Music Piracy Continues To Drop Dramatically, But The Industry Hates To Admit That Because It Ruins The Narrative

from the let's-try-this-again dept

This was wholly predictable, of course. Back in 2015, we released a detailed analytical report showing that the absolute easiest and most effective way to reduce piracy was to to enable more and better licensed services that actually gave users what they were seeking for reasonable prices and fewer restrictions. The data in that report showed that focusing on greater legal enforcement had no long term effects on piracy, but more and better authorized services did the trick every time. Then, earlier this year, we released another report showing that the music industry is in the midst of a massive upswing thanks almost entirely to the rapidly increasing success of licensed music streaming platforms. It was incredibly dramatic to look at the numbers.

Put two and two together, and you'd full expect to see a corresponding dramatic drop in piracy. And, indeed, it appears that's exactly what happened, but the recording industry doesn't want you to realize that. In IFPI's latest release, they play up the idea that piracy is still this huge existential problem.

Sounds bad, right? Later in the report it insists that:

Using unlicensed sources to listen to or download music, otherwise known as copyright infringement, remains a threat to the music ecosystem.

A "threat to the music ecosystem"? It also attacks stream ripping: "Stream ripping is the illegal practice of creating a downloadable file from content that is available to stream online. It is now the most prevalent form of online music copyright infringement." Of course, place shifting/time shifting copyright content has been found to be fair use in the past, so it's pretty rich for the industry to act like it's all bad. My own love of music was fueled from back in the day when I was a kid carefully setting up a tape player to tape my favorite songs off the radio. But, hey, to IFPI it's all evil.

Of course, what IFPI conveniently left out of its report is that these piracy numbers are dropping dramatically. Indeed, IFPI doesn't bother to mention the historical numbers here, because, boy would that really upset the narrative they're pushing.

This year 27% of Internet users classify themselves as music pirates, compared to 38% last year. Similarly, the percentage of stream-rippers dropped from 32% to 23% between 2018 and 2019, which is a rather dramatic decrease.

To put this into perspective, out of every 100 persons who were classified as music pirates last year, 29 kicked the habit. And for every 100 stream-rippers, 28 stopped. These groups obviously overlap, but it’s certainly a major shift.

It is, indeed, a major shift. And certainly correlates quite closely with the similarly dramatic rise in the use of licensed services. And this is during a period of time prior to draconian new copyright enforcement laws were put in place, so it's not like the IFPI has a story to tell about how its new legal regimes helped out here. It seems that the most likely story is exactly what we've said for years. Invest in giving the public what they want, in a reasonable manner at a reasonable price, and piracy kinda goes mostly away as a problem.

What an idea.

If only the IFPI would actually recognize that.

Instead, as Torrentfreak notes, IFPI seems to conveniently ignore its historical narratives when the data proves their fear-mongering was exaggerated or wrong:

Another thing we observed is that the role of search engines is no longer highlighted. This used to be a top priority. In 2016 IFPI reported that 66% of all music pirates used general search engines (e.g. Google) to find pirated music. A year later this went down to 54%, last year it dipped under 50%, and in 2019 it’s not mentioned at all.

For some reason, we think this may have been different if these trends had gone in the other direction. For example, in 2016, IFPI sounded the alarm bell when stream-ripping grew 10% while the 28% drop this year isn’t mentioned.

One wonders why a 10% increase was worth setting off the alarm bells, but a much more massive decrease is wholly ignored or, worse, still presented as evidence of a problem. Actually, no, no one wonders why. We know. It would just be nice if politicians finally recognized that IFPI isn't particularly honest in its framing of all of this. Might have saved us quite a bit of trouble.

Filed Under: music, narrative, piracy, streaming
Companies: ifpi

Ring Considered Using 911 Calls To Trigger Automated Streaming Of Camera Footage To Local PDs

from the bringing-the-police-state-home dept

Amazon's Ring doorbell/camera venture hasn't met a news cycle it can't fill with unintentionally-bad PR. Every time someone thinks they've heard the last odious effort by this company to become an unofficial extension of police department surveillance networks, another set of documents obtained through public records requests resets the counter to "zero days since last PR black eye."

