Is The Revolution Over Already?

the game is changing

^{a personal view by John Winterson Richards}

The 21st Century has seen two related but separate revolutions in what we still, for the sake of convenience, call "television." They are, not necessarily in chronological order, the development of online "streaming services" and the increased popularity of "binge watching." The first is a revolution in supply, the way content is provided. The second is a revolution in demand, the way content is consumed, but has obviously impacted in turn on how it is provided. The combination of the two has replaced scheduled television with vast online video libraries accessible at will.

Now, at least at the time of writing in October 2022, there are signs that these revolutions are stalling. The big streaming services have problems: shares in Disney, Netflix, and Amazon have all fallen this year, and Netflix, while still the market leader, has recorded its first drop in subscribers since 2011. Meanwhile, the trend towards putting whole seasons or half seasons of content online at the same time to facilitate binge watching is giving way to a return to "dropping" episodes weekly.

Are these trends related? Are they temporary aberrations or a sign of things to come? Are the two revolutions over, or at least stalled?

Answering those questions requires that they be put in their historical context. Hard as it is to imagine now, television was once the monopoly of literally a handful of networks who provided scheduled broadcasting. In the United States there were three national networks and a number of syndicated local stations, often with very poor signals. In the United Kingdom, there was a single terrestrial channel, then two, then three, then four, and then five before digital television made multi-channel terrestrial broadcasting the norm.

At the same time that digital technology was developing there was a global expansion of satellite and cable television channels, some of which, like HBO, were notable for innovative programming, but terrestrial television remained the basis of the common cultural experience of television well into the current Century.

It was still possible to think in terms of a scheduled show being "event" television that would impact on the popular consciousness beyond the ratings. The objective of programmers was to generate a "water cooler moment," a television show that would have people talking about it around a theoretical water cooler at work next day.

The idea of direct "streaming" of films and television shows along computer cables to computer screens had actually been around for a long time. The first commercial service was established as early as 1992. The problem was, of course, that the technology was not sufficiently developed or widespread for it to be commercially viable to buy the rights to the best new films, let alone commission original programming. It was only when broadband developed and became generally available in the first decade of the new Millennium that the figures really began to add up.

It was no great surprise that the existing television broadcasters were first in the field with their own streaming services, which gave them a whole new platform for their existing content at relatively little extra cost. The BBC, for example, launched their 'iPlayer' in 2007. Streaming media can be used for simultaneous broadcast, but the real money is in "video on demand" and the more intelligent providers soon saw the commercial merit of making their back catalogues available online. Yet it remains surprising how many big providers remain behind in this respect and much historical content that could be put online at negligible additional cost remains unavailable.

Even more surprising is the way that the streaming service that quickly broke from the pack was Netflix, which had at that point no production facility or back catalogue of its own. It was already a very primitive, low technology "video on demand" service in that it physically posted rental DVDs to its customers. This business model was never very successful and it was obvious by 2007 that it could not last much longer as streaming services become technologically viable. Netflix was going to have to change or die.

With astonishing speed, it changed into a streaming service itself and somehow managed to raise the capital to invest in getting the rights to high profile new films. It became the place to see the latest cinematic releases at home as soon as possible and the word "Netflix" became part of everyday speech in much the same way as the word "Google."

Netflix also acquired streaming rights to ongoing television shows such as Breaking Bad and selling these rights, possibly in advance, was built in as an increasingly important factor in the financing of new and ongoing shows.

It is perhaps all the more impressive that Netflix quickly became the market leader when, unlike many of its potential rivals, it was still producing no content of its own and had no back catalogue, even if that did at least give it greater flexibility in choosing where to buy new content. However, its purchasing power soon made it a major player in production, so direct production of its own content was a logical next step. at

Netflix started direct commissioning in 2013, around the same time as its great rival, Amazon Prime. At first each was cautious, but in both cases the trickle soon became a flood.

Although some streaming services receive income from advertising, the biggest, including Netflix and Amazon, run "ad free" and rely on subscriptions. The number of viewers as such is therefore less important than the number of subscribers. This offers the welcome possibility that shows need not live and die by the ratings as they do on commercial television.

The way the subscription model works, the key is to get the exclusive streaming rights to prestigious productions, such as the latest "blockbuster" feature films and fashionable "cult" television shows, which attract subscribers to sign up. While the multiplicity of channels has made "event" television and the "water cooler moment" increasingly unlikely, "fear of missing" out" is stronger than ever and people want to feel they have access to the latest fashion even if they do not actually look at it.

