Following AT&T's Lead, Comcast Makes A $65 Billion Bid For Fox

from the merge-ALL-The-things! dept

Encouraged by AT&T's massive merger victory this week, Comcast has made its own $65 billion acquisition offer for a large chunk of 21st Century Fox. According to the Comcast announcement, the company's all cash $65 billion dollar offer is a notable step up from Disney's own $52.4 billion all-stock package, setting up a showdown between two companies that have had a contentious relationship since Comcast's 2004 failed hostile takeover attempt of Disney.

The deal includes the FX Channel, numerous regional sports networks, and a minority stake in European cable TV giant Sky, which would all be tacked on to the NBC Universal assets Comcast acquired back in 2011. Fox will however retain Fox News, Fox Sports, and Fox broadcasting, which will all remain under the existing Fox brand. In its statement, Comcast rolled out the usual claptrap about how the combination would be lovely for all involved:

"We have long admired what the Murdoch family has built at Twenty-First Century Fox. After our meetings last year, we came away convinced that the 21CF businesses to be sold are highly complementary to ours, and that our company would be the right strategic home for them."

Comcast had previously hinted that it was waiting to see the outcome of AT&T's own merger battle with the DOJ before making its own bid for Fox. Comcast and many analysts believe that the comically broad nature of AT&T's court victory (based on a pinhole narrow reading of the markets by U.S. District Court Judge Richard Leon, who clearly has never heard of things like zero rating or net neutrality), means the precedent set will likely result in a DOJ that's more hesitant to intervene in potentially problematic merger moving forward.

That's especially true of vertical integration mergers, where modern U.S. antitrust law tends to be ill-equipped to handle some of the more complex new media anti-competitive concerns that pop up. Combined with the death of ISP privacy rules and the neutering of net neutrality, we're creating a brave new landscape where there's very little to stop giants like Comcast and AT&T from using their last mile monopolies--combined with massive ownership of content needed to compete with these giants--as anti-competitive bludgeons against consumers and competitors alike.

For example, there's now nothing of note preventing AT&T and Comcast from exempting its own content (like HBO or a regional sports game) from arbitrary and unnecessary usage caps, while penalizing those who use a competitor's service (Netflix, or the next Netflix). Similarly, there's nothing stopping Comcast or Verizon from arbitrarily throttling competitors at interconnection points, driving up the cost for competitors to access their broadband subscribers. There's an ocean of creative ways to hamstring competitors the government is now largely helpless to effectively police, and as the AT&T court win shows, the ISP claim that this isn't a problem because antitrust will save us all clearly isn't a valid argument.

With the FCC making it very clear it's a glorified rubber stamp, that leaves the DOJ as the only real wild card in terms of whether any meaningful conditions get applied to this deal. Granted if you followed the NBC Universal merger, you'll recall that Comcast has a pretty terrible history of ignoring merger conditions when it suits it, and regulators from both parties tend to do little more than grumble when the company tap dances around imposed restrictions (though that was a major reason why Obama-era regulators blocked Comcast's 2014 attempted acquisition of Time Warner Cable (not to be confused with Time Warner)).

Obviously there's still plenty of folks that see zero problems with massive broadband monopolies gobbling up countless media empires while paying millions of dollars to neuter state and federal oversight. And their theory that these kinds of deals are no problem because the market self-regulates (ignoring there is no free market competition in broadband to organically hold them accountable) will soon have a perfect opportunity to put their theories to the test.

Filed Under: antitrust, broadband, competition, content, doj, mergers, streaming
Companies: at&t, comcast, disney, fox, time warner

Shockingly, Streaming Providers Are Dominating Cable At Customer Satisfaction

from the innovation-nation dept

It's really no secret that traditional cable and broadband providers have some of the worst customer satisfaction of any companies in America. Comcast and Charter (Spectrum) in particular can usually be found stumbling around in last place in most satisfaction and support rankings. That's been particularly true of the American Customer Satisfaction Index, which routinely shows cable and broadband providers rank consistently worse than nearly any other company in any industry in America. In fact, these companies even tend to be ranked worse than Americans' experiences with government agencies like the IRS.