To date, the company that's already formed partnerships with nearly 400 law enforcement agencies has:

• Instructed cops on how to obtain doorbell footage without a warrant
• Provided cops with info on how often their requests are rejected by citizens
• Written/re-written public statements involving Ring cameras for law enforcement agencies
• Engaged in a heavily-publicized sting operation that failed to net any criminals
• Denied it wants to implement facial recognition technology while employing a "Head of Facial Recognition Technology"

Here's the latest PR coup by the expert self-maligners, as reported by Alfred Ng for CNET:

Ring considered building a tool that would use calls to the 911 emergency number to automatically activate the video cameras on its smart doorbells, according to emails obtained by CNET. The Amazon-owned company isn't currently working on the project, but it told a California police department in August 2018 that the function could be introduced in the "not-so-distant future."

One email obtained by CNET expressed the company's desire to implement a "call-for-service" trigger for recording. And not just recording. The cameras would start streaming footage to police departments partnering with Ring to give them a live feed of the affected (triggered?) area. Ring doorbell users would have to opt in, at least, but the pressure to do so would obviously be increased if the users got their doorbell cameras for free from their friendly local PD.

It appears this plan has been ditched, which will allow Ring to steer clear of at least one more terrible news cycle. That being said, everything else that's bad about this private/public partnership remains true, which isn't going to somehow start being less bad any time soon.

Ring's stated prioritization of customer privacy continues to ring (sorry) hollow. The company pushes users and police departments to gravitate towards its snitch app, where users can be encouraged to "share" footage of "suspicious" events, relieving cops of the burden of requesting footage from users or Ring itself. Investigators can still approach Ring directly for camera footage if residents aren't willing to cooperate. Ring says it only complies with "lawful demands" for recordings. What it doesn't say it that the "lawful demand" is usually a subpoena, not a warrant.

This is working out well for Ring. It's probably also working out fine for local law enforcement agencies. The latter seems very willing to cede creative control to Ring, so whatever relationship these parties have must be beneficial enough that cop shops don't mind taking a backseat to Ring's spin team. Ring seems willing to ride out these turbulent news cycles without making any changes to its business model. And why should it? It has claimed over 95% of the doorbell/camera market and is living rent-free in the hearts and minds of over 400 law enforcement agencies.

Filed Under: 911 calls, doorbells, police, privacy, streaming
Companies: amazon, ring

Cable Giant Spectrum On Quest To Outlaw 'Insane' Streaming Password Sharing

from the you're-own-worst-enemy dept

For years, streaming video operators like HBO and Netflix have taken a relatively-lax approach to password sharing. Netflix CEO Reed Hastings has gone so far as to say he "loves" the practice, and sees it as little more than free advertising. Execs at HBO (at least before the AT&T acquisition) have made similar arguments, arguing that young users in particular that share their parents' password get hooked on a particular product via password sharing, then become full subscribers down the road. In short, they see it as added value for the consumer, and have repeatedly stated it doesn't hurt them.

On the other side of the equation sits Charter CEO Tom Rutledge, one of the highest paid execs in media. He, in contrast, has long complained that he views password sharing as "piracy", and has consistently promised to crack down on the practice. Rutledge and his fellow executives gave a particularly rousing "get off my lawn" lecture at a media event a few years back:

"There’s lots of extra streams, there’s lots of extra passwords, there’s lots of people who could get free service,” Rutledge said at an industry conference this month...“It’s piracy,” Connolly said. “It’s people consuming something they haven’t paid for. The more the practice is viewed with a shrug, the more it creates a dynamic where people believe it’s acceptable. And it’s not."

Except it is acceptable. For one, most of these services include password sharing as part of their business model; they include limits on the number of simultaneous streams that can be running under any one account to prevent sharing from undermining too many new sales. And the companies that have been embracing the practice say they've seen no negative impact from it. Again, it's free advertising and a consumer-friendly practice that's factored into the business model. It's certainly not, as Rutledge has often suggested, synonymous with "piracy."

