Will failed streaming models and false promises bring back piracy?
This week we’re looking hard at media convergence in The Drum’s latest deep dive. Here, Brew Digital’s Rich Harper warns of one consequence of the modern media environment: a resurgence of the pirates.
Will piracy continue to rise if the media ecosystem remains so homogenous? / HP Koch via Unsplash
Convergence is typically seen as a pro-consumer convenience: multiple disparate products or services in different categories merge together to become one (hopefully) accessible product. Perhaps the greatest success story of convergence is the smartphone – computer, camera, phone, and MP3 player coming together in a single handheld device that unlocked significant economic and creative opportunity.
But convergence doesn’t always succeed. Microsoft has had several failures; combining touch and traditional desktop environments in Windows 8 and positioning the Xbox One as both a game console and home media center are just two. Google failed hard in its attempts to make Google+ the epicenter of your digital existence. Let’s not even start on Elon Musk’s attempt to turn X (formerly Twitter) into an ‘everything app’ to compete with WeChat.
We’re even starting to see a rejection of convergence among certain demographics. Teens are turning to old-school point-and-shoot cameras over their smartphones (even as they continue to post online).
This rejection of amalgamation is similarly true of people’s media consumption habits, but here it’s less to do with retro appeal, and more to do with the media companies failing to present a compelling proposition. Here, media convergence is the inevitable end of the ‘pro-consumer’ unbundling promise.
The race to the bottom
The 2010s saw the realization of the streaming age, where people started to get more freedom over what they wanted to consume and where. With the support of record labels, iTunes revolutionized the model of acquiring music, and with the support of studios, Netflix changed how people watched premium content, providing an all-you-can-eat model for the price of two coffees a month.
But as incumbent ‘legacy’ media companies and emerging technology giants started vying for more of our time, buoyed by years of historically low interest rates, a race began to outspend the competition, buying up studios and writing blank cheques for content.
The unfortunate consequence of the streaming era has been the declining appreciation of prestige content as a commodity in its own right. The tech giants (Google, Apple, and particularly Amazon) treat video as a ‘nice to have’, an additional service to offer to keep you looped into their ecosystem. They, along with Netflix, are the real drivers of the race-to-the-bottom approach to content, forcing the legacy media companies to compete in an arms race they could never afford.
Our attention, and the engagement metrics that come with it, increasingly became the valued commodity. Streaming presented an opportunity to gather more data than services like Nielson could ever accurately offer – which meant better monetization potential. Studios started ending their syndication deals and began building their own platforms. Their assumption: that a few tentpole franchises, which have been cash cows for years, would be enough to compel users to sign up.
During the pandemic that largely worked, as people had more time at home and more disposable income.
But that artificial high has come to an end.
The return of the pirates?
The big technology companies have seen share prices slide alongside profits, and the legacy media companies are now reaping what they sowed after years of debt fueling their acquisitions and consolidation. We’re now seeing the streaming platforms crack down on password sharing, increase prices, and cut content in an attempt to trim costs. Now, they risk reigniting the very problem their existence was meant to solve: piracy.
The a la carte model made media consumption convenient and affordable enough to turn a percentage of former pirates into paying customers, but when an average consumer is now expected to pay for multiple streaming services for the few shows each week they watch, it’s not surprising to see piracy spike by nearly 40% during Covid.
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Let’s look at a real-world example. Say you are an average family of 4. You all enjoy watching TV and streaming music. In the UK, you’re likely going to have the following:
Spotify Family: £17.99 a month
Disney+: £7.99 a month
Netflix: £10.99 a month (going up to 15.99 if you want to watch it in 4K)
Amazon Prime: £8.99 a month
That’s already £46 (about $57) per month. Do you want to watch football? That’s going to require a subscription to TNT and Sky Sports to get full coverage: £29.99 and £34.99 respectively. Then you get a recommendation for Slow Horses, which is on Apple TV+. That’s another £6.99. What about Now TV, or Peacock, they both have exclusives that are worth watching? And if you pay for Sky or Virgin Media, that’s even more. We can all see how quickly the expense can spiral.
Media convergence has failed to meaningfully improve the experience for the consumer. Roughly two-thirds of respondents to an Ipsos survey felt that there were too many streaming services, and were worried that their favorite content was going to be pulled. Nearly 60% were overwhelmed by the amount of choice.
Meanwhile, competition from free services such as TikTok and Instagram means that status quo is no longer enough for these streaming platforms. So, the question becomes, who will be the first to break ranks and provide a service that’s truly innovative and delivers on the convergence promise?
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