And despite seemingly bi-annual promises by these companies that customer service is their top priority (remember when Comcast promised a new "Customer Experience VP" would fix everything?), it's actually getting worse.

According to the latest ACSI report, high prices, bloated cable bundles, and terrible customer service continue to leave customers angry and frustrated:

"Customer satisfaction with subscription television service falls 3.1 percent to an ACSI score of 62, an 11-year low as the industry faces a seismic shift of subscribers defecting to lower-cost online video streaming services. In response, many cable and telecom companies are offering new Internet TV streaming in addition to legacy pay TV, but cord cutting continues."

While some cable companies have finally realized the error of their ways and begun offering less expensive, more flexible streaming alternatives (Dish's SlingTV and AT&T's DirecTV Now), by and large the mindset of the cable industry remains focused on doubling down on a lot of the dumb ideas (predominately aggressive price hikes) that brought them to this point in the first place.

For example Charter Communications, which has been pummeling consumers with price hikes in the wake of its $89 billion merger with Time Warner Cable and Bright House Networks, took a particularly steep tumble during these latest satisfaction ratings for traditional cable providers:

The same story is playing out with broadband ISP satisfaction ratings, where limited competition often results in high prices as well:

It's worth noting that this year was the first year the index ranked streaming video alternatives, and (shockingly) the companies that are now offering lower prices, more flexible and innovative services, and better customer service are doing significantly better than traditional cable. Netflix, Sony PlayStation Vue, and Twitch all saw scores of 78, and the lowest rated streaming provider (Crackle at 68) was still rated better than nearly all traditional TV providers:

And while cord cutting is expected to break records this year, that's not to say that cable providers can't turn things around. Industry executives simply have to stop pretending that the traditional TV cash cow will live forever, and begin to compete by offering cheaper, more flexible options with better customer support. The bottom line many cable executives can't acknowledge is: competition simply means TV isn't going to be as profitable as it used to be, and they're going to have to actually try now. You can either get out ahead of this phenomenon now through adaptation, or continue doubling down on the same bad ideas that resulted in record cable TV customer defections in the first place.

Filed Under: acsi, cord cutting, customer satisfaction, internet, pay tv, streaming
Companies: charter, comcast, netflix, time warner

How The Record Labels Screwed Up The Music Industry, And The Tech Industry Saved Them

from the start-thinking-about-the-customers dept

If you've been following how much the record labels stumbled around the internet for the past couple of decades, then you know the basics here. But time has a way of erasing some of the nuances of history, and I find it incredible to watch the RIAA and the record labels these days walking around proudly acting as if they were the ones who "saved" the music industry by embracing streaming services that now make up the bulk of the recording industry's revenues. Indeed, as we've pointed out for years, the recording industry has a very long history of overvaluing the music and undervaluing the services that people want. They've spent so long insisting that the music is the sole source of the value of what they produce, that they always downplay (or entirely erase) the rest of the equation: getting the music to fans in a manner that is convenient, reasonable, and non-burdensome. Instead, they always focus on killing the golden goose -- insisting that any successful music tech service pay them more and more until they're squeezed dry.

