Why The Upcoming Streaming Service War is a Bad Idea

As I confessed in my very first article for this site, I am a cinephile. Be it going to the local theater, streaming through an app, or renting DVDs, I love watching movies. However, the movie industry is standing on shaky ground these days. Box office numbers are just not reaching the heights that the studios would like them to. Once guaranteed tentpole movies are bombing left and right. Chinese and other Asian markets are the only means of staying afloat in most cases. Broadcast television isn’t doing any better, with viewership dropping 50% from what it was a decade ago. And this is all thanks to a red eyed monster that keeps both movie studios and TV networks awake at night. That monster, of course, is Netflix.

Yes, Netflix, the once small company that used to be a mail order DVD rental service (although they still offer that service to this day), has grown like a weed; becoming a juggernaut in the entertainment industry. It all started in 2007, when the company became an online streaming service. Slowly, but surely, they grew, and created original, award winning content like “House of Cards” and “Orange is the New Black”. And most recently, they are responsible for some of the most talked about series being made today, like Marvel’s “Daredevil”, “Jessica Jones”, and “Luke Cage”, and the Stephen King/Steven Spielberg inspired “Stranger Things”. Now Netflix is available in 190 countries, they have over 100 million subscribers, they have an annual budget of $7 billion to create original content with, and they are second only to HBO when it comes to being nominated and winning Emmys and other awards. In other words, they are a nightmare for the rest of traditional Hollywood.

In a recent polling, Netflix, along with YouTube, were ranked as the “coolest” brands that teenagers love. No doubt, this horrified mainstream Hollywood. The 13-30 year old market is the target audience that every movie studio and TV network wants a part of. However, it seems Netflix has a stranglehold on that audience, to the point these 13-30 year olds don’t want to leave their homes to go to the local theater, nor do they want to watch broadcast television, live as is airs, with the commercials and everything. No, to that target audience, doing those are activities that old people do. Like senior citizen age, old people. So naturally, everyone in Hollywood wants a piece of that streaming media service pie, and they want to cut the legs out from under Netflix to do it!

The Walt Disney Company made all the headlines when they announced that come 2019, they would not only create their own Netflix-style service, but they will remove all of their branded movies and TV series from Netflix. This includes anything from the Disney Channel, anything under Pixar, and of course, the HIGHLY profitable Marvel and Star Wars movies. Although, this is not something that is uncommon with Netflix and its love/hate relationship with major studios. Just a few months earlier, there was a mass exodus of nearly everything ever produced by or aired for Fox Entertainment Group from Netflix. The reason? Because Fox also plans on making their own streaming service that will solely air their own properties. Warner Bros. is also doubling down on streaming, as they are creating a DC Entertainment centric service, complete with a much demanded third season to the animated series, “Young Justice”, and a live action adaptation of “Teen Titans”. Even CBS has their service, CBS All-Access, which is using “Star Trek Discovery” as a means to bring in more subscribers. Ideally, 4 million subscribers to be exact, according to CBS’s CEO (yeah, good luck with that). Indeed, the game plan to dethrone Netflix as thee streaming service to beat, is for every major media company to have their own streaming service. And personally, I think this is a horrible idea that will probably end with a streaming media bubble that will burst, and Netflix will probably end up the King of the Mountain anyway. Here’s why….

A common fact with Hollywood is that the people who are in control of everything don’t understand why something becomes popular. Case in point, look at the Marvel Cinematic Universe. After “Avengers” became the third highest grossing movie of all time (now the fourth highest, after “Star Wars: The Force Awakens” happened), every movie studio has began creating their own shared universes. And every single one of them as failed miserably. Warner Bros. has the DC Extended Universe, but with the exception of “Wonder Woman”, every other movie within that shared universe has been met with polarizing fan reactions, scaving reviews, and disappointing box office returns (not one movie has crossed $1 billion, yet). And Universal Studios have tried more than once to create a modern version of their Universal Monsters franchise, and have failed twice so far, first with “Dracula Untold”, and again with the recent reboot of “The Mummy”. So why is it that Marvel can do this shared universe thing with ease, but no one else can? Simply put, they understand the formula, and the other studios don’t. Marvel learned from one of their earlier letdowns, “Iron Man 2”, where they spent entirely too much time setting up future movies, thus ruining the rest of the movie. This is a trap all other studios have fallen in. Since then, Marvel has used hidden Easter eggs and post credit scenes as their primary means of world building, and it has worked near flawlessly. And that is why Netflix is king these days, they found the formula, and they use it better than anyone else.

See, the reason why Netflix is currently like a God among mortals is because it’s a service that scratches a lot of itches that viewers want from their entertainment. Don’t want to pay $10 or more for a single movie that you might not like? Pay $10 for Netflix, and you can watch any number of movies you want! If you don’t like one, just stop watching it and watch a different movie instead! Don’t want to go to the theaters? Here, watch a movie on your laptop or tabletop computer, your smartphone, your tablet, or your smart TV! Don’t want to watch a TV series on a weekly basis? Just wait for the season finale, and then binge watch the full season! Is there an old series that you loved and would like to watch again without buying it on DVD? Hey, it’s probably on Netflix! You see where I’m going with this? The reasons why Netflix is the dominant entertaining force going on right now are due to a cheap price, convenience in availability, good customer service, and a wide variety of content to watch. That last one is the most important aspect.

