As Netflix Locks Down Exclusive Disney Rights, The New Walled Gardens Emerge

from the meet-the-new-boss dept

Back in 2012, Netflix and Disney struck a deal wherein Netflix would be the exclusive online provider of Disney content starting in 2016. And while we knew that the deal had been struck, it was only this week that Netflix announced on its blog that the exclusive arrangement would formally begin in September. As of September 1, if you want to stream the latest Disney (and by proxy Marvel, Lucasfilm and Pixar) films — you need to do it via Netflix.

Given the popularity of the Marvel films and the now-annual release of new “Star Wars” titles, that deal has become bigger and more important than ever, making it a pretty large coup for Netflix. Especially if you consider that Disney is co-owner of Hulu, which is planning to dramatically scale up its own subscription streaming video service later this year or early next. In fact, while Hulu for years was little more than an uninteresting ad for traditional cable, data suggests that Hulu’s catalog is now much larger, thanks in large part to Netflix’s tight focus on original content.

And while this is good news if you already subscribe to Netflix, this ongoing quest to lock down content in exclusive arrangements has a notable downside as the practice expands. As Hulu, Netflix, and Amazon have tried to each lock down their own exclusives, finding your favorite movie or TV series has become a frustrating game of hunting and pecking to ferret out which provider has the exclusive rights. It’s also becoming increasingly confusing for consumers to understand when these deals expire; something that’s not effectively communicated by most streaming companies.

And, ironically, while many streaming video customers cut the cable cord due to high prices, exclusive arrangements are now forcing those customers to pay for countless streaming services if they actually want to access all of their favorite shows and movies. There’s a certain danger in replacing the cable industry’s long-standing walled gardens with newer, different walled gardens, and it’s pretty clear most of these companies either don’t see the potential pitfalls or, in a rush for eyeballs, just don’t care.

And as broadcasters increasingly realize they can cut out the middlemen and launch their own streaming services, it seems inevitable that the exclusivity wars will only get worse. For example, if you want to watch the new “Star Trek” TV series from CBS when it launches in January 2017, you’ll need to subscribe to CBS’s $7 a month, All Access streaming platform. There’s likely going to be a lot more where that came from, especially as Comcast takes a bigger role in managing Hulu (NBC Universal merger conditions preventing it from fiddling with Hulu to prevent anti-competitive shenanigans expire next year).

So while the streaming industry and broadcasters are intent on following the exclusivity concept deep down the rabbit hole, few if any seem to notice that while these kinds of exclusive deals may be good for one company over the short term, they’re not going to be great for the broader streaming industry over the long haul. There’s a lot of potential here to fracture content availability, confuse paying customers, and drive frustrated customers back to piracy after all of the work done to get them on legitimate platforms in the first place.

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Companies: disney, netflix

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Comments on “As Netflix Locks Down Exclusive Disney Rights, The New Walled Gardens Emerge”

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60 Comments
Violynne (profile) says:

Oh, boy. Karl writes another article, I get angry at his lack of understanding, and yet another pointless post will be made given I know damn well he’s not going to change his opinion.

Karl, how is this any different than current entertainment licenses today?

Exclusive is what supports the consumer’s purchase. Fair? Probably not, but it’s been this way for centuries.

Let’s put this in perspective so you can understand it better. Disney recently purchased both the Marvel and Star Wars franchises.

Prior to the announcement from Netflix, where could anyone stream any movies of these franchises? I’ll tell you: No where.

Now, for the first time ever, in the history of both Marvel and Star Wars, people can actually stream these shows.

First. Time. EVER!

Yes, the industry is moving like a glacial landmass to work towards providing people what they want to see and are willing to pay for.

But the reality of the situation is people do not have to hunt and peck because there are only three services:
Amazon
Netflix
Hulu

Maybe 4, if YouTube can figure out what the hell it wants to do, but those are the big three.