Over at Motherboard, Ernie Smith, has a good history of how the recording industry screwed up streaming in the early days (unfortunately he does what most people do and refers to what's really the "recording industry" as the "music industry" -- and also simplifies the history to be just one round of mistakes, rather than many, many mistakes leaving a graveyard of dead tech companies in its wake -- but the overall article is still excellent). It's a very instructive piece in detailing exactly how the record label bosses were so focused on making sure that they had control and limits, that they didn't care at all about providing a service that people actually wanted. Much of it focuses on the two idiotic music label-approved streaming services that the industry tried to launch MusicNet and PressPlay (which we dubbed MusicNot and PressPause way back in 2001). Smith details how both services were built entirely focused on "how do we protect our revenue stream" rather than "how do we serve the customer." Thus, you had lots of DRM and lots of stupid limits:

Their offerings were slightly different—for a $9.95-per-month fee MusicNet allowed for 100 temporary downloads and 100 on-demand streams at launch, according to Billboard, while Pressplay allowed for 300 streams and 30 downloads and offered limited CD-burning capabilities at higher price points—but the tissue tying the two approaches together was DRM.

It certainly wasn’t music, as the services made no effort to collaborate with one another. In the post-Napster era, the combination of limited libraries and competition from peer-to-peer file sharing services put the companies at a major disadvantage.

Incredibly, inside the industry, executives so believed their own bullshit that they really thought these consumer-unfriendly services would win over piracy:

Stephen Witt, in his 2015 book How Music Got Free, portrayed Universal Music’s then-CEO, Doug Morris, as being overly excited about PressPlay, to the point where Recording Industry Association of America President Hilary Rosen, frequently portrayed as an “enemy combatant” of the Napster era during this time, had a hard time talking him off the ledge. (Rosen, it should be said, was simply sharing the company line because it was her job.)

“On several occasions he told Rosen to stop talking to Napster, to stop negotiating with the Fannings, to stop worrying so much, because he had something that would ‘make it all go away,’” Witt wrote. “In later years, PressPlay would be a reliable starting point for listicles of the ‘Top All-Time Tech Busts.’”

If you don't remember Doug Morris, he was the guy who, back in 2007, gave a stunning interview where he insisted that the reason why the labels missed the boat on the internet was... because they didn't know anyone who understood technology and then blatantly admitted that he didn't know how to hire someone who would have understood technology. To me, that seemed like evidence for why the board should have fired him and brought in someone who actually understood the market. For Morris it just meant he remained a revered leader of the recording industry.

But really the thing that screams out through Smith's piece is the same old thing: the record labels seem to believe that the only thing that matters -- the only thing that provides any value at all -- is the music (which, coincidentally, is the one thing they have some element of control over thanks to copyright). And thus, the idea that the technology or service matters, or that making a service that people actually want is considered barely even worth considering.

Indeed, reading through the article, it basically shows how the tech industry -- in the form of Apple and Spotify -- more or less rescued the recording industry from their own incompetence. And the incredible thing today is that the record labels still whine and complain that the tech industry that saved them is "taking advantage" of them, rather than showing them the way forward.

Filed Under: business models, doug morris, drm, golden goose, music, overvaluing content, streaming
Companies: apple, musicnet, pressplay, riaa, spotify

Comcast To Sell Netflix Subscriptions In False Belief This Will Slow Cord Cutting

from the good-luck-with-that dept

As we've noted previously, Comcast has enjoyed a little more resilience to the cord cutting threat than satellite TV and telco TV providers--thanks to its growing monopoly over broadband. As DSL users frustrated by lagging telco upgrades switch to cable to get faster speeds, they're often forced to sign up for cable and TV bundles they may not want (since standalone broadband is often priced prohibitively by intent). Of course that doesn't mean these users or stick around (or that they even actively use the cable subscription they pay for), but it has helped Comcast all the same.

There are some indications that advantage isn't helping as much now that we're seeing so many streaming services come to market. At least one Wall Street research firm predicts that Comcast's cord cutting defections will double this year, though those totals still remain modest (400,000) compared to the company's total number of pay TV (22.4 million) and broadband (25.5 million) subscribers.

