. The consolidation phase has been underway for a while and big chunk of that list of streaming providers now looks like a cemetery of filled with corporate tombstones. Warner had a bunch of streaming services each one over specialized, these were absorbed into HBOmax, then Warner Media was more or less sold to Discovery which was another service that got rolled in. Except for Crunchy Roll, Sony bought that off of Warner and oddly enough opted to role their own Funimation service into Crunchy Roll instead of the other way around. YouTube Red is a memory as is CBS All-Access (Paramount had been divided into CBS and Paramount studios, in desperation they re-merged). Shudder and Unauthorized are still with us, indicating that the smaller specialized services will remain viable. Last, Hulu and Disney+ are in the process of merging.
“2020 is going to be a watershed year for Netflix… Or rather a customer shed year. Twenty-five of their top fifty shows are going to be gone and everybody is going to be eating their lunch.
Disney Plus is looking like a specialty channel for a specialty market. Now, it’s a decent market but it’s not going to dethrone Netflix anytime soon. Although, Netflix’s death of a thousand cuts will begin in earnest about the middle of next year.”
Okay, I obviously got Netflix’s grim-dark future completely wrong. In my defense, I wrote this article in 2019. I had no way of knowing that the vast majority of the human race would be placed in house arrest the next year. Covid saved Netflix. It boosted their subscriptions to record levels and gave them the wherewithal to survive a period where they should have starved to death.
The article continues:
“One thing that I’m curious about is how will the fractalization of mass entertainment affect the market as a whole.
Cataliine Predicts:
“First, Actors are going to lose both influence (what little they had) as well as their paychecks. There will likely be a few A-Lister lottery winners but given that the pool of acting jobs will expand, their salaries will be driven down across the board as name recognition comes to mean about as much as the average Instagram Influencer. The movie star is a holdover from the 20th century and won’t survive much past 2040.”
I appear to be on track on that one.
“Second, Entertainment revenue is likely to decrease across the board. Seventy million people watched the opening of Disneyland in 1955. Disney Plus was high-fiving themselves with an opening of ten million subscribers. 2020 starts in a month and a half, by 2030 the entertainment market will be almost unrecognizable”.
I got that one right too but for the wrong reasons. Covid changed theater-going habits. Millennials have reached the age where they don’t do movie night too much anymore at about the same time as Zoomers were supposed to take up the slack but didn’t because they never had a chance to pick up the movie-going habit. Call it a Black Swan event.
I had also predicted the rise of a right-wing entertainment service. I’ll give myself half credit there since the venue that cropped up was the Daily Wire. Although, Angel Studios did enter the top ten movie moneymakers with a year with Sound of Freedom. Like I said, half credit.
Do I have any new predictions? A couple.
There is a good possibility that Paramount and Warner Brothers will merge. Universal was sniffing around Paramount too but Paramount comes with CBS attached and Universal owning both CBS and NBC would give the FCC too much heartburn. I don’t think the FTC even can approve a merger due to existing laws.
There is the possibility of Paramount getting divided up between SkyDance and Warner Brothers, with Skydance taking the Paramount back catalog from 1980 to the present. Everything from 1979 on back would go to Warner. You have to remember Tom Cruise is a major stakeholder in SkyDance and most of his films have been with Paramount.
Apple will not buy Disney. I keep hearing this one because “Apple has the money and they’re super Woke.” The thing is capability does not equal intention. Apple loves its prestige format TV shows and movies, and as near as I can tell that’s all they want. Apple dislikes acquisitions, it doesn’t do business that way. Apple builds from the ground up and in-house. Granted there is nothing Bob Iger wants more at this point than to sell Disney to Apple. However, Disney is clearly and obviously dysfunctional, no company in their right mind would buy it unless they were carving it up.
Lastly, FreeVee, Hulu, and Tubi have led the way forward with their advertisement-supported tiers. All of the streaming services will have one soon. Although, Netflix surprised me by beating out Disney+. Disney owns both Hulu and Namesake+ and Hulu has been doing great with its ad tier for years. The fact that they came in behind Netflix strongly indicates that Hulu and Disney+ have a warring tribes mentality. They are not going to help each other like good do-bees. Also, Netflix is the number one streaming service and that is naturally the one the companies buying the ads want.
For now the streaming services will continue to aggregate, feeding upon one another in cannibalistic fury.
We’ll see how my well my psychic powers hold up.
Okay, I’m done here.
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