If these big name productions are what attract subscribers to a streaming service, the next challenge is to keep them signed up. This is where it helps to have as large a reserve as possible of other content in the hope that they will find something there to keep them entertained. In theory, this could be good for television because it allows for greater investment in quality shows which do not have to attract high numbers of viewers. It could well be that such niche shows are disproportionately important in keeping small but significant groups of viewers signed up.

In practice the streaming services have no way of measuring that accurately and tend to rely on viewer numbers as a rough metric. As a result, the streaming services can be just as ruthless as the networks in cancelling shows that are not perceived as pulling their weight.  That trend is getting more noticeable. Not so long ago, the streaming services were being mocked for the way they threw money, apparently without much discrimination, at anyone offering them new content. That is definitely no longer the case.

The reason for this is obviously the "boom and bust" in streaming caused by the coronavirus. The "lock downs" were the glory days for the streaming services. They were also the very peak of binge watching, simply because there were few other forms of entertainment for large parts of the population effectively confined to their homes 24 hours a day, seven days a week.

The thing about booms is that they never last - in spite of the way those benefiting from them tend to forget this fact and assume that this time this one will somehow last forever. Whether it was because they had become economically unsustainable or because the need for them had been exaggerated - take your pick according to your politics - the "lock downs" came to their unavoidable end and the necessity was now to get the population back to work. This had an immediate negative impact on the use of streaming services and particularly on binge watching.

At the same time, the streaming services were hit by the broader economic consequences the "lock downs." Keeping much of the population and the economy idle for long periods has a price, for individuals, households, businesses, national GDP, and government finances. Sooner or later that price was going to have to be paid. What was less foreseeable was that the bills for the coronavirus began to arrive at the very moment the global economy faced another crisis as the result of the Russian invasion of the Ukraine and consequent Western sanctions. This combination triggered a cost of living crisis that has everyone checking their household budgets to cut overheads in order to pay for more expensive food and energy. The evidence is that streaming service subscriptions are near the top of the list of avoidable fixed costs for many households.

There is therefore no great mystery to the fall in the number of Netflix subscribers and the shares of the companies that run the big streaming services. Yet there may be a third factor at work which is harder to predict. There is evidence to suggest that consumers are becoming more discriminating on cultural grounds. This, it should be emphasised, is not the same as political preference, even if that is often part of it - for example, some fans might object to the latest offerings from Disney's Marvel or 'Star Wars' franchises because they are perceived as "woke" while others, who may care little for politics one way or the other, resent the way the fictional worlds in which they are emotionally invested are being exploited so crudely, and still others may be in both categories.

Whatever the reason, the "culture wars" look to be a factor which the Boards of Directors of companies that own streaming services are going to have to take into account more and more. The production of content has long been dominated by one side of the political spectrum, which now appears to have made it their exclusive preserve, but about 50% of their target market - sometimes more, sometimes less, depending on the issue - is on the other side and increasingly aware of that fact.

What the streaming services need to understand is that their main competition is not other streaming services but small content providers using free platforms like 'YouTube.' Many of the most successful of these small providers specialise in videos dedicated to criticising the mainstream.

The danger to the big streaming services does not come from organised boycotts. The anti-collectivist side of the spectrum is not keen on collective action. A "Cancel Disney Plus" campaign prompted by Disney's involvement with China and treatment of Gina Carano gained little traction: it certainly did nothing to stop Disney's own streaming service powering through its 100 million subscriber target soon after launch to become almost immediately the third biggest player in the market.

What certainly did hurt Disney was the casual ease with which the State of Florida stripped their all important theme parks of their extraordinary local government status after Disney's employees prompted to make an ill-advised intervention in State politics. For all the talk about the power of multinationals over government, the fight is usually over very quickly when they go head-to-head. Whatever their personal politics, Boards of Directors are dominated by nominees of investment funds whose only real concern is the rate of return on their money.

Unlike Netflix, Disney and Amazon have other business interests which are far more important to them than their streaming services. These make them vulnerable. Disney has been a lot quieter on the political front since their Florida experience. It also cannot have escaped Disney that political conservatives are statistically more likely to have children - the target market for those theme parks. At the same time both Amazon and Disney are well aware of the fact that no amount of deliberate or perceived political messaging in their content is going to make up for their unpopularity with the political Left due to their other business practices. They are in danger of alienating both sides of a polarised political spectrum at once.