In the hopes of slowing the slow but study climb in cable TV defections, Comcast has announced that it will soon begin bundling Netflix subscriptions with its existing services, in what it claims is a quest to provide "more choice, value and flexibility":

"Netflix offers one of the most popular on demand services and is an important supplement to the content offering and value proposition of the X1 platform,” said Sam Schwartz, Chief Business Development Officer, Comcast Cable. “Netflix is a great partner, and we are excited to offer its services to our customers in new ways that provide them with more choice, value and flexibility. The seamless integration of Netflix with the vast Xfinity entertainment library on X1 present a unique and comprehensive experience for customers."

There's no indication yet whether Comcast will sell Netflix at any kind of discount. Still, the move isn't likely to help Comcast stop what's become an obvious example of market evolution. Customers looking for actual "choice, value and flexibility" pretty consistently find that's not something they get from traditional cable, thanks in part to Comcast's relentless rate hikes and hidden fees. Since most of these customers are ditching cable due to having to pay $130 or more per month, even a discounted subscription to Netflix isn't likely to help.

Of course Comcast still has an ace up its sleeve: usage caps and overage fees. The company's slow and steady deployment of these arbitrary, unnecessary and punitive limits will allow Comcast to (ab)use a lack of broadband competition to not only counter reduced TV revenues by jacking up the price of broadband, but to punish customers who choose to wander outside of Comcast's walled gardens.

After all, Comcast's own streaming services don't count against the company's caps, while Netflix's service does. And should Comcast and the FCC survive legal challenges to the net neutrality repeal, there's not much to stop Comcast from using a lack of adult oversight on this front to brutal, anti-competitive advantage.

Filed Under: bundles, cord cutting, streaming, videos
Companies: comcast, netflix

MPAA Apparently Silently Shut Down Its Legal Movies Search Engine

from the we-hardly-knew-ye dept

In 2015, with much fanfare, the MPAA released its own search engine of sorts as WhereToWatch.com. The idea behind the site was to combat the argument that people pirate films because there are too few legal alternatives. The MPAA built the site to show where those legal alternatives do in fact exist. Left unaddressed, of course, were questions about how useful and convenient those alternatives were, how users had to navigate through a myriad of restrictive policies for those legal alternatives, and how terrible Hollywood must be in promoting its legal alternatives if the only thing needed to stop all this piracy was an MPAA search engine.

On top of that, WhereToWatch served as something of an excuse for many draconian polices the MPAA was pushing for all along. By being able to point to the search engine as "proof" that all kinds of legal alternatives to piracy were readily available, the MPAA argued that policies such as "notice and staydown" as well as site-blocking were legitimate pursuits. Somewhat predictably and with a heaving helping of irony, WhereToWatch received multiple DMCA takedown notices for its search results, demonstrating how perilous DMCA takedowns have become.

And now comes the news that the MPAA actually shuttered the site months ago.

The MPAA pulled the plug on the service a few months ago. And where the mainstream media covered its launch in detail, the shutdown received zero mentions. So why did the site fold? According to MPAA Vice President of Corporate Communications, Chris Ortman, it was no longer needed as there are many similar search engines out there.

“Given the many search options commercially available today, which can be found on the MPAA website, WheretoWatch.com was discontinued at the conclusion of 2017,” Ortman informs TF. “There are more than 140 lawful online platforms in the United States for accessing film and television content, and more than 460 around the world,” he adds.

That is all absolutely true today, though it was also true three years ago when the site was launched. The simple fact of the matter is that the site did little to serve any real public customer base. Yes, legal alternatives to piracy exist. Everyone knows that, just as they know that there are far too many hoops and restrictions around which to jump that have nothing to do with price. The MPAA and its client organizations have long asserted strict control over their product to the contrary of public demand. That is, and has always been, the problem.

On top of all that, the MPAA showed its no better at promoting its site than it was at promoting the legal alternatives to pirating movies.

Perhaps the lack of interest from the U.S. public played a role as well. The site never really took off and according to traffic estimates from SimilarWeb and Alexa, most of the visitors came from Iran, where the site was unusable due to a geo-block.