Undaunted, Rutledge has been trying to build a coalition of industry allies focused on stomping out the nefarious practice of password sharing. And as the company strikes programming deals with partners, it's ensuring that a ban on such sharing is part of the process. One big partner in this initiative is Disney, which is expected to put the kibosh on password sharing when it launches its new Disney+ streaming service this fall. All the while, Charter executives are running around calling the practice of password sharing "insane":

"Ultimately our goal is that we can get an alliance of a large enough group of programmers and operators to protect the value of the content that people produce and the content that we distribute and we pay for,” Chris Winfrey, Charter’s chief financial officer, said last week at the Bank of America Merrill Lynch 2019 Media, Communications & Entertainment Conference in Beverly Hills.

Winfrey severely criticized programmers that turn a blind eye to the practice of password sharing, claiming such practices are “insane."

“To think that it doesn’t impact the way we get paid, it does,” Winfrey said. “And it conditions the entire marketplace to think that content should be devalued, it should be free, and that’s the way it is and I shouldn’t have to pay for it. It’s our firm belief that we’d be growing and growing significantly [if it wasn’t for password sharing]."

Except it's not "free," for the reasons outline above. And while you might gain some additional revenue by banning password sharing, you might also lose subscribers to companies that actually value making consumers happy. Charter Spectrum is, if you'd forgotten, statistically one of the least liked companies in America for a long list of reasons, from mindlessly jacking up prices to providing some of the worst customer service of any company, in any industry in America (think about that accomplishment for a second). Blaming all of its problems on the fact people occasionally share streaming TV passwords reflects the entitlement mindset that's pretty common in the too big to fail, government-pampered telecom and broadcast sector.

Filed Under: password sharing, streaming, tom rutledge
Companies: charter, hbo, netflix, spectrum

AT&T Ponders Dumping DirecTV After Investor Backlash, But It's Not Likely To Help

from the yeah-that's-not-gonna-work dept

As we just got done noting, investors have finally started to grumble about AT&T's obsession with merger mania (aka "growth for growth's sake"). AT&T, you'll recall, spent more than $150 billion to acquire Time Warner and DirecTV in a bid to dominate the streaming video and online advertising space. But the deals saddled AT&T with so much debt, it forced the company to raise rates despite rising competition, driving many of these customers to the exits. Oh, and AT&T's being sued by other investors for allegedly lying about it. It has also largely bungled its TV branding in general.

In what appears to be an intentional leak designed to suggest that AT&T is taking these concerns seriously, a report emerged this week in the Wall Street Journal (non paywalled alternative read here), suggesting that AT&T may now try to offload DirecTV after paying $67 billion for the company back in 2015:

"The telecom giant has considered various options, including a spinoff of DirecTV into a separate public company and a combination of DirecTV's assets with Dish Network, its satellite-TV rival," the Journal report said, citing "people familiar with the matter." It's still early in the process, so AT&T could end up sticking with DirecTV. "AT&T may ultimately decide to keep DirecTV in the fold. Despite the satellite service's struggles, as consumers drop their TV connections, it still contributes a sizable volume of cash flow and customer accounts to its parent," the Journal reported."

AT&T's decision to spend billions of dollars on a satellite TV company on the eve of the cord cutting revolution was always seen as a shaky bet. Especially given AT&T's decision to freeze most serious investment in the company's fixed-line broadband business. That said, the money DirecTV is currently making is helping to pay off the company's enormous debt load (AT&T's currently in the running for the most heavily-indebted company public letter wasn't kind to AT&T. Notably, the investors took issue with AT&T's belief that you dominate a space by throwing billions of dollars at mergers, something Wall Street usually is keen on thanks to short term gains:

"We firmly believe that AT&T’s M&A strategy has not only contributed directly to its profound share price underperformance, but has also caused distractions that have contributed to the Company’s recent operational underperformance."

That's a polite way of saying AT&T can't just buy its way to domination. But Elliot's suggestion to offload DirecTV won't help much.

The debt from a decade of merger mania would remain, and while the announcement of a sale might boost the markets slightly (allowing Elliot to exit semi-gracefully), it wouldn't fix what's broken at AT&T. Telcos like AT&T and Verizon still suck at wandering outside of their core competencies (building and running networks, lobbying to crush competitors), the result of being government-pampered monopolies for the better part of a generation. As we've seen with Verizon's Go90, AOL, and Yahoo face plants, these companies simply aren't good at adaptation and competition because it's an alien construct.

