The rise of Internet-powered services has changed the way we live, in almost every way imaginable. One of the most tangible benefits of this change in the past two decades has been the advent of instant communication. Borders have basically become a thing of the past, in terms of information passage. There is no piece of news that is not instantly broadcasted worldwide.
These days, it isn’t normal for information to remain dormant, or take a while to travel around the globe; especially among the tech-savvy. But that isn’t the case just with the news. All types of content have been revamped by the existence of high-speed Internet; including video content. Once exclusively present on television and in movie theaters; such limitations are a thing of the past, with the appearance of online streaming services. Is that a good thing, though? We’ll dive into the question below.
Rise of Netflix
In 2019, people who don’t use Netflix, Hulu, or something similar are rare, at least in the developed world. But while the world of online video streaming truly came to be with YouTube a decade and a half ago; Netflix is what we’ll focus on here. The reason is simple: it’s an interesting case study in the way technology changes established markets from the perspective of the customer; or rather, how it doesn’t.
Unlike most modern media-tech giants, Netflix was founded all the way back in 1997. At that moment, however, its founders meant for it to be something like a movie Amazon. Or rather, a VHS rental company, with a simple yet ingenious business model. For a set subscription, people could order and rent movies via mail; unlimited movies a month, but just one at a time. However, this wouldn’t prove to be a particularly sustainable business model; or rather, not one which was meant for greatness. If you lived in a bigger city, you could quickly rent movies, and they’d arrive with ease. While that’s one of the benefits of living in NYCor a similar metropolis; those out in the country wouldn’t get their chosen films as fast.
But Netflix would truly find its footing ten years later, in 2007. That’s when Netflix would launch its streaming services, starting what would amount to a revolution in the film and television industries.
Revolution – or not?
At the beginning of the movie and television streaming revolution, Netflix was something of a miracle for consumers. After all, you could watch countless movies and TV shows, for a price far lower than an average cable subscription. Many touted its appearance as proof that technology innovations change markets for the better, for customer and corporation alike. However, in just a couple of years, every media giant launched its own streaming service; shutting down deals with Netflix, and offering their content only on their platforms.
In the end, if you want to watch every piece of content online legally, you’d need to have Netflix, HBO Now, Hulu, Amazon Prime, etc. And while each of them cost a minuscule amount of money, it adds up to more than a cable subscription. Meaning that at the end of the day – the customers saw no real gain from the innovation.
Disney – Fox Merger
Seeing as we’ve concluded that the decentralization of video on demand (VOD) services hasn’t brought lower prices for the customers in the long run; will the opposite have the desired effect for the average consumer? Because, while the current market landscape seems riddled with diverse streaming services; over the next couple of years, that may not be the case. A great example of this is the recently completed acquisition of 21st Century Fox by Disney.
Obviously, such a humongous deal has been the focus of the mainstream media in the past couple of months. In one swoop, Disney has acquired an assortment of cable TV channels worldwide, National Geographic Partners, and perhaps most crucially – 20th Century Fox television and film studios, along with a 30% stake in the Hulu streaming service.
Effect on the Streaming Services Market
As we’ve somewhat mentioned above, one of the crucial values any streaming service can offer to its customers is its library of content. And as of 2019, Disney truly boasts some of the most popular TV and Movie franchises in existence – Marvel and Star Wars being at the forefront. That’s why their plans about their very own streaming platform this year are such a huge deal; doubly so with their acquisition of so many valuable Fox assets. Indeed, Disney seems poised to take over the mantle of the default VOD platform from Netflix, who will have difficulties competing. Especially since the streaming service business model has two basic principles: increasing prices, and increasing the investment into new content simultaneously. But in terms of financial resources and popular content, Disney is an incredibly obvious forerunner. And while they’re offering great subscription prices for Disney+ right now; once they’re the king of the jungle, their prices are bound to skyrocket. So, the question is – did the Fox merger give them, if not an outright monopoly, then a very predictable chance of building one?
Legality of the Merger
Unfortunately for end-users, the relevant legislative bodies in Disney’s biggest geographical markets had almost no issues with their business plans and Fox acquisitions. That could be said the most for China, whose relevant regulatory body simply approved the merger without any conditions. As for the EU, the European Commission gave its approval after Disney made minor concessions in terms of divestment of less valuable, local European TV stations.
When it comes to the American market, the Federal Communications Commission (FCC) was, naturally, most interested in preventing a merger between Disney-owned ABC and Fox Broadcasting Company. But the absence of that merger left the legislative doors open for what amounts to Disney’s future monopoly in the young, but valuable, streaming services market. Consequently, in a couple of years’ time; consumers may face subscription rates even higher than with cable TV of yore.
Author: Lisa Roberts