Look, the basis for this effort was a good one: promote legit movie-watching to customers currently pirating. That's laudable. But Hollywood is in the business of convincing the public to do so every bit as much as the public is obligated to buy Hollywood's products. It's not enough to build a search engine to the current unwanted offerings and call it a day.

You have to actully innovate.

Filed Under: culture, movies, piracy, search engine, streaming, what to watch
Companies: mpaa

Netflix Bows Out Of Cannes After Festival Tells Streaming Services To Get Off Its Lawn

from the relics-of-a-bygone-era dept

Last month, the folks running the Cannes film festival had a little toddler moment, when they declared that streaming services like Netflix wouldn't be allowed to win the Palme d’Or. More specifically, Cannes boss Thierry Fremaux stated that streaming services wouldn't be allowed to win any awards if they didn't adhere to outdated French film industry release windows. Such windows are increasingly archaic, but the release windows required by France's cultural exception law are particularly obnoxious, requiring a 36-month delay between theatrical release and streaming availability.

Cannes couldn't just come out and admit it was having a "damn kids get the hell off my lawn moment," so it tried to peddle a bunch of nonsense about how this was all about ensuring high festival standards. That, of course, ignores the fact that while Netflix pushes a lot of streaming crap, streaming services in general are increasingly winning both television and film awards. It also ignores the fact that Cannes is trying to dress protectionism up as something more noble than it actually is. Or, that bad streaming content wouldn't be considered for awards anyway.

In response, Netflix has now stated that the company will be avoiding Cannes entirely, Netflix Chief Content Office Ted Sarandos stating the company will be taking its ball and going home:

"We want our films to be on fair ground with every other filmmaker,” Sarandos says. “There’s a risk in us going in this way and having our films and filmmakers treated disrespectfully at the festival. They’ve set the tone. I don’t think it would be good for us to be there."

In a subsequent interview, Sarandos says Netflix learned of its ouster from the media, and was quick to point out that Cannes is really only making itself look stupid here:

"We hope that they do change the rules. We hope that they modernize. But we will continue to support all films and all filmmakers. We encourage Cannes to rejoin the world cinema community and welcome them back. Thierry had said in his comments when he announced his change that the history of the Internet and the history of Cannes are two different things. Of course they are two different things. But we are choosing to be about the future of cinema. If Cannes is choosing to be stuck in the history of cinema, that’s fine."

It's all really just another stupid example of how folks love to try to dress up counterproductive protectionism, stubbornness and resistance to natural evolution as some kind of more elaborate ethos. And how countless people, companies and organizations believe they can somehow thwart disruptive technology to try and roll back the clock to the way things used to be. Of course as Techdirt readers are very much aware, that never tends to work out particularly well.

Filed Under: cannes, movie industry, streaming, thierry fremaux
Companies: netflix

ESPN To Combat Cord-Cutting By Putting Once Kinda Free Content Behind A New Paywall

from the that'll-show-'em dept

In reaction to cord-cutting, a very real "thing" no matter what some cable executives will tell you, ESPN has mostly employed two strategies to combat it. The first strategy has been to stick its head as far and deep into the sand as possible, virtually ignoring reality. Once that was no longer possible, the ESPN ostrich lifted its head out of the sand and squawked out a new streaming service, for which it would bill customers $5/month. In that last link, our own Karl Bode wrote:

There's every indication that ESPN's still only paying lip service to innovation. What consumers say they want is the ability to either avoid ESPN entirely, or buy ESPN the channel on a standalone basis. But it's important to point out that's not what ESPN is actually offering here. The new streaming service won't provide access to ESPN's existing channel lineup unless you have a traditional cable subscription. Without a traditional cable TV subscription, users of the app will be directed to other content they may or may not actually want.

While all of that is still mostly true, recent revelations about the new streaming service indicate that it's actually worse than Bode described. There will indeed be more content on ESPN+ that users probably do want -- such as MLB and NHL games --, much of the rest of the content offered through the service will be cannibalized from another ESPN property that has previously been kinda sorta "free" if you're a cable subscriber.