Just like the big three in “radio” are:
Apple
Spotify
Pandora

Yes, there are others out there, but if you’re looking to license exclusive content, you’re going to go with the bigger players who have established the customer base.

What we should be taking away from this isn’t criticism, but appreciation that maybe, just maybe, the rest of the movie industry will get off its lazy ass and do what Disney is doing, even if this means we have all three subscriptions which is still cheaper than cable.

PS: there’s still no such thing as unlimited data. >:]

PaulT (profile) says:

Re: Re:

“I get angry at his lack of understanding”

You seem to be somewhat lacking there yourself, I’m afraid.

“Karl, how is this any different than current entertainment licenses today?”

Part of the problem is that it’s not. The new problem is that in previous eras, people would generally be subscribing to all the channels and would just have to know where to look to get the channel showing the show/movie desired. The consumer would just have to pay extra if the content wasn’t on basic cable.

Now, they’re being asked to subscribe to and pay for each one separately. Not a bad thing if you’re happy with the content on one or two services, a very bad thing if they’re spread over many more.

“But the reality of the situation is people do not have to hunt and peck because there are only three services”

Your point goes out the window when you’re wrong yourself. There’s a lot more than 3 services out there. Hell, one additional service (CBS’s All Access service) is directly referred to in the very article your whining about being wrong.

“Yes, there are others out there, but if you’re looking to license exclusive content, you’re going to go with the bigger players who have established the customer base.”

Oh, sorry, I forgot – if you ignore facts then you’re right…

morganwick (profile) says:

Re: Re: Re:

Part of the problem is that it’s not. The new problem is that in previous eras, people would generally be subscribing to all the channels and would just have to know where to look to get the channel showing the show/movie desired. The consumer would just have to pay extra if the content wasn’t on basic cable.

Now, they’re being asked to subscribe to and pay for each one separately. Not a bad thing if you’re happy with the content on one or two services, a very bad thing if they’re spread over many more.

“This is what we told you would happen if the cable bundle was broken up.” -legacy content and cable companies

I.T. Guy says:

Re: Re:

“Just like the big three in “radio” are”
https://www.google.com/search?q=internet+radio&ie=utf-8&oe=utf-8

“First. Time. EVER!”
Ha ha ha you’re a year behind.
http://decider.com/2015/04/07/star-wars-streaming/

“there are only three services” (That YOU know of)
https://www.google.com/search?q=movie+streaming+service&ie=utf-8&oe=utf-8

“and yet another pointless post will be made”
You got that right.

Anonymous Coward says:

Re: Re:

“The current situation is terrible. We started moving towards a new situation, but it’s starting to look a lot like the old situation. But it doesn’t look identical to the old situation, therefore everything is better in all ways, and that means it’s perfect.”
Fuck off with your bizarre rose-tinted spectacles, thanks.

kallethen says:

Re: Re:

The problem will exasperate more when the exclusiveness extends to each media company’s own streaming services, as indicated in the article. That $10/mo each for Amazon, Netflix, and Hulu will grow as you have to tack on CBS, ABC, Fox, ePix, HBO, Showtime, ESPN, etc, etc, etc.

I know I’ve looked into it and it feels like I’d be paying just as much for my current cable bundle as I would trying to cut the cord and still have access to the shows I want… and add in that I have poor reception of local TV thanks to some mountains.

Chris-Mouse (profile) says:

Re: Re:

Yes, there are others out there, but if you’re looking to license exclusive content, you’re going to go with the bigger players who have established the customer base.

Or, as the article mentioned CBS doing, you could also go with the service you control, meaning consumers may end up having to subscribe to one service per production studio.

PaulT (profile) says:

Re: Re: Re:

Plus, different content has different audiences and thus may be more suited to different services. Unless you’re pushing the most mainstream content, you might be better off with a smaller service where your content is more likely to be seen by a majority of subscribers rather than hidden away under better known content.

It’s not just that the “only 3 services” is a lie about the present state of the industry, it’s also incredibly short-sighted about how content not from a major studio will be handled, even if you did assume that they’d only licence it to an existing player.

