Streaming has a consumer and a piracy problem; the answer lies in the music industry

Streaming services have revolutionized the way we consume movies and TV shows. They offer many benefits over traditional methods, such as convenience, variety, personalization, and interactivity. However, these benefits come at a cost: streaming service fragmentation

Imagine you want to watch a movie or a TV show tonight. You have a Netflix subscription, so you open the app and browse through the titles. You see some interesting ones, but they are not what you are looking for. You want to watch something new and original, something that everyone is talking about. You remember that there is a new show that has received rave reviews and awards, and you decide to watch it. You search for it on Netflix, but you can’t find it. You google it, and you discover that it is only available on another streaming platform that you don’t have. You feel frustrated and annoyed. You wonder why you have to pay for multiple streaming services to watch the content you want. You think that this is unfair and ridiculous.

This is the problem of streaming service fragmentation (SSF), and it affects millions of consumers and the streaming industry. Streaming service fragmentation is when different streaming platforms have exclusive rights to different content, forcing consumers to subscribe to multiple services or switch between them to access the content they want. This situation is bad for everyone involved, and it needs to change.

Streaming services have revolutionized the way we consume movies and TV shows. They offer many benefits over traditional methods, such as convenience, variety, personalization, and interactivity. However, these benefits come at a cost: streaming service fragmentation.

SSF is caused by the greed and short-sightedness of the content holders and the streaming platforms. The content holders, such as studios, networks, and producers, want to maximize their profits by selling or licensing their content to the highest bidder or creating their own streaming platforms. The streaming platforms, such as Netflix, Amazon Prime Video, Disney+, HBO Max, and many others, want to attract and retain consumers by offering exclusive and original content. However, this strategy backfires in the long run, as it creates a hyper-competitive and fragmented market, where each platform tries to outdo the other by producing more and more content, regardless of its quality or relevance.

SSF has negative consequences for consumers and the streaming industry.

First, SSF causes consumer frustration and confusion. According to a Nielsen[1] report, 46% of audiences believe that the number of platforms makes it difficult to find what they are looking for, and 50%[2] said it is hard to know which shows are on which services. Consumers may also experience subscription fatigue, as they have to pay for and manage multiple streaming accounts, each with its own interface, features, and quality standards. It also creates a headache for viewers with a variety of interests because it can be overwhelming to keep track of where to find their favourite shows and movies.

Second, SSF hinders the growth and innovation of the streaming industry. It creates a hyper-competitive and fragmented market, where each platform tries to attract and retain consumers by offering exclusive and original content. However, this strategy may not be sustainable in the long run, as it can result in oversaturation and duplication of content, as well as increased production costs and risks. SSF can also limit the potential audience and revenue for each platform, as consumers may not be willing or able to subscribe to all of them.

Third, SSF can also lead to increased piracy, as some consumers may resort to illegal ways of accessing the content they want, rather than paying for multiple subscriptions or switching between platforms. According to a Deloitte report, the average US consumer subscribes to four streaming services, but only watches two regularly, and 40% of consumers said they have too many subscriptions. A study by Broadband Genie found that the use of stream-ripping services, which allow users to illegally download content from streaming platforms, increased by 1390%[3] in the UK between 2016 and 2019 and there are multiple reports that have cited SSF driving an increase in piracy rates as consumers become frustrated with the growing number of subscription services and their costs.[4]

How can we solve this problem? The answer may lie in the music industry. Unlike the video streaming industry, the music streaming industry has avoided the problem of fragmentation by allowing users to access any song they want from any platform with a single subscription. For example, Spotify users can listen to songs from Universal Music Group, Sony Music Entertainment, Warner Music Group, and many other labels without having to switch between different apps or pay extra fees. This is possible because the music industry has adopted a licensing model that allows streaming platforms to pay royalties to the rights holders based on the number of streams or plays that their songs generate. This model benefits both consumers and the music industry by providing convenience, variety, personalization, interactivity, growth, innovation, and revenue.

The video streaming industry should learn from the music industry and adopt a similar licensing model that would allow users to access any content they want from any platform with a single subscription. This would solve the problem of SSF and create a win-win situation for both consumers and the streaming industry.

There is a solution to the problem of SSF, and it is not more flexible and affordable subscription models, such as the new advertising supported package from Netflix and Disney+. Although these may seem like a good idea at first, they are not enough to solve the problem of exclusives locked to one platform and the hassle of navigating (and paying!) for multiple streaming services. The ultimate solution is bundling. This has already started to happen, and given the sheer number of streaming services available, some consolidation is inevitable.

Bundles or aggregators that allow consumers to access multiple platforms with one payment and one interface are the future of streaming. We have seen some examples of this, such as Sky and Netflix, but even that limited (and expensive) offering has further lessons for the content owners that they can learn from the music industry.

Compare the situation of the movie and TV industry with the music industry, which has managed to reduce piracy significantly by offering almost universal access to music through online music stores and music streaming services. A report by IFPI found that music piracy declined by 22% globally between 2018 and 2019, as more people switched to legal streaming services1. Spotify found that its service alone helped reduce music piracy by up 20% in some markets such as Spain and Norway2. Muso, a digital piracy monitoring and measurement company, published a white paper detailing that piracy overall is on the rise since 2020, with the US being the biggest piracy market. The white paper also highlighted that TV and film piracy dominates, accounting for 50.3% and 11.2% of all piracy. Music was just 8.1%[5].

Music streaming, while it still has issues with its revenue splits and the amount that artists receive, has created a better user experience for people than piracy as it offers higher quality, more convenience, more discovery and more social features.

A video streaming service that had all the content and paid a proportion of the subscription fee to the content owner based on key metrics, watch-time, completion etc, would be the killer service, it would be a service I would pay a premium for.

Like the lockdown playlists of music shared among friends and colleagues, TV and film viewing has always been about the social side as much as it has been about the spectacle or enjoyment of the story being told. The fragmentation of content is diminishing this.

From everyone watching Tiger King in the COVID lockdown and discussing it online, to everyone having that ‘water cooler’ moment about what was on TV last night. That social aspect will be missed if all content is in streaming silos that only a very few people can afford to have all of.

The future of streaming has to be consolidation and bundling, mirroring the music industry, or piracy will continue to rise.

Author’s note: The example from the opening paragraph was Ted Lasso, I want to watch it but I’m not adding Apple TV to my litany of subscriptions.

References 

[1] https://techcrunch.com/2022/04/06/nielsen-report-shows-the-frustration-of-streaming-service-market-fragmentation-and-users-desire-for-bundling/

[2] https://newatlas.com/fragmented-streaming-services-when-is-too-much/51041/

[3] https://www.techradar.com/news/fragmented-streaming-market-could-lead-to-more-illegal-downloads

[4] https://www.slashgear.com/853314/why-streaming-services-are-driving-people-back-to-pirating

[5] https://www.muso.com/wp6-2021-muso-discover-piracy-by-industry-data-review

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