Yes, there will always be people that will complain that Netflix doesn’t have “big movies”, in other words, the big blockbuster, tentpole movies that were released in theaters just six months earlier. In truth, no streaming service will work like that. Studios invested big money in their productions, they aren’t going to just give them away as a packaged deal alongside dated movies from decades’ past. No, studios want their most recent movies to be paid for individually, through On Demand video rentals, DVD rentals, or streaming rental services like Vudu, iTunes, or Google Play. In truth, if you want to get the “big movies” through Netflix, you’re going to have to use that mail order DVD service that I mentioned from before. Nope, Netflix will never have the “big movies” until a year or two later, so that argument is a mute point as far as I’m concerned.

However, what Netflix does have is an impressive selection and variety of programming available to watch, to the point that if you still can’t find something to watch, there’s no hope of entertaining you. Wanna watch “Friends”, but don’t want to pay for cable to see reruns of it? The show is on Netflix. Wanna watch that popular anime series your friends keep talking about? Chance are, it’s on Netflix. Wanna to watch a Showtime series without paying separately for Showtime? That series is probably on Netflix. What about little known, independent movies? They’re probably on Netflix. A stand-up comedy special or two? Get to the Netflix! Just want to aimlessly browse the site until you find some oddity of a movie that you otherwise would have never find on cable TV? Yep, Netflix! You see, variety is the spice of life, and people love the spice that Netflix provides. This is why each media company will end in failure.

Don’t get me wrong, I completely understand that Disney has a cult-like fan following that rivals some world religions, but I’m not one of those devoted followers. When it comes to children’s programming, I have far more fond memories from series like “He-Man”, “She-Ra”, “GI Joe”, “Transformers”, “Thundercats”, “Voltron”, “The Real Ghostbusters”, “Jem and The Holograms”, “Teenage Mutant Ninja Turtles”, and the various other cartoons of the 1980s than anything Disney produced. Yes, you could argue that all those series that I listed were created for the sole purpose of selling toys, but it’s not like Disney isn’t guilty of this. I mean, you could easily argue that everything Disney makes is designed to get you to go visit their amusement parks, and buy limitless amounts of tie-in merchandise while you’re there. Hell, you could even argue that while “Game of Thrones” and “The Walking Dead” are the two most beloved and critically acclaimed things on TV right now, in the end, they are just hour long ads to get you to buy George R.R. Martin’s novels and the graphic novels published by Image Comics. My point being is that not everyone is going to want to pay for Netflix, and then pay another fee just for Disney content. I would know, because I’m one of those people. As big a fanboy that I am for Marvel and Star Wars (LONG before Disney got their tentacles around them), I’d rather pay a one-time fee to own those movies on DVD or Blu-Ray, rather than pay a monthly fee to have access to a library of content that I couldn’t care less about.

Simply put, “it’s the money, stupid”, is what will lead to this upcoming streaming service war ending badly. Let’s face it, the economy is in the toilet right now, and everyone is looking for ways to save money, and one of those ways is with their entertainment. Cable prices are ridiculous these days, with monthly bills averaging around $200 or more! Along came Netflix, and now you just have to pay the $30-50 Internet access only fee, and then the $10 fee for Netflix. Boom, instant $150 in savings! But what if you pay $10 for Netflix, but then another $10 for Disney (although, the rumored starting rate will be $5), then another $10 for CBS All-Access, another $10 for Fox’s service, another $10 for the DC centric service, etc.? You’ll be paying $200 all over again, and that’s not something people want. That’s why I personally think it’s best for consumers to have as much content in one place as possible. However, competition is a good thing for business, and when there’s competition for our well earned dollars, we win … for the most part.

As I pointed out (in passing), Disney’s new service will be priced at $5, half the price of Netflix. That’s a good, competitive price. It’s not a price I’m willing to pay, but I’m sure plenty of parents would be willing to pay it to shut up their kids for a few hours. There’s just one problem for Disney, and that’s the reveal that in order to break even, they will need about 32 to 35 million subscribers! Yikes! Those are numbers that just do not happen overnight. Sure, Netflix has over 100 million subscribers, but that’s after being around for a decade! For another example, there’s the WWE Network, which launched back in 2012. Their target goal was to have one million subscribers within a year. But even with their loyal fanbase, they didn’t reach one million subscribers until two or three years later. And only recently are they flirting with the idea of reaching two million subscribers. Much like the WWE, Disney might be burning money to keep a service afloat that isn’t even profitable for them. “But Michael, isn’t Netflix in $20 billion worth of debt?”, you might ask. Well, it’s hard to tell, considering their stock is still through the roof, and they are still willing to burn through billions of dollars to produce new content. They even bought Millar World, the comic book company created by Mark Millar, the writer of “Kingsmen”, “Kick-Ass”, “Wanted”, and Marvel’s “Civil War” and “Old Man Logan”. Granted, I figured Netflix would buy Dark Horse Comics or Image Comics instead, if only for the larger library of titles to adapt, but that’s just me. The overall message is that Netflix is ready to combat Disney removing Marvel properties from their catalog by making their own comic book adaptations. “But Michael, you’re sending mixed messages,” you might say. “You said you want your content all in one location, but you also want there to be competition between companies. How can you have it both ways?” I’m glad you asked, here’s my solution to the problem …