MadAsASnake (profile) says:

Re: Re:

Even if you were right, you missed the point. Breaking up streaming content into “exclusives” and time boxing is exactly what drives people to alternatives. While I understand that these companies are trying to give people a compelling reason to buy, more often they are giving them a compelling reason to obtain it from source in which no-one gets paid.

JMT says:

Re: Re:

…even if this means we have all three subscriptions…

Nope, not happening. Just like I have no interest in going to three different stores for my groceries, I have no desire to prop up their decrepit business model by having multiple subscriptions. Exclusive licences are anti-consumer and should only ever be viewed with scorn.

Wendy Cockcroft (user link) says:

Re: Re: What if the MPAA did something useful...

…by setting up or collaborating with a streaming service, e.g. YouTube, to provide all the entertainment we want, perhaps via a subscription, then collected and distributed the ad and/or subscription royalties to the studios, etc.?

If they did that instead of fighting streaming services or encouraging their members to fragment the market into separate walled gardens, content would be paid for and everyone would win.

Sigh! ‘scuse me while I put my pipe away, I’ve finished dreaming.

PaulT (profile) says:

Re: Re: Re: What if the MPAA did something useful...

Three instant problems:

1. Disney is part of the MPAA, so that wouldn’t help the current situation. They could choose to still licence to a 3rd party rather than take on the extra costs & work involved with a new service.

2. When the people in charge of the content try setting up their own service they have a habit of either making it woefully inadequate, locked down so far it’s not usable or vastly overpriced. An MPAA-created streaming service would be horrible for the consumer.

3. If they had their own service, do you honestly think they’d be giving fair deals to licence content to competitors?

TLDR – if MPAA members were of the mindset to create a useful comprehensive service that would work, we’d already have one. This situation is the best we can hope for in the short term, I’m afraid.

Chris says:

Streaming

@Violynne I disagree completely. Amazon has the best platform currently, and you are certainly able to stream via prime or rental, a number of marvel movies:
http://www.amazon.com/s/ref=nb_sb_noss_1?url=search-alias%3Dinstant-video&field-keywords=marvel
Disney and Pixar movies:
http://www.amazon.com/s/ref=sr_nr_p_n_consumption_type_1?fst=as%3Aoff&rh=n%3A2858778011%2Ck%3Adisney%2Cn%3A2858905011%2Cp_n_consumption_type%3A9052272011&bbn=2858905011&keywords=disney&ie=UTF8&qid=1464179814&rnid=8953052011
And the newest Star Wars:
http://www.amazon.com/Star-Wars-Force-Awakens-Theatrical/dp/B019G7X8DS/ref=sr_1_1?s=instant-video&ie=UTF8&qid=1464179873&sr=1-1&keywords=star+wars&refinements=p_n_consumption_type%3A9052272011

Now unlike Amazon, Netflix does not allow for rental currently. Which means that portions of the catalogue of these properties that Disney does not want to allow unlimited streaming of (would require rental fees) are now simply going to be unavailable. Maybe you can find them in a redbox sometimes, but exclusivity means some of these titles will simply be unavailable unless you purchase the physical media (or presumably a digital copy somewhere).

Exclusivity is not pushing anything forward, it is just moving backward. Things being ‘this way for centuries’ is a terrible argument for why it should stay the same. Netflix, Hulu and Amazon have been major disruptions to the entertainment marker, but that innovation is now reverting to these companies shift toward being the next Comcast and TWC… Wider availability and competition are best for the consumer not exclusive deals.

Anonymous Coward says:

Not me

exclusive arrangements are now forcing those customers to pay for countless streaming services

I have seen the need for multiple subscriptions coming for quite a while now and I will not be participating. I can wait for Redbox to get the movie for $2 rather than pay for 2, 3 or more subscription services. It will cost as much as cable and you still won’t have all of the content.