ESPN+ is also a way to get some extra money out of current subscribers, ones who might already be used to thousands of live sports over streaming. If this new service sounds a lot like ESPN3, the current online home—provided by many ISPs*—for thousands of sports that aren’t televised on ESPN’s TV channels, you’d be right.

While certain aspects, like the MLB and NHL games, are brand new, one of ESPN3's main draws is a wealth of college games in lesser-watched sports or conferences, as well as expanded coverage of Grand Slam tennis and global competitions like cricket. The network has so far been vague about which leagues and games will get cannibalized from ESPN3, or how many, but ESPN did confirm that some of ESPN3's programming will change.

ESPN3 comes along with many cable television packages that include ESPN's TV channels. The content for ESPN3 has always been the sort that isn't popular enough to air on the channels, but which might interest some customers. College games and niche sports make up the bulk of the lineup. But now ESPN will remove some of that content and put it behind a $5/month paywall, asking customers used to getting this content free, bundled with their cable subscription, to instead pay another $60 per year for it. Same content, more money, all while further reducing the value of an ESPN cable subscription, where ESPN still makes most of its money.

How is this a recipe for increased revenue?

You'll still get ESPN3 forced on you by your cable subscription (if you have one), it will just suck a little bit harder. Most of the sports content you want will still only be available through a cable TV subscription, which more and more people do not want. And ESPN+ will cost more money, while only being moderately better in content compared with the bundled in ESPN3.

This is what we call a swing and a miss.

Filed Under: cord cutting, paywall, sports, streaming
Companies: disney, espn

NBA To Experiment With Cheap 4th Quarter Only Streaming Options

from the buzzer-beater dept

As entertainment streaming has officially become "a thing", one leading to massive change in the entertainment landscape, many eyes still turn towards the professional sports leagues. That's because live professional sports is now one of the last big bulwarks against cord-cutting. With that in mind, it's interesting to watch the major sports leagues experiment in streaming, a process that began roughly five years ago in earnest. While Major League Baseball has long led the way, the other leagues are catching up. The NBA in 2014 negotiated a new broadcast deal with Disney and TNT, one in which the league insisted that streaming options be significantly expanded. In fact, 14% or more NBA games are now nationally televised on those networks, with streaming options that do not require cable.

While that sort of deal is to be applauded, it's admittedly fairly vanilla. Put more broadcasts up on streaming services. There's nothing too experimental about that. Especially compared with a new plan the NBA is kicking around for cheap streams of the last quarter of NBA games.

Now the NBA is testing another, obvious-when-you-think-about-it idea: letting fans watch the 4th quarter of a live, in-progress game for just 99 cents.

On Twitter, Vasu Kulkarni shared a screenshot of a notification sent by the NBA app. For less than a buck, he could hop in and stream the end of a game between the Miami Heat and Oklahoma City Thunder. The Verge has reached out to NBA Digital for more specifics on how many fans are being presented with this option. I haven’t seen other screenshots or instances of it, and it’s very possible that the price could change as the NBA tries to find a sweet spot. 99 cents seems like a good one, though. Presumably the usual annoyances with these things (i.e. blackouts for local teams) also apply here.

If those annoyances are indeed still in place with this option, it would be a massive mistake. The whole value in offering these cheap streaming options for the more thrilling moments of a basketball game -- the end of it -- is the ability to draw in the more casual fan to view more broadcasts. Cutting out the local teams, particularly when what's considered a "local team" is so tortured and laughable for so many markets, undercuts that value at the kneecap. Regardless, it's good to see a league with this much sway experimenting in this way.

According to Darren Rovell of ESPN, these experiments are unlikely to end merely with end-of-game sequences.

