Monday, February 11, 2013

Streaming Wars

Netflix recently released an original series, House of Cards, and Amazon Prime just announced that it has garnered exclusive rights to Downton Abbey starting next year. These announcements lead some to muse on the future of streaming video entertainment and how traditional the model appears.

To wit, if each streaming service continues adding exclusive properties, the typical viewer would need subscriptions to several providers in order to enjoy his loved programs in a timely manner. Hulu+ has a lot of popular shows the day after they broadcast, where Netflix has more movies and documentaries and no commercials, but Crackle often features selections not appearing on either of those sites and Amazon Prime just signed an exclusive deal with CBS whose new shows do not appear on any of these services. If you watch one or more shows on most of these networks, you would need at least two subscriptions and be forced to pay per episode to stay current with your TV viewing.

Most critics are decrying the model, saying it is no different from traditional cable/satellite plans except that each viewer creates his own package individualized to meet his taste and needs - if you don't pay for sports programming, you don't have any sports channels. According to their logic, the average viewer is going to have to pay for so many individual streaming providers that he may as well just pay for a cable/satellite plan. Except that cutting the cord is still cheaper than almost any cable/satellite plan - usually by half or more. And that's just for starters.

Again, the size of your monthly bill is directly proportional to your TV viewing appetite; the less TV you watch regularly, the less you are likely to pay. If you don't watch broadcast TV that often and do not care to keep up with current shows, you're likely to drop your Hulu+ subscription at some point. Also, Hulu+ and Netflix represent the high end of subscription rates, generally speaking; at $8.99 per month, they are some of the pricier providers. Amazon Prime costs a little over $6.50 per month but bills annually. Most streaming content providers' monthly charges are around $5.00 or less (though Roku in particular offers numerous other pay channels that can cost as much as $25-30.00 per month).

As that discussion points out, the streaming content providers already kind of brand themselves according to what they offer. Hulu+ is focused on current broadcast TV, while Netflix focuses more on movies to point out the major differences in the two most popular players in the field. Some viewers will be more naturally drawn to one than the other and there is no real reason to assume the majority will obediently subscribe to all available options simply because...

Another point that seems to be missing from these dark rumblings is the increased access to non-visual entertainment, most notably radio and podcasts. When I cut the cord several years back, there were fewer options available to me than there are today. But with basic Hulu, a Netflix subscription, and broadcast TV, I certainly did not suffer from a lack of video content. But what I really got into was podcasts and streaming radio. There were entire weeks when I would listen to podcasts and music without ever watching anything in my Netflix or Hulu queues. At worst, I might catch a few episodes of daily shows or nightly news, but I was otherwise listening to podcasts or streaming radio services (including Last.FM which is $3.00 per month but also has free access).

Roku features tons of radio and podcast channels, including Pandora, Slacker, and more. Adam Carolla has his own channel featuring all of the podcasts produced by his Ace Broadcasting studio. Adam Curry has two channels dedicated to regular podcasts.

And honestly, I've found that my renewed interest in other forms of entertainment satisfies me more than simply watching television ever did. Several great radio programs and podcasts round-out my regular entertainment consumption these days, where I hadn't regularly listened to radio in probably a decade or more prior to cutting the cord. Of course, podcasts' rise in popularity had something to do with that but it could be argued that a rise in the popularity of streaming entertainment lead to the podcast boom. Whatever the case, streaming entertainment offers much more than just movies and TV shows.

Subscriptions to Amazon Prime, Netflix, Hulu+, and Last. FM come to roughly $30.00 per month; subscribers to all of these services could still be saving about $50.00 per month. Of course, there is no sports programming, CBS, or HBO, and that's still a dealbreaker for the majority of home viewers. More and more streaming sports sites are becoming available but HBO is likely to be a holdout all the way to the end of the line. You can watch CBS programming on the CBS website. And while it's true that you have a higher Internet bill with broadband access, you're only paying a little more a month than you do for dial-up - the cost offset is still cheaper than paying for cable in addition to Internet access.

Production and licensing are likely to undergo major structural changes in coming years, with more studios developing and producing content to license to streaming distributors. The Guild is one of the pioneering shows of this model - it is now collected on both Netflix and Hulu. Providers like Netflix and Hulu will not be directly involved in the development or production of these shows, becoming distribution channels as opposed to handling all production in-house.

Some of these properties will be bought outright in one form or another and developed in-house as exclusive properties. Hulu might enter some deal with The Guild, for example, in which it takes a more direct hand in the production of the show. But content development and production is going to continue to grow apart, and away, from the traditional studio/channel system. There are already streaming Roku channels which do this, working more or less as content aggregators.

Remaining true to traditional broadcast form, many of these channels make money through advertising and so are free to viewers. I pay regularly for two of the more than 20 channels in my Roku lineup and I paid a one-time fee of $2.00 for a third. The total recurring cost of my streaming Internet is less than $20.00 per month; the Roku device cost right at $60.00; my high-speed Internet is $30.00 per month; so I pay around $50.00 per month for my streaming entertainment with total setup costs of about $60.00 (and that's not even accurate because I use my Internet for online gaming and general Internet access, not just to provide streaming entertainment, so only a portion should be directly applied to my recurring streaming entertainment costs). Also, you don't need a streaming device like Roku to access streaming entertainment - the only thing you need is an Internet connection - so you don't even have to count the $60.00 "setup fee."

Many argue that if the majority of people cut the cord, cable and satellite companies will simply respond by raising the subscription costs of Internet access. However the real cost to cable is sports programming (due to licensing fees) - another factor too often overlooked by these articles. I also have a feeling that the FTC would get involved if the telecoms started raising Internet access costs to astronomical rates - as would the ACLU, local area organizations, et. al.

However they try to slice it, cutting the cord is still less costly than subscribing to cable/satellite and your entertainment choices are hardly compromised. Competition is likely to increase costs but just as likely to improve quality. Each provider's personal focus and branding will become apparent in time and subscribers will make choices based on their TV viewing habits, as opposed to feeling forced to pay for numerous subscriptions just to keep up with one or two shows.

© C Harris Lynn, 2013
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