AT&T executives desperately want AT&T to be Google and Facebook, and have eyed both companies' ad revenues jealously for the better part of the last two decades, thinking that money is somehow owed to them because they own the underlying network (that's really what the net neutrality fight was about). They seem to believe growth for growth's sake and lobbying are the path to domination, but while that worked well in the broadband space, it's not going to work quite as well in helping them gain stature in other markets.

Especially given that as lumbering monopolies fused to the nation's intelligence agencies, neither AT&T nor Verizon has the ability to actually innovate in the space, which is why AT&T's current TV branding efforts look a lot like road kill. AT&T will remain saddled with millions of aging copper and phone lines it is (like most US telcos) too cheap to upgrade despite billions in tax cuts and regulatory favors. Mindless merger mania won't fix the DNA-level problems that plague Ma Bell, and neither will selling off a core component of the company's bumbling, but ongoing, attempt to dominate the video advertising space.

Filed Under: competition, consolidation, cord cutting, divestitutre, mergers, satellite tv, streaming, tv
Companies: at&t, directv

'Subscription Fatigue' Looms As Comcast Reveals Yet Another New Streaming TV Platform

from the lousy-with-choice dept

So we've noted many times that the rise of streaming video competitors is indisputably a good thing. Numerous new streaming alternatives have driven competition to an antiquated cable TV sector that has long been plagued by apathy, high rates, and comically bad customer service. That's long overdue and a positive thing overall, as streaming customer satisfaction scores suggest. In response, traditional cable TV providers have had to up their game, exemplified by this week's launch of yet another streaming service by Comcast, dubbed "Peacock."

The company unveiled the new streaming service this week, stating it should go live next April. And while no pricing details have been announced for non-cable subscribers, Peacock will be free to users that already subscribe to a traditional cable TV bundle from Comcast. According to Comcast, the new service and naming convention reflects a "proud and bold" persona for the nation's least liked company:

"For us, it’s the perfect nod to the legacy without being too on the nose,” said Bonnie Hammer, chairwoman of the upcoming streaming service. “From my point of view, it screams that we are proud and we are bold."

Like the numerous other streaming services from AT&T, Disney, Apple, and others, Peacock is in a race to lock down as many exclusives to its platform as is humanly possible, which will include hits such as "The Office" and "Parks and Recreation," as well as development of (yet another) "Battlestar Galactica" reboot by "Mr. Robot" creator Sam Esmail. Netflix had to spend $425 million to lock down Seinfeld as part of a five-year exclusivity deal. AT&T's HBO Max has meanwhile secured all exclusive streaming rights to "Doctor Who" and "Friends." The streaming exclusivity wars have begun in earnest.

But there's one thing that remains overlooked as every company and its uncle rushes to deliver its own direct-to-consumer streaming service: subscription fatigue. Deloitte analysts have been using the term to describe the inevitable fatigue that will set in as users try to figure out which of their favorite shows are exclusive to which platform, which could come to annoy users despite the increase in new streaming options:

"But the plethora of options has a downside: Nearly half (47%) of U.S. consumers say they’re frustrated by the growing number of subscriptions and services required to watch what they want, according to the 13th edition of Deloitte’s annual Digital Media Trends survey. An even bigger pet peeve: 57% said they’re frustrated when content vanishes because rights to their favorite TV shows or movies have expired.

“Consumers want choice — but only up to a point,” said Kevin Westcott, Deloitte vice chairman and U.S. telecom and media and entertainment leader, who oversees the study. “We may be entering a time of ‘subscription fatigue.'"

Granted one plus side with streaming is users can sign up for a service for a few months, binge watch to their delight, then cancel. But managing multiple subscriptions (and logins) while tracking the home of your favorite current, ongoing shows could prove annoying, and even moreso if the industry shifts (as many expect) to a harsher crackdown on those who share streaming passwords — something Netflix and HBO used to see as little more than free advertising, but has increasingly been confused with "piracy" by grumbly legacy executives at the likes of Charter Communications.

The end result? A slow but steady shift back to piracy among users that find subscribing to a half dozen streaming services too expensive, or hunting and pecking for their favorite paywalled content annoying. It's an issue companies aren't all that worried about as they rush to the competitive trough, but it's likely to be a looming problem as the number of services and exclusivity silos grow.