The bottom line here is that the game is changing. The "culture wars" are probably going to get more violent and those who put themselves in the middle will suffer commercially. The Boards of Directors of Netflix, Amazon, and Disney are not the stuff of martyrs.

So, to answer the question posed at the beginning, both the "boom" and the "bust" in streaming are more likely temporary aberrations, caused by the extraordinary events of the coronavirus and the consequent economic reaction, and are not the end of the streaming revolution.

However, the game is changing. Competition between the Big Three subscriber services was always going to be intense and the harsher economic environment will make it more so. Subscriptions are obvious overheads to cut in a cost of living crisis, and households with several subscriptions may rationalise. As 'Highlander' told us, "there can be only one." That one will be the one most households retain when they cancel the other subscriptions.

Disney, although currently in third place, have greatest strength in depth in the form of their formidable back catalogue, not only Disney Classics, but also the franchises they have bought, including Marvel Studios, Lucasfilm, Pixar, and The Muppets Studio. However, their strategy of essentially strip mining their existing intellectual property, exploiting it shamelessly with "spin offs," sequels, "prequels," and remakes until the audience get sick of them, while highly profitable in the short term, is counterproductive in the longer term as their failure to invest in original content leave them with nothing to exploit.

Victory will go to the service which generates most "must see" new content. At the moment that is undoubtedly Netflix, with hits like Squid Game and Stranger Things which got them their "water cooler moments" after all. Amazon have mounted a well-funded challenge, especially with the hugely expensive The Lord of the Rings: The Rings of Power, which Jeff Bezos has said will determine the future of Amazon streaming. If so, the early signs are not good. It is not impossible that Amazon might be the first of the Big Three to drop out of large-scale direct production, even if synergy with its other products and services makes it unlikely that they will drop out of streaming altogether.

What we can probably expect is greater focus on investment in fewer but more prestigious and high profile projects. The days of mass production of content are probably at an end. Sadly some of the shows that will lose from this are of high quality and highly respected within their own niches. We can also expect most projects to become less overtly political as the battle for subscribers gets more intense and providers feel they cannot afford to offend anyone.

The return to the old weekly release of episodes, as opposed to dropping whole seasons or half seasons at once for binge watching, is part of this process. The streaming services are again trying to make each episode an "event." This approach succeeded for Netflix with 'Stranger Things' but the final season of the highly respected 'Better Call Saul' made relatively little impression on the popular consciousness. It would be interesting to know the exact viewing figures of the latter compared with the final season of 'Ozark' which was released in two parts around the same time. It may well be that those released weekly have lower initial viewing because many viewers wait until all the episodes are available for binge watching.

In October, 2022, we seem to be in an interesting transitional phase. Bearing in mind how the landscape has changed in fifteen years, it is difficult to say where we will be in another fifteen years beyond the obvious truism that major change is highly probable. The Big Three may no longer be the Big Three - indeed, they have only been the Big Three for a couple of years.

The wild card may be global demand for a liberalisation of intellectual property law. At the moment this is poorly organised in the face of powerful and well entrenched corporate interests, but it is a movement that is unlikely to go away and is consistent with the nature of the internet. If it succeeds, we might end up with all those back catalogues online as a single freely accessible video library - truly a "television heaven" - but will this discourage new production?

That is the argument put up by the corporate interests in defence of their intellectual property. There is substance to it, but is it exaggerated? After all, much of what is being produced by those big corporations is notable for its lack of originality. The real innovators are more likely to be found in 'You Tube,' where their work is already freely accessible.

Where a production is very costly, it is not unreasonable for those investing in it to have a monopoly of its exploitation for a few years afterwards. However, the reality is that for business planning and accountancy purposes, it is only those few years that have any impact at all on decision making. Even the most expensive projects fail or succeed very quickly. Any residuals beyond that point are a bonus. Why should copyright protection last much longer? Would a copyright of no more than, say, seven years really block any production?

If such a dramatic change seems unlikely, remember that there was a relatively recent change the other way, lengthening the copyright period in the USA, after intense lobbying by Disney and others. A shortening of the period might not have such a great impact on how television was produced - there will always be a commercial requirement for the new - but it would certainly have an impact on how it was consumed: the assurance of knowing that practically everything over seven years old was easily accessible whenever we wanted might actually mean that we watch less overall.

It may be that the real revolution in television has yet to begin.