ESPN reporter Darren Rovell predicts that the NBA could turn micro-transactions into a “significant revenue stream” for fans who want to catch the pivotal ending moments of a game. It’s a tiny, tiny fraction of the price of a full League Pass subscription, so it’s a much easier sell for casual fans who would hesitate to fork out for the big package but have no issue paying 99 cents when they get a push notification about a close, high-stakes game. Silver also mentioned the possibility of these streams being offered when a player has a chance of breaking an all-time record or reaching other notable achievements.

As the Verge post notes, this is somewhat akin to the NFL's RedZone channel, but you pay for what you want and nothing else. Hopefully the antiquated barriers come down along with this experiment and hopefully we'll see more and more creative options put forth by the leagues as well. If nothing else, it should make some large cable providers start quaking, and that's always fun.

Filed Under: discounts, innovation, sports, streaming
Companies: nba

The Rise In Streaming Video Exclusives Could Annoy Consumers, Driving Them Back To Piracy

from the meet-the-new-boss dept

By and large, the added competition being levied upon the traditionally apathetic pay TV industry has been a good thing. Though it has taken a decade longer than it probably would have in a healthier market, the rise of streaming competitors has forced incumbent cable companies like Comcast to up their game and at least consider lowering prices, improving abysmal customer service, and offering more flexible video options.

Granted many pay TV execs seem intent on doubling down on the dumb ideas that cause cord cutting in the first place, but it's indisputable that we're finally seeing some evolution in the traditionally stubborn sector. Pay TV sector executives that believe cord cutting is a fad that magically ends once Millennials procreate are increasingly being marginalized, as are executives that believe they can milk the dying traditional TV cash cow indefinitely without repercussions.

That's not to say that the new streaming frontier isn't going to be without some pretty notable problems. Studies suggest that by 2022, nearly every broadcaster, cable channel, and their mother intend to offer a direct to consumer streaming video product. That includes Disney, which later this year will be pulling most of its most popular content from services like Netflix and Hulu (Star Wars, Marvel films, Pixar titles) and exclusively hosting them on its own, new streaming video platform.

On its surface this improved level of competition is most assuredly a good thing. But as we've noted previously there's a problem brewing here that most executives and analysts don't seem particularly keyed into. Namely, that once you've cordoned off each broadcaster and content-creator's product into countless walled silos -- each requiring their own subscription -- you've not only countered the biggest benefit of the streaming revolution (lower prices, greater flexibility), you've opened the door to customers getting frustrated and returning to piracy.

It's pretty rare that I see research firms point out this potential pitfall. For example, The Diffusion Group's study noted that while they predict every broadcaster will offer their own streaming service by 2022, this could simply increase the number of annoying retrans and carriage feuds (and the annoying blackouts and price hikes that result) between cable companies and broadcasters:

"These are early signs of an emerging media tribalism," argues Berkley. "Major networks will increasingly reserve their best titles for their own direct-to-consumer services, which will help drive total network DTC subscriptions close to 50 million by 2022."

Berkley warns, however, that DTC strategies come with great risk, especially for TV networks. "The legacy model is built upon decades of comfortable relationships between networks and operators. If networks extract too much high-value content too quickly, channel conflicts are inevitable."

Said "conflicts" could prove particularly interesting now that we're doing away with net neutrality (for, you know, "freedom" or whatever). We've already watched as companies like Viacom blocked entire broadband IP ranges from accessing content during programming disputes with cable operators. News Corp also blocked Cablevision customers during a similar feud. These bad ideas are a two-way street, and without net neutrality protections in place, there's a universe of new, creative ways cable operators and broadcasters can hamstring one another in direct competition, annoying consumers.

Less talked about by analysts is the fact that customers might find piracy a better, simpler alternative if they're forced to subscribe to thirty different services (at $8 to $20 per month, per pop) just to access the movies and TV shows they're looking for. Like CBS did with the new Star Trek: Discovery series, each player in this game wants to hide their best content behind an exclusivity paywall. But customers are already confused and frustrated by constantly shifting licensing deals impacting title availability, and may find piracy to be the simpler alternative to having to navigate an ocean of exclusivity silos.