Filed Under: peacock, piracy, silos, streaming, subscription fatigue, tv
Companies: comcast

AT&T's Terrible New TV Branding Confuses Even AT&T

from the DERP dept

AT&T's efforts to dominate the online streaming (and advertising segment) has had a bit of a rocky start. After spending more than $150 billion to acquire both DirecTV and Time Warner in recent years, AT&T's been losing subscribers hand over fist anyway. Part of the problem is that the company acquired so much debt in the course of the deal (AT&T is among the most indebted companies in the world), AT&T's been forced to raise rates on subscribers. Given the rise in streaming competitors, those users are wisely just heading for the exits.

But AT&T's been making some notable missteps on the branding front as well. The company keeps launching, scrapping, and then re-launching so many different TV options it's confusing the hell out of customers. As the company stumbles its way into building one cohesive brand, it has gotten kind of, well, silly:

Apparently AT&T's new TV branding isn't just confusing consumers. It's also confusing AT&T. The company's marketing and support departments appear to have been bungling the names of several new AT&T TV products in marketing and support materials, only compounding consumer confusion. AT&T recently eliminated its DirecTV Now streaming TV brand, and renamed it (quite creatively) "AT&T TV Now." The company also rolled out another completely new service and called it "AT&T TV." The former service is just another streaming app, while the latter service requires a new AT&T set top box and is currently in a glorified beta.

This being the telecom sector, customer support is already kind of an afterthought. But AT&T's confusing branding has taken things to an entirely new level, leaving many AT&T customers in a bizarre, customer service purgatory:

"To make matters even worse, most tech support for AT&T TV Now is labeled AT&T TV on AT&T's website. When you try to contact AT&T TV Now you need to use the contact information for AT&T TV. This has resulted in many of our readers confused about how they contact... AT&T TV Now to ask a question.

AT&T's website does not help. AT&T TV Now is only found if you click on streaming. For a while after the name change, clicking on DirecTV Now in some menus on AT&T's website brought you to AT&T TV [instead of] AT&T TV Now.

Even just this week when AT&T announced a deal with Starz they didn't list AT&T TV Now but listed AT&T TV. When asked about this AT&T said AT&T TV Now was lumped together with AT&T TV.

As we've long noted, telecom companies aren't particularly innovative because they've spent the last few generations as government-protected and pampered monopolies. Fused to the nation's intelligence and law enforcement community, they're the personification of "too big to fail." Their deep lobbying tendrils also mean they enjoy regulatory capture on the state and federal level, making any real accountability for bad behavior a rarity, at best.

Given real competition is alien to them, Verizon and AT&T keep doing face plants as they attempt to erode Google and Facebook online video ad revenues. That's why instead of directly competing or innovating, the telecom sector's first inclination is usually to try and tilt the regulatory playing field or cheat in some fashion. And while these kind of shenanigans have caused plenty of problems in the broader internet and streaming TV ecosystem, those problems would likely be immeasurably worse were the telecom sector actually competent outside of its core competencies (building networks, lobbying to erode competition).

Filed Under: at&t now, branding, hbo, hbo go, streaming, tv
Companies: at&t

Comcast Wireless Joins Verizon In Charging You More For HD Video

from the pay,-and-then-pay-some-more dept

One of the more subtle assaults on net neutrality has been the slow but steady introduction of arbitrary, often unnecessary restrictions mobile carriers will then charge you to get around. Sprint, for example, has toyed with plans that throttle all video, music, and games unless you pay extra. Verizon has also banned 4K video from its network unless you pay more for 5G (which isn't widely available). The company also now throttles all video on its "unlimited" data plans, charging consumers even more if they want to view content in HD as the originating service intended.

Comcast has now followed Verizon's lead, and its new wireless service will also now ban HD videoon its unlimited data plans unless you pony up an adidtional $20 per month. The company technically began throttling all video to 480p on its wireless network a week ago, but only just last week announced that users would now be charged more if they actually wanted to watch video in HD:

"Xfinity Mobile's unlimited data plan costs $45 per line per month, but video streams are generally limited to 480p resolution. Comcast yesterday announced a new $20-per-month HD Pass "for an upgrade to HD video resolution on Unlimited lines (720p on phone and 1080p on tablets)." That raises the monthly price to $65."