Dreddsnik says:

Re: The elephant in the room

“Hard to believe a piece like this on TechDirt made it through editorial approval without the requisite paragraph on how this will only encourage more people to seek out unofficial sources for the content.”

It doesn’t really need to be said anymore.
Everyone else seems to get it.

Skeeter says:

Different Feathers - Same Bird

I really want anyone who is anti-cable (or pro-cord-cutting, or whatever) to explain to me the difference between paying $65 for cable, or paying Amazon $100 a year for Prime, $10 a month to Netflix, $4 a month to Hulu, $7 a month to CBS ‘All Access’, and more?

I mean, if you ‘cut-the-cord’, all you really are doing is cutting the cord. You’re STILL paying for cable, whether your provider is one company, or seven companies auto-billing your credit card each month.

Sure, I’ve got cable – and a decent ‘cable only’ package for about $60 (after fees) a month. I add the obligatory $10 for Netflix (for a few shows that will never syndicate again) each month, and MAYBE a $6-hit at Redbox once a month. Ok, that’s $76. I know a LOT of people paying $76 for just their cable – so tit-for-tat.

Why has this turned into such a public opinion war? My god, it’s like being young again (the early ’70’s) and watching ‘Ford-vs-Chevy’ mania all over again. You DO REALIZE, all that did was benefit both Ford AND Chevy, right? The prices for both still went up each year, as the quality dropped.

PaulT (profile) says:

Re: Different Feathers - Same Bird

“I really want anyone who is anti-cable (or pro-cord-cutting, or whatever) to explain to me the difference between paying $65 for cable, or paying Amazon $100 a year for Prime, $10 a month to Netflix, $4 a month to Hulu, $7 a month to CBS ‘All Access’, and more?”

Choice. Nobody has to subscribe to any of those services, let alone all of them. You’re also free to choose your own schedule when to watch the content, as well as having the ability to watch outside of your home.

If you cut the cord then spend the same to access the same shows, you would want to ask yourself why. But, not everybody wants to do that – and were forced to pay for content they don’t want regardless before they cut the cord. Not paying for crap you don’t want to pay for, even if you end up paying the same at the end of the day, is also part of the appeal.

“Sure, I’ve got cable – and a decent ‘cable only’ package for about $60 (after fees) a month”

That’s a problem with competition meaning that many people don’t have a choice other than stick with their cable provider for broadband, which is a separate issue. In places where you have a real choice between multiple DSL or cable providers, etc., things seem to be cheaper (sometimes with streaming access included).

“You DO REALIZE, all that did was benefit both Ford AND Chevy, right? The prices for both still went up each year, as the quality dropped.”

My American history is a little rusty, but wasn’t that why Japanese imports started to sell at higher numbers than either, and ultimately led to the near collapse of both companies and the local manufacturing industry? I might be wrong as I’m talking off the top of my head, though. If I’m right, I wait with bated breath for the competitor that will blow apart this market too.

Anonymous Coward says:

Re: Re: Different Feathers - Same Bird

Cars are a separate issue but still applies to your point, adaptation in the marketplace. The japanese cars were small vehicles that were good on gas when we were going through a gas crisis. The American car makers were still making land yachtes and scrambled to come up with products. Cable companies are even less likely to respond to their customers. When I had Cox Cable my signal would drop constantly and I could never get an HD signal. Cox never fixed the issue but was more than happy to take my money. I now only use their broadband and as soon as they have a reliable competitor I’ll jump ship altogether.

jupiterkansas (profile) says:

Re: Different Feathers - Same Bird

If you’re someone that must have access to all content ever created, then you might as well stick with cable.

One streaming service can give me more than enough stuff to watch, and I can changes services throughout the year if I want to see something else. Cord-cutting isn’t for cable addicts. It’s for people who just want something to watch now and then and would rather spend their money on other entertainment, like books, music, and live theatre.

Personally, if I can’t press pause, I don’t watch it. I watch things on my own schedule, so cable and broadcast TV seem antiquated to me.

