The Streaming Wars Will Be Worse Than the Cable Wars. But the Customer Will Still Always Lose

Combining siloed entertainment options with the loss of net neutrality means most consumers will have fewer affordable options.

So they will resort to piracy - or elect a government that actually has their best interests at heart. JL

Katharine Trendacosta reports in Slate:

Instead of the old horizontal bundling—in which cable companies packaged a bunch of channels together so that people paid for some things they weren’t going to watch to get what they were—the new bundling is going to be vertical, where you pay for internet and get a streaming service. Instead of paying one cable bill for all the channels, the ones we want and those we don’t, we’re paying for countless services just for the one or two programs or movies we want to watch on each.

Begun, the streaming wars have. Worse and far more harmful than the cable wars of years past. And with the new content wars will come a fresh internet hell.

It was not that long ago that we heard constantly about battles being waged between networks that provided content and the cable companies that delivered that content to people. Every couple of years or so, as multiyear deals between networks and cable providers drew to a close, networks would demand more money for their content. Cable companies, unsurprisingly, wanted the opposite. Sometimes, the game of chicken did result in people losing channels for a while, but more often it was just noisy PR campaigns. You might remember years and years of being told that if you were a Time Warner customer, you wouldn’t get Fox. Or you’d lose Comedy Central and Nickelodeon if you had DirecTV.

The latest cycle of these deals was in the late 2000s and early 2010s, and with cable such a high-stakes battleground, networks were content to leave streaming in the hands of, basically, Netflix. Networks did enter the streaming world only the year after Netflix but far less aggressively than today. Hulu was a joint NBC and Fox venture, and CBS launched TV.com in 2009. Individual channels also had their own low-profile streaming services, often streaming recent episodes for free—in order to encourage new viewers—or a back catalog accessible with a cable login. They weren’t positioned as competition for cable or Netflix so much as a way for viewers to catch up on shows they’d missed.

Eventually, though, Netflix’s success proved that streaming was a viable market, and now the companies that once were content to license their movies and TV shows to Netflix want their own piece of the action. But because there are so many ways to watch older movies and TV shows—spread out across syndication, several streaming services, even *gasp* buying DVDs—the way companies have decided to lure new customers is with a classic ploy: the exclusive.

Netflix, Hulu, and Amazon have all gone this route. Want to watch To All the Boys I’ve Loved Before, Shrill, or The Expanse? You have to subscribe (or in some cases buy a DVD that costs roughly the same as a subscription). CBS, too, put its Good Wife spinoff and its new Star Trek shows on its “All Access” streaming service. Warner Bros. launched a service just for content based on DC comics. But, as is ever the case in Hollywood, it’s Disney that upped the ante with the launch of Disney+ in November.

Between its own animation, Pixar’s, Star Wars, and Marvel, Disney’s grip on mass culture is unparalleled. For that alone, Disney+ was going to be big. But Disney also made its streaming platform the exclusive home of the first-ever live-action Star Wars show. And so Disney+ became the most downloaded new app of the end of 2019.

Disney+’s hugely successful launch wasn’t just because of its catalog. The company also had recently become majority owner of BAMTech—a streaming technology service spun off by Major League Baseball from its digital media operation. Instead of trying to develop a tech company from scratch, Disney just bought one. And with that, Disney was able to offer a slick interface and straightforward subscription plan along with a decades-deep catalog and The Mandalorian.

NBCUniversal has gone a very different route for its streaming service. Its offering, set to launch July 15, is called Peacock (perhaps a mistake in a world where penis jokes travel at the speed of light online). It will have a few originals, but the biggest draw is going to be its catalog, including SNL  and The Office. And unlike Disney+, it’s got a free option. Or you can pay for a premium option that has more content but still has ads. You can also pay for a premium premium service that has no ads.

But here’s the thing: Peacock doesn’t have to be good to compete. It simply has to exist on Comcast. Peacock Premium (with ads) will be free if you are a Comcast or Cox subscriber, and all of those subscribers are getting Peacock’s ads and driving up Peacock’s subscriber numbers, which makes those ads more lucrative for NBCUniversal. And that should come as no surprise to anyone who knows that Comcast owns NBCUniversal and that Cox licenses Comcast’s streaming platform.Disney+ got to 10 million subscribers by leveraging the hold it has on the biggest brands in pop culture and its ability to buy an existing streaming technology. Peacock is free to Comcast subscribers simply because Comcast owns NBC. Disney doesn’t have that kind of pipeline access, so it had to make a much more limited version of that kind of deal with Verizon to compete. Disney had to do this work because Disney owns many things, but it does not yet own an ISP.People will become de facto subscribers to Peacock because of their internet service providers. But people are customers of certain ISPs not because they chose them but because there is, for many, many Americans, no choice for high-speed broadband. A 2016 report from the Federal Communications Commission stated that only 38 percent of Americans had more than one choice for high-speed broadband. And the higher the internet speeds, the more access restrictions there are.