The problem with these efforts begins with the fact that Americans already pay some of the highest prices for 4G mobile data in the developed world. In exchange, they get mobile 4G broadband service that ranks somewhere around 30th worldwide in terms of speed. Studies also show that US wireless provider video quality is similarly some of the worst in the developed world due to many of the nickel-and-diming, erroneous restrictions being placed on mobile lines.

The other problem with these kinds of plans is one of precedent. Once you open the door to letting giant telecom companies impose arbitrary barriers you'll then have to pay extra to get around, you open the door to all manner of additional, problematic efforts (especially with the recent neutering of FCC authority and net neutrality). Want your games to work as intended? Pay us more. Want your music streaming to be free of arbitrary restrictions? Pay us more. Want to use Netflix instead of a telecom's TV services? Pay us more.

One way to help minimize these issues is to stop mindlessly signing off on competition-eroding megamergers that only act to reduce any incentive to genuinely compete on price. Instead of direct competition, wireless carriers adore saddling their plans with so many bizarre restrictions and caveats that direct pricing comparisons are often impossible for the average user. Frightened by what they don't understand, these users are then incentivized to buy the most expensive plan in order to avoid overage fees or other restrictions. It's a pricing funnel designed with one thing in mind: upselling you to a more expensive plan.

Another answer to this growing problem is for carriers to finally stop marketing clearly limited plans as "unlimited." For fifteen years or so US mobile carriers have marketed "unlimited" data plans with an ocean of very real, very confusing limits. Comcast's unlimited data plan, for example, throttles users back to DSL speeds (1.5Mbps download/750kbps upload) after 20 gigabytes of monthly use. Despite getting government wrist slaps for the better part of 15 years this practice has only accelerated, the number of caveats have grown, and it's a wonder Americans have any idea what kind of connection they're actually buying.

Enter the death of net neutrality rules, which not only prohibited many of the more elaborate, heavy handed nickel-and-diming efforts by mobile carriers, but mandated that wireless carriers be entirely clear about what kind of mobile connection you're buying. Wary of the rules being restored due to the state AG and Mozilla lawsuit against the FCC, many mobile carriers are trying to behave. But should the states and Mozilla lose their bid to restore the rules, this entire problem is going to get exponentially worse in relatively short order.

Filed Under: broadband, net neutrality, streaming, video
Companies: comcast, verizon

AT&T Hopes A Confusing Rebranding Will Help Its Muddled Video Plans Make Sense

from the good-luck-with--that dept

Despite spending more than $150 billion on mergers intended to help it dominate the video space, AT&T's video ambitions are falling flat. The company just posted a loss of more than 778,000 "traditional" video subscribers last quarter (satellite TV, IPTV), but also lost another 168,000 subscribers at its DirecTV Now streaming service. The reason? The company's acquisitions of DirecTV ($67 billion) and Time Warner ($86 billion) saddled it with so much debt, the company was forced to raise rates. This, in turn, helped drive AT&T's customers to the exits.

Despite its voracious appetite for M&A, it's not entirely clear the company knows what to do from here. The same week it announced record subscriber losses, AT&T proclaimed it would be engaged in a rebranding that will kill off the DirecTV brand. AT&T's DirecTV Now streaming video service will now be, quite creatively, named just AT&T TV Now:

"AT&T is eliminating the DirecTV Now brand name it uses for its struggling Internet-based TV service. DirecTV Now will become "AT&T TV Now" later this summer, AT&T announced today. DirecTV Now (the future "AT&T TV Now") offers a bundle of linear TV channels, similar to traditional cable or satellite services, and AT&T said its core offering won't be changed."

The problem, as some were quick to point out, is that AT&T, Time Warner, and HBO all now offer video via an immensely confusing array of options. There's HBO Go, HBO's streaming service for those with cable. There's HBO Now, HBO's streaming service for those without cable. There's AT&T's Watch TV, which is a live, discounted bundle of 35 channels. There's also AT&T TV, which is delivered over IPTV. Then there's AT&T TV Now, which is a rebranded version of DirecTV Now, its on demand streaming option. There's also HBO Max, AT&T's new streaming platform slated for next year. Not confusing at all, right?