Anonymous Coward says:

Re: Different Feathers - Same Bird

I really want anyone who is anti-cable (or pro-cord-cutting, or whatever) to explain to me the difference between paying $65 for cable, or paying Amazon $100 a year for Prime, $10 a month to Netflix, $4 a month to Hulu, $7 a month to CBS ‘All Access’, and more?

Well, its like this, if you have uncapped Internet, (which I have), there is this minor site called YouTube, and my list of channels worth watching has grown to where adding a channel requres that another one is dropped.

jupiterkansas (profile) says:

How is this different from the ala carte system we’ve been begging cable TV to provide for years? Sounds like we’re finally getting it.

Eventually these services will morph from exclusive content to niche content – catering to specific audiences the way various cable channels serve niche content. Criterion is already leaving Hulu to start it own service targeting arthouse films and Criterion’s largely foreign language collection.

Streaming services will always be hampered by the fact that all content has to be licensed. They will never provide everything the way a store or library or Redbox or other disc-based rental service can.

jupiterkansas (profile) says:

Re: Re: Re:

That’s not what cable ala carte was all about. It was all about let me pay just for HBO, or just for TCM, or just for the channel I want. Well, a streaming service is more like one of those channels, and we’ll probably see more niche streaming services (like sports streaming) that are more like niche cable channels.

Obviously if you only want to watch one thing, this isn’t a solution. Better to just buy that one thing directly (if it’s offered). Most people don’t want just one thing.

crade (profile) says:

Re: Re: Re: Re:

That is exactly was ala cart cable is about. The whole point of ala cart (anything, but in this case) cable was to cut down on the extra crap that you have to buy if you want to watch any particular show. Instead of buying a whole bundle of channels, you only have to buy one. It’s still paying for extra crap, but at least it’s less extra crap. Buying a whole streaming service for a particular program would be paying for more extra crap you don’t want rather than less.

jupiterkansas (profile) says:

Re: Re: Re:2 Re:

A channel and a streaming service are the same in this instance. A service might offer more content than a channel, but you’re basically paying for a limited selection. It’s the same as paying just for HBO or Showtime – even if both channels offer some of the same movies.

Cabel ala carte was never about watching one show.

Purple says:

Netflix and Amazon

Most people already have Amazon Prime and Netflix. With Amazon you get more than streaming videos you also get streaming music and free shipping so it is more than worth the $8/month. If it is not on one of those two, I just don’t watch it.
I can see how this is an issue, and how they ignore history, but what do you expect? Look who is making these decisions.

nerdrage (profile) says:

Re: Re:

Exclusive content will last. The insane number of services won’t. A crash is coming that consolidates the services down to 3 or 4 majors that keep growing into global behemoths. Cable and broadcast will go under.

Who is going to produce shows then? The surviving streaming services will produce them as originals. And of course they will be exclusive to each service. They’re not going to share nicely! Why should they? They will have tens or hundreds of millions of global subscribers and ALL the power then. Bwhahaha!

No wonder everyone wants to try to be one of the winners. Most will fail but if they don’t try, they KNOW they’re screwed!

Wyrm (profile) says:

As I see it, I have two options as I’ll definitely not subscribe to several such services at the same time.
1. I subscribe to one service at a time, with a rotation as I enjoy a month of one service then switch to another. Doing this with Cable would be more difficult and costly. Not a great solution, but legal and much cheaper than before. Still have to fish around for specific content. And spend time juggling subscriptions.
2. Forget them and just torrent whatever I want. No subscription, no exclusives. If those guys don’t want my money, why should I be the one going through hoops and loops to give it to them?
They’re making things a nightmare for their customers, then complain that they find “alternatives”.

Anonymous Coward says:

exclusive arrangements are now forcing those customers to pay for countless streaming services if they actually want to access all of their favorite shows and movies

Replace “if they want to access” with “if they want to pay to access”. The PR people have done a pretty good job of convincing people it’s somehow wrong to see stuff without paying (but, if nothing else, broadcast television still exists—usually with better quality than cable, if you can get the signal).