The main reason why I think it laughably stupid for each media company to make their own streaming service is because each media company already has their own streaming service. It’s called Hulu! Yes, Hulu, the closest thing to a Netflix rival. Like Netflix streaming, it has been around since 2007, but unlike Netflix, it’s not an independent company. Nor it is available in 190 countries, nor do they have over 100 million subscribers, nor do they have a $7 billion budget for original programming (they have only $2 billion to work with). What Hulu does have is a joint venture between four of America’s six major media companies. Comcast, Walt Disney Company, and News Corporation each own 30% of Hulu, while Time Warner owns the remaining 10%. A quick rundown: Comcast owns Universal Studios and TV networks like NBC, USA, Syfy, MSNBC, and Bravo; Walt Disney Company owns Disney Studios (obviously) and networks like ABC, Freeform, and ESPN; News Corporation owns 20th Century Fox, and networks like FOX, FX, and Fox News; and Time Warner owns Warner Bros., and networks like The CW, TBS, TNT, and CNN. Yeah, that’s a lot of content to fall back on. And yet, Hulu is like Rodney Dangerfield, it gets little or no respect, even from its parents. And therein lies the problem.

Please excuse me while I go into a bit of a fantasy scenario, but in the very unlikely chance I were to become the CEO of Hulu, here’s what I would do. #1. Like Netflix, I would make the company go worldwide. The company currently has 32 million subscribers (12 million based in America alone), but it could reach Netflix’s numbers if it were available outside of just English speaking countries. #2. I’m going to reach deep inside of the libraries of each of those four major media companies, and I’m putting that content on Hulu. Hey, Universal, you to get people into a new shared universe of your Universal Monsters? Then all of the original monster movies are going on Hulu. Oh, and we’re putting all the classics that Spielberg either directed or produced, like “Jaws”, “Jurassic Park”, “E.T.”, and “Back to the Future” on there, too. Yo, Fox, all of the “Alien” movies are going up on Hulu, and all of the “X-Men” related movies, too. We’ll even throw in all of the “Predator” movies. Sure, Disney, you can remove all the Marvel and Star Wars movies from Netflix … but you’re putting them on Hulu! And lastly, Time Warner, all things DC related are going on Hulu. You see the pattern? If you want Hulu to grow, you gotta put all of the most popular properties on there. Yes, I know, the studios would rather milk those properties individually, rather than give them away on a shared streaming services, but this is the easiest way to fight back against Netflix.

Rather than each media company making their own service and causing consumers to die from a thousand cuts, just use the streaming service they already have to work with. Granted, it took Hulu a decade to find their signature hit series with the Emmy Award winning “The Handmaiden’s Tale”, and they plan on making even more original content, but imagine the entertainment juggernaut that the service could be if the four ownership companies stopped fighting amongst themselves and let their powers combined to form Captain Planet (silly metaphor, but you get the idea). If Hulu was allowed to the best service it could be compared to Netflix, it would be unstoppable. But no, it’s treated like a stepchild who is just exists and doesn’t get the attention it deserves, even if it was the first streaming service to win a Best Drama Emmy. I’m telling you, consumers won’t be willing to pay $10 each for six or more streaming service, but I’m willing to bet that they would be glad to pay the combined $20 to own both Netflix and Hulu if both offered the absolute best of the best quality content there is to be seen.
Alas, this just isn’t meant to be. The studios are greedy, and they each want the biggest piece of the pie to themselves. Ironically, this is what burst the bubble for the music industry. The record labels were charging too much for the albums, along came iTunes and Amazon Music, with the option to pay only for the singles you wanted, and ta-da, selling your music via those services is more profitable than selling the physical media. Right now, Netflix is like iTunes, taking everyone’s profits, and the studios want their power back. However, in the end, content, continuance, and pricing are the deciding factors in all of this. If Netflix can still deliver in those areas, then these other streaming services will be lost causes, and just more burdens on consumers’ wallets.

I’ve probably ranted for long enough now. My point is simply that Hollywood needs to understand why Netflix is as popular as it is. People are hurting financially, and they are picky with their entertainment. They are willing to pay $10 a month for at least one service, but that doesn’t mean they are willing to pay $70 or more for a half dozen or more services at the same time. I say instead of starting over from scratch, continue to build upon what you already have. Now, please excuse me, while I watch one or two titles from my watchlist, but then add another five or six titles to it (right now, I’m up to 500 titles, yikes!).

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