Both AT&T and Verizon desperately want to topple Google and Facebook in the video advertising space, but there remains little indication that lumbering, government-pampered monopolies have the flexibility to actually accomplish that goal. Verizon's Go90 streaming video service, you'll recall, was supposed to dominate the Millennial video space, but wound up being scrapped after nobody gave much of a damn.

It's frankly hard for pampered monopolies to seriously compete because, with the exception of some tepid, non-price competition in wireless, actual hard-nosed competition is alien phrenology to them. As are innovation, disruption, and quick adaptation. Companies like AT&T and Verizon have spent thirty years responding to competition by lobbying government to make life hell for their competitors at every turn. And because giants like AT&T all but own numerous federal and state lawmakers, that's routinely been pretty easy. That's not going to work in a streaming space where actual competition is starting to explode.

In a sector where many traditional cable operators have only doubled down on the same dumb behavior that drives cord cutting in the first place, AT&T at least had the courage to offer its own streaming alternative. Many companies are so terrified of accelerating the cord cutting losses to traditional video revenue, they refuse to offering compelling, more flexible, and cheaper alternatives. AT&T deserves credit for taking risk, even if the path forward should have been fairly obvious.

That said, it's not entirely clear AT&T knows what it's doing. In addition to a scattered brand presence and endless price hikes, the company seems fixated on turning HBO from a boutique channel filled with popular, higher-quality risk taking, to a an outlet that craps out shorter form content en masse. This shift in focus to quantity over quality isn't likely to help in the way AT&T execs seem to think it will. And while the death of net neutrality and AT&T's domination of broadband will certainly help AT&T tilt the playing field here and there, even that may not be enough to keep AT&T relevant in the streaming wars to come.

Filed Under: streaming
Companies: at&t, directv

Netflix Sees First Subscriber Losses Ever

from the adapt-or-perish dept

Netflix has certainly enjoyed its flight to the top of the heap of the streaming space, now streaming video to 60.1 million US subscribers. That's more than pay TV giants like AT&T or even Comcast, who've done their best (via usage caps and lobbying shenanigans) to unsuccessfully hamper Netflix's meteoric rise.

But there's some indication that the company may have started to reach its high water mark. Netflix this week revealed it lost 130,000 subscribers last quarter, the company's first quarterly subscriber loss in history. The losses come despite Netflix having spent $3 billion on programming last quarter, and another $600 million to market its its wares. The loss was quick to rekindle memories of Netflix's bumbled Qwikster, price hike debacle from back in 2011:

"Investors had been forgiving about the spending and the debt -- so long as customers grew at record rates. But the loss of subscribers in the U.S. was the first since the Qwikster debacle, and it suggests Netflix may be running into price resistance or the limits of the addressable domestic market. The company has forecast it can reach as much as 90 million customers in the U.S., compared with 60.1 million currently."

In a letter to investors, Netflix downplayed the rise of streaming competition, blaming the losses on its own price hikes and a fairly underwhelming content slate during the quarter:

"Our missed forecast was across all regions, but slightly more so in regions with price increases. We don’t believe competition was a factor since there wasn’t a material change in the competitive landscape during Q2, and competitive intensity and our penetration is varied across regions (while our over-forecast was in every region). Rather, we think Q2’s content slate drove less growth in paid net adds than we anticipated.

Given all the premature hand wringing and predictions of doom that surrounded Netflix after the Qwikster face plant, anybody suggesting Netflix will suddenly start to free fall is likely jumping the gun. Netflix's third quarter kicked off with the launch of Stranger Things season three, which will likely help drive subscriptions skyward again. And Netflix executives also seem to be slowly realizing that throwing around billions of dollars for mediocre international content at a mind-boggling scale may not be the winning strategy they originally surmised.

That said, this is only really the beginning of Netflix's challenges. Giants like Disney, AT&T, and Comcast are all rushing to pull their growing slate of TV shows and movies from Netflix and shift them exclusively to their own new streaming platforms. Studies suggest that nearly every broadcaster will launch their own streaming service by 2022. That's not only going to create greater losses due to competition, but the added cost and confusion of so many exclusivity silos is going to likely drive a significant number of users back to piracy, something the streaming sector hasn't really figured out yet.

In other words, despite a lot of pearl clutching Netflix is likely to clear its current hurdles. It's the rise of an ocean of streaming exclusives (especially by telecom providers given the death of net neutrality) and a shift back to piracy Netflix will really need to worry about over the next five years.