Again, the rise of streaming competition and lower-priced, more flexible TV services is a good thing. But if many of these companies aren't careful, it wouldn't take much to shoot this progress squarely in the foot via exclusives or other anti-competitive behaviors emboldened in the wake of federal apathy on net neutrality. The end result could be progress in name only, with customers finally shaking off one bad idea (bloated, expensive bundles of over-priced channels), only to find themselves forced to subscribe to a dozen caveat-laden streaming services just to get the content they're looking for.

Filed Under: content, content silos, copyright, exclusives, piracy, silos, streaming

Cannes Bans Netflix Films From Competition Because The Internet Is Bad (Or Something)

from the get-off-my-lawn dept

Cannes this week declared that the long-running festival would be banning streaming services like Netflix from being able to win the Palme d’Or. That said, festival leaders weren't able to offer a coherent reason why. Festival boss Thierry Fremaux apparently tried to offer something vaguely resembling an explanation to a variety of different news outlets, but wasn't particularly successful. Most of the arguments made by Fremaux to the press had something to do with Netflix being different (gasp) from the traditional film industry production and criticism model:

"The Netflix people loved the red carpet and would like to be present with other films. But they understand that the intransigence of their own model is now the opposite of ours,” Thierry Fremaux said."

The heart of the ban appears to be a fusion of protectionist concerns about how streaming could harm the traditional French film industry and brick-and-mortar theaters (aka: fear of competition). France has a cultural exception law that requires a percentage of all box office, TV and streaming revenues be used to finance homegrown and foreign films. That law also forces a very outdated and obnoxious release window: namely a 36-month delay between theatrical release and streaming availability. Streaming providers' disdain for such artificial and arbitrary restrictions has been ruffling feathers for years.

In other words, this is really just the same old story about people making silly decisions because of fear of something new disrupting legacy business models that may not work as well in the modern era. But because Cannes just can't come out and admit that, we instead got a heavy dose of disdain for the internet in general:

"Fremaux said the while new players like Netflix and Amazon are enabling directors to make big budget films, they are creating “hybrids” that aren’t TV and aren't quite film. “Cinema [still] triumphs everywhere even in this golden age of series,” he said. “The history of cinema and the history of the internet are two different things."

It's 2018 and that's not entirely true anymore but who cares, get off my lawn!

Cannes has previously banned made for TV movies to ensure a certain quality bar in competition. The organization appears to be using that ban to justify banning Netflix, despite the fact that Netflix is now spending billions on producing its in-house, award winning fare. Because many of these films only saw limited runs in theaters (or no run at all) doesn't automatically equate to low quality, and banning streaming services from awards isn't likely to magically save an industry unwilling to evolve.

Of course this disdain for all things new isn't solely a French phenomenon. Stephen Spielberg recently stated that Netflix films shouldn't be allowed to win Oscar awards, though here too you'll notice that the justifications are arguably flimsy, with an attempt to equate "streaming" with inevitably low quality:

"Once you commit to a television format, you’re a TV movie,” he told ITV News. “You certainly, if it’s a good show, deserve an Emmy, but not an Oscar. I don’t believe films that are just given token qualifications in a couple of theaters for less than a week should qualify for the Academy Award nomination."

Why not? Who knows! If the content is awful it will get rejected from such competitions anyway. And trying to fend off streaming at this point is like trying to slow the flow of a river with just your hands. The move is pretty clearly an effort by Fremaux to project a certain standard of excellence (he also announced that selfies would be banned at this year's festival), but the message it's actually sending the world is more of the "I'm a Luddite" variety.

Filed Under: cannes, competition, disruption, films, innovation, movies, protectionism, streaming, thierry fremaux
Companies: cannes film festival, netflix