For a while, industry leaders have said the future of television is streaming. They’re not wrong, but they’re also not entirely correct.
The future of television is exclusive streaming via specific apps. Much like how music streaming services have become a battle of exclusivity, the television industry is taking note and following suit. Showtime is exclusively streaming a few of its new Twin Peaks episodes. The CW stopped giving Hulu the exclusive rights to carry episodes of its series the day after they aired, and instead started streaming through its own app. CBS launched its own streaming service, CBS All Access, and confirmed its upcoming Star Trek: Discovery series would be the only place North American audiences could watch the show.
As the Television Critics Association conference continues its winter session this week, one thing has become abundantly clear: Networks want in on the streaming game, and they don’t want to rely on Netflix or Hulu. The CW, Showtime, Fox and other networks know they can’t compete with Netflix — there’s a reason Netflix reportedly paid $1 billion to be able to stream CW series — but they also don't want to be entirely dependent on the streaming giant. And the best way to get new users quick is through exclusivity of popular shows.
Mark Pedowitz, president of the CW, told reporters on Sunday the network has doubled the amount of viewers logging onto its app and website after pulling the episodes from Hulu. As a result, ad sales on the website have increased and the network is seeing a boom in profit.
“We have not advertised. Our service is only three months old,” Pedowitz said, as reported by IndieWire. “People have found it by word of mouth and through social media. Controlling your own destiny of your digital product and ad sales, and you’re the only place for in-season viewing makes a huge difference.”
Pedowtiz isn’t the only chief thinking along those lines, either. Bob Iger, CEO of Disney, told investors in August that Disney was very interested in the prospect of streaming and heavily invested in exploring more opportunities. That same month, Disney announced it had acquired a 33 percent stake in BAMTech, the streaming technology used by Major League Baseball. Iger told CNBC the technology would be predominantly used for ESPN, which Disney owns, but the company was also looking at other avenues for television programming.
“We think that in today's world having the ability to stream on a scale basis live sports and live programming is a competitive advantage and something that's necessary," Iger said. "As a majority owner, we feel it gives us an ability to jump-start not only ESPN, but our other businesses as well.”
Although Disney has deals with Netflix and Hulu, which the company also has a 30 percent stake in, Iger has repeatedly said during investors calls that he’s interested in exploring the streaming technology available to them and seeing what works for the company. While Netflix and Hulu are good ways to get cord cutters’ attention, there’s no reason Disney couldn’t launch its own streaming service. Once the technology was made available and its deal with Netflix expired, making films from Pixar, Lucasfilm and Marvel totally exclusive is a real possibility.
One of the more obvious examples is the way HBO handles its streaming. Most HBO series, like Game of Thrones and Westworld, are only available through HBO Now or HBO Go. Although they can be viewed through setbox platforms like Sling TV, a separate subscription is needed. The network doesn’t make any of its current shows available anywhere else at any time, unlike FX or Showtime. While the latter two may partner up with Netflix to bring more eyes to their series, HBO’s content remains exclusive to its own app. Amazon Prime subscribers do have access to HBO series that are at least three years old — The Sopranos, Deadwood and The Wire, for example — through the company’s basic plan.
What this leads to, essentially, is more headaches for consumers. Instead of buying packages through a TV service provider, which may include HBO, Showtime and FX, separate subscriptions will be needed for each.
It’s a trend the music industry perfected in 2016
Three popular music streaming services that exemplify the industry's move to exclusivity are Apple Music, Spotify and Tidal. While Spotify does offer a free, ad-supported version, Apple Music and Tidal require subscriptions. For the most part, the content is the same, but the exceptions are noteworthy.
The best example of this to date is Beyonce’s Lemonade. The album is only available to stream through Tidal. While some of the songs are available on YouTube through Beyonce’s Vevo channel, if you want to watch the entire film and listen to the official version of the album, it’ll cost you $9.99 at minimum. When Frank Ocean released his newest album, Blonde, it was only available through Apple Music for the first couple of weeks.
Last year, The Verge published a piece examining the exclusivity of music in 2016 and asked whether it was harmful or beneficial. Reporter Micah Singleton argued while exclusivity wasn’t exactly beneficial for the subscriber, it was one of the only good solutions the failing music industry had.
“Streaming music is a costly business — companies pay millions upfront for the rights to music and then give around 70 percent of that $10 a month you pay them back to the rights holders,” Singleton wrote. “That means none of these services — not even Spotify, with its 100 million users — are actually profitable. Apple Music, Tidal, and (to a lesser extent) Amazon Music all have the same goals when it comes to paying for exclusives: to drive subscriptions. But for regular people, exclusives can be a huge inconvenience.”
TV networks, like record labels, are trying to keep their heads above water. Two months into the 2016/2017 television season, Nielsen reported all five major networks were seeing a decline in ratings. A decline, it should be mentioned, that had been consistent over the past couple of years.
This isn't shocking news; we know that more people are streaming shows and movies, but if you're making your own content it's unlikely you're happy with the idea that fewer people are leaving your channel to watch your movies or shows on Netflix. It’s important for each network to have its own streaming service, where it can still sell ads and collect detailed information on usage patterns, but what makes sense for the major networks turns into an inconvenience for the viewer who is stuck being billed for multiple services.
Showtime CEO David Nevins told reporters this week that every time the network adds a series to its stand-alone streaming service, which launched in 2015, “there’s a surge of sign-ups.” Nevins added that with more than 1 million subscribers, the service had “rocketed past our initial expectations,” according to Ad Week.
It’s become such an important medium for the network that executives have started planning programming around it. Nevins said one of the reasons Showtime continued to air its drama The Affair through the Christmas break, a time when most networks go on a mid-season hiatus, was because of streaming. With more people on vacation, there was an increased desire for new TV and people flocked to Showtime’s streaming service to catch up.
While Netflix and Hulu aren’t going anywhere, television is going to look a lot like music over the next couple of years. Prepare to have more individual subscriptions to catch the shows you want. We’re entering a new period of exclusivity.