Instead of the old horizontal bundling—in which cable companies packaged a bunch of channels together so that people paid for some things they weren’t going to watch to get what they were—the new bundling is going to be vertical, where you pay for internet and get a streaming service in return. It’s not just Comcast that’s doing this. AT&T owns HBO, and it’s going to give premium AT&T mobile and broadband customers HBO Max (not to be confused, although you could definitely be forgiven for doing so, with the existing HBO Go and HBO Now apps) bundles at no extra charge.

And all of this integration has an added level of danger to it because there are, as of now, no national net neutrality protections. Former Verizon lawyer and current FCC Chairman Ajit Pai led the charge to repeal them in 2017. Net neutrality requires ISPs to treat all data online the same, regardless of its source. Without those protections, an ISP that also owns a content company with a streaming service can use its internet access power to hurt its competitors, and history shows that ISPs tend to do just that. Whether it’s Comcast blocking peer-to-peer technology; AT&T, Sprint, and Verizon blocking Google Wallet so you’d use their services instead; or AT&T blocking FaceTime from iPhones unless you paid for a more expensive plan, internet providers have used their power to squeeze more money out their customers.

So while you’re promised Peacock for free as a Comcast subscriber, you may also be getting your Disney+ content, which you pay for, at a degraded quality. Or maybe Disney+ won’t get degraded—if it pays Comcast’s price. That particular deal is just hypothetical, but without net neutrality protections, ISPs can charge their competitors a lot for access to their customers and for the promise that they won’t throttle traffic to competitors’ services. Which will then force the prices that viewers pay up.

The same dynamic between ISPs and streaming services plays out with cellular providers, many of which are part of the same giant conglomerates as the big ISPs. Just as ISPs can include streaming services with your internet bill, cell providers will offer a streaming service with your mobile plan. And in the absence of net neutrality protections, cell providers engage in practice called “zero rating,” which means that either their own services or services that have made a deal with them will not count against your data cap. For low-income populations, for those who rely on their phones for internet access, this can lock people into certain services and certain information sources.

Now, instead of paying one cable bill for all the channels, the ones we want and those we don’t, we’re paying for countless individual services just for the one or two programs or movies we want to watch on each of them. And that will bring back piracy, which is bouncing back after having been on the decline for years.

The return to piracy is both a bit of a meme and a bit of a reality. And its return is absolutely the result of a market that giant companies have built to intentionally trap customers into either a single-company ecosystem (one ISP, one easy streaming service) or an annoying, expensive patchwork. And while piracy signals discontent with the system, it’s quite unlikely that these companies will react by changing their approach, let alone lowering prices.

They’re going to mandate copyright filters and harsh punishments to combat the “scourge of piracy,” even though studies have shown over and over again that the best way to defeat piracy is with cheap, easy, and legal alternatives. And while the tech giants like Facebook and Google will easily be able to comply with this kind of law (YouTube, for example, already voluntarily implements a complete disaster of a copyright filter, called Content ID), any smaller, newer competitors will not. In other words, no one will ever be able to challenge this system, since the barrier to entry will be so high. We’ll be stuck with whatever the large companies deign to give us. Niche content, like that found on Acorn and Crackle, already in danger, will vanish. Additionally, the structure of Netflix deals is such that the service rarely lets shows make it past two seasons, and even with a devoted fan base, the shows can’t find a new home. A lot of things that people love are disposable in this digital landscape, easily discarded or lost.

Hollywood likes to claim that copyright laws are actually anti–Big Tech laws, to draft off of the techlash. What they don’t tell you is that, as ISPs and streaming companies, the big studios are also Big Tech. In trapping users into this ecosystem, Big Content and Big Tech are united, not in opposition. They are in opposition to the wants and needs of consumers, though. For example, all of these companies are more concerned with selling ads and collecting and monetizing your data than in delivering the best experience to you, the user.

None of this has to be this way.

Here’s one very basic thing we can do, right now: restore net neutrality. We used to have strong net neutrality protections, and there’s a bill that would make the old protections law, which has already passed the House of Representatives and is just languishing in the Senate. You can tell your senators to push for it.

Another thing to do is support measures that promote ISP choice. This is an area that can seem very boring but is very important. Longer term, be suspicious of copyright laws that involve filters, easy content removal, and sky-high punishments for regular internet users. Also, when Hollywood and ISPs talk about “Big Tech,” remember that Disney and Comcast are also big, also tech companies, and also trying to control what you see and do online. Tech companies are now entertainment companies, too—think about YouTube Red, Amazon Originals, Facebook Watch, Apple TV+. Remember that we had to put in place rules to prevent giant movie studios from manipulating the movie theater market, and think about what the Disney-Marvel-Pixar-Fox-Lucasfilm megacorporation could do these days. Wonder why any of these companies—studios, Big Tech, ISPs—have been allowed to get so big with so little oversight.

We know how to protect ourselves from what’s coming. We know people prefer legal streaming to piracy. We know that an overwhelming majority of Americans support net neutrality. We know that people should have choices for ISPs. We have the numbers on our side, just not the money. So we just have to start speaking up.