What Movie Studios Refuse to Understand About Streaming

The longer we live in the new digital world, the more we are seeing it replicate systemic issues we’ve been fighting for decades. In the case of movie studios, what we’ve seen in the last few years in streaming mirrors what happened in the 1930s and ‘40s, when a small group of movie studios also controlled the theaters that showed their films. And by 1948, the actions of the studios were deemed violations of antitrust law, resulting in a consent decree. The Justice Department ended that decree in 2019 under the theory that the remaining studios could not “reinstate their cartel.” Maybe not in physical movie theaters. But online is another story.

Back in the ‘30s and ‘40s, the problem was that the major film studios—including Warner Bros. and Universal which exist to this day—owned everything related to the movies they made. They had everyone involved on staff under exclusive and restrictive contracts. They owned the intellectual property. They even owned the places that processed the physical film. And, of course, they owned the movie theaters.

In 1948, the studios were forced to sell off their stakes in movie theaters and chains, having lost in the Supreme Court.

The benefits for audiences were pretty clear. The old system had theaters scheduling showings so that they wouldn’t overlap with each other, so that you could not see a movie at the most convenient theater and most convenient time for you. Studios were also forcing theaters to buy their entire slates of movies without seeing them (called “blind buying”), instead of picking, say, the ones of highest quality or interest—the ones that would bring in audiences. And, of course, the larger chains and the theaters owned by the studios would get preferential treatment.

There is a reason the courts stopped this practice. For audiences, separating theaters from studios meant that their local theaters now had a variety of films, were more likely to have the ones they wanted to see, and would be showing them at the most convenient times. So they didn’t have to search listings for some arcane combination of time, location, and movie.

And now it is 2021. If you consume digital media, you may have noticed something… familiar.

The first wave of streaming services—Hulu, Netflix, iTunes, etc.—had a diversity of content from a number of different studios. And for the back catalog, the things that had already aired, services had all of the episodes available at once. Binge-watching was ascendant.

The value of these services to the audience was, like your local theater, convenience. You pay a set price and can pick from a diverse catalog to watch what you wanted, when you wanted, from the comfort of your home. As they did almost 100 years ago, studios suddenly realized the business opportunity presented in owning every step of the process of making entertainment. It’s just that those steps look different today than they did back then.

Instead of owning the film processing labs, they now own the infrastructure in the form of internet service providers (ISPs). AT&T owns Warner Brothers and HBO. Comcast owns Universal and NBC. And so on.

Instead of having creative people on restrictive contracts they… well, that they still do. Netflix regularly makes headlines for signing big names to exclusive deals. And studios buy up other studios and properties to lock down the rights to popular media. Disney in particular has bought up Star Wars and Marvel in a bid to put as much “intellectual property” under its exclusive control as possible, owning not just movie rights but every revenue stream a story can generate. As the saying goes, no one does to Disney what Disney did to the Brothers Grimm.

Instead of owning theater chains, studios have all launched their own streaming services. And as with theaters, a lot of the convenience has been stripped. Studios saw streaming making money and did not want to let others reap the rewards, so they’ve been pulling their works and putting them under the exclusive umbrella of their own streaming services.

Rather than having a huge catalog of diverse studio material, which is what made Netflix popular to begin with, convenience has been replaced with exclusivity. Of course, much like in the old days, the problem is that people don’t want everything a single studio offers. They want certain things. But a subscription fee isn’t for just what you want, it’s for everything. Much like the old theater chains, we are now blind buying the entire slate of whatever Disney, HBO, Amazon, etc. are offering.

And, of course, they can’t take the chance that we’ll pay the monthly fee once, watch what we’re looking for, and cancel. So a lot of these exclusives are no longer released in binge-watching mode, but staggered to keep us paying every month for new installments. Which is how the new world of streaming is becoming a hybrid of the old world of cable TV and movie theaters.

To watch something online legally these days is a very frustrating search of many, many services. The hope you have is the thing you want is on one of the services you already pay for and not on a new one. Sometimes, you’re looking for something that was on a service you paid for, but has now been locked into another one. Instead of building services that provide the convenience audiences want—with competition driving services to make better and better products for audiences—the value is now in making something rare. Something that can only be found on your service. And even if it is not good, it is at least tied to a popular franchise or some other thing people do not want to be left out of.

Instead of building better services—faster internet access, better interfaces, better content—the model is all based on exclusive control. Many Americans don’t have a choice in their broadband provider, a monopoly ISPs jealously guard rather than building a service so good we’d pick it on purpose. Instead of choosing the streaming service with the best price or library or interface, we have to pay all of them. Our old favorites are locked down, so we can’t access everything in one place anymore. New things set in our favorite worlds are likewise locked down to certain services, and sometimes even to certain devices. And creators we like? Also locked into exclusive contracts at certain services.

And the thing is, we know from history that this isn’t what consumers want. We know from the ‘30s and ‘40s that this kind of vertical integration is not good for creativity or for audiences. We know from the recent past that convenient, reasonably-priced, and legal internet services are what users want and will use. So we very much know that this system is untenable and anticompetitive, that it can encourage copyright infringement and drives the growth of reactionary draconian copyright laws that hurt innovators and independent creators. We also know what works.

Antitrust enforcers back in the ‘30s and ‘40s recognized that a system like this should not exist and put a stop to it. Breaking the studios’ cartel in the ‘40s led to more independent movie theaters, more independent studios, and more creativity in movies in general. So why have we let this system regrow itself online?

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Author: Katharine Trendacosta

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