Filed Under: competition, prices, streaming, subscribers
Companies: netflix

New Study Points Out What A Boon Sports Streaming Piracy Could Be To Leagues

from the making-use dept

When it comes to cable cord-cutting and the set box vs. streaming revolutions, I have always argued that professional and college sports plays an outsized role. In fact, sports programming is one of the few threads by which the cable television industry is currently hanging. Some leagues have made better use of these trends than others, with Major League Baseball still representing the gold standard in sports streaming, with the other major sports leagues riding along in its wake. And, yet, one of the most common complaints about streaming copyright infringement one can find out there is that of live-streaming professional sports. While much of this comes from the broadcast partners of these leagues, the leagues themselves still make a significant amount of noise about pirated sports streaming.

It's never made sense to me. Sports league revenues generally are dominated by two categories: merchandise and advertising revenue. The former gets boosted with the maximum number of eyeballs on the product while the latter becomes something of a complicated mess, given that ad revenues have traditionally gone to broadcast partners, which translate into large contracts with revenue going from the broadcasters to the leagues. Despite that complication, the interest here is in advertising revenue. I wrote the following paragraph way back in 2012:

Here's my question: why is any of this necessary? With that same smart phone, I could have gone to one of dozens of websites (evil, evil websites) that would simply stream the games I wanted directly to my device for free. More to the point, they'd stream the local broadcast that I wanted, complete with commercials. Why wouldn't the major sports leagues do the same thing? If advertising is still the major money-maker for professional sports (and, along with merchandise, it is), why wouldn't they want to increase their reach by offering their own free advertisement-laden stream? Coupled with location identifiers, I'd think the leagues could partner with local broadcasters to make sure that people were getting the same geographical broadcast they'd get watching at home. Again, the same commercials can be in place, so what's lost? Why charge me $50 a season to watch the game on my phone or tablet, but not levy that same charge for watching on my television? It's the ads that matter, isn't it?

The ads, and the eyeballs, of course. Pirate streams increase reach, full stop. Why wouldn't leagues and broadcasters see that reach as a good thing? Well, according to a recent MUSO study, they absolutely should.

In their study, the companies looked at eight matches of the previous Premier League season. They found that these matches had an average pirate audience of 7.1 million viewers across as many as 149 countries. Most of these unauthorized viewers came from China, where nearly a million people tuned in per match, followed by Vietnam, Kenya, India and Nigeria. The U.S. and the U.K. took 10th and 11th places among the piracy audience.

These numbers were complemented with GumGum’s marketing and sponsorship insights. After factoring in the exposure of different brands in various regions, they came to the conclusion that there is £1 million in uncaptured sponsorship media value per match. The majority of value is linked to field-side LED advertising and the sponsorship placements on the front of the players’ jerseys. While pirates may not pay, they definitely see these sponsored messages.

Based on the study, it seems that even a lack of localized advertising still leaves an enormous amount of money on the table in the form of on-the-field sponsorships. I would add that, at least for large global brands, there is value in the commercials as well in pirated streaming. Per the study, the retort from broadcasters and leagues thus far appears to be complaints that, because they cannot control or directly count the streams in question, those viewers aren't represented in advertising or sponsorship contracts.

But all that tells me is that that's the problem. Not the pirated streams themselves, but the failure to capture the boon of those streams in the contracts with sponsors and advertisers. Given that, and considering the laughable game of whac-a-mole that is blocking pirate streams, how is it not the better solution to put these pirate stream numbers in front of sponsors and increase contract costs for sponsorships as a result? When MUSO, an antipiracy outfit, states the following, it's probably time for rightsholders to listen.

MUSO co-founder and CEO Andy Chatterley hopes that the findings will change the perception of pirates. He emphasizes that this audience should certainly not be disregarded.

“Piracy audiences have too long been disregarded as offering no real value to rights holders and distributors, but the reality is that these huge audiences still see the same shirt sponsors and commercials as people watching the game via a licensed channel,” Chatterley says.

In other words, these streams are not an enemy, but an opportunity, if only the leagues would finally take notice.

Filed Under: opportunity, piracy, promotion, sports, streaming