Dingledore the Flabberghaster says:

There is a slight difference

in that some of the larger streaming providers – I’m thinking here of Netflix and Sky’s Now TV – don’t push a contract onto you. You can stop and restart your subscription as you see fit. That pushes providers to make sure that there’s at least something a lot of people want to watch and that the something makes the monthly payment worthwhile.

In my eyes, the biggest problem with cable packages – here in the UK that primarily Sky, Virgin, and BT – insist on 12-month-plus contracts that allow them to be patchy with their quality programme volumes.

nerdrage (profile) says:

Re: Antitrust?

What happens when Netflix funds an original like Jessica Jones and doesn’t license it to Amazon? That’s legit, right? They made the show, they should keep it.

Well this is where it’s all going. Streaming services will drive cable and broadcast under by stealing their customers. So then how will new shows get made? They’ll all be Netflix or Amazon or HBO originals. How can you go after them for “antitrust” then? Does Ford allow Chevy dealerships to sell their cars?

Wendy Cockcroft (user link) says:

Re: Re: Antitrust?

The argument is that having multiple companies charging high rents for access to content is going to backfire by driving people to piracy. Bear in mind that you’d have to have a subscription to EACH AND EVERY service to watch EVEN ONE of the shows you want to see. Unless you are willing to stick to but one provider, this could prove expensive. Enter the piracy dragon.

This situation has arisen because the vertical integration business model is permitted when it shouldn’t be. To be consumer friendly, you should EITHER make programs and films OR broadcast and distribute them. To do both captures and locks down the market for those programs or films. This is what comes of treating cultural items like physical property; they’re not a scarcity so they shouldn’t be treated that way at all.

Anonymous Coward says:

Basically instead of learning and adapting to the internet and streaming, all the legacy entertainment companies will just transfer the same business models to the internet and have their own exclusive streaming platforms, many of which will probably be awful and not worth the hassle and price to watch the few things a month you might want to see.

I’d like to see the new Star Trek series when it comes out but it’s not worth paying just to see one show especially when I already have Netflix.

Disappointing to see it going that way but hardly surprising.

Anonymous Coward says:

Re: Re: Re:

They really are making it impossible for anyone to make an appealing service with their short sighted walled gardens they’re all making. It’s not appealing to anyone to have to pay $5-20 a month for each service just to see one or two things that’s exclusive to each service. And constantly switching every month to a different service to catch up on each services exclusive content is just insane, no one wants to do that.

Shilling says:

In the end all these exclusivity deals will only hurt the platforms themselves if they keep their cancel anytime policy. As a cordcutter you just subscribe to 1 service for a month or 2 per year and then hop to another platform when you watched all the shows that interest you. The danger here is that they will most likely introduce year plans and cancel the monthly plans altogether or they only provide content for 2 months out of the year so you have to be subscribed all year round not to miss anything like that silly vault Disney had (or still has?) Where they would lock certain movies out of the market for a couple of years.

All in all there is still room to screw over cord cutters even more then what they did thusfar.

nerdrage (profile) says:

it's a passing phase

We’re in a crazy-growth phase of the transition into streaming as the dominant distribution medium for global entertainment (outside movie theaters). This will be followed by a crash as consumers get fed up of looking everywhere for content they want, and just opt for one or two of the biggest services with the most stuff. (Or piracy, but that will be neutral in this game since it doesn’t send money to one of the major players who stand to win or lose.)

This will result in a virtuous cycle for a few services above a pretty high threshold and a vicious cycle for the rest. Netflix is assured to be above that threshold. Ditto for Amazon, maybe HBO, possibly Hulu, beyond that who knows. I don’t begrudge CBS its bid to join the winner’s circle using their best brand for this purpose, Star Trek. They probably will fail and Star Trek will end up being made for licensing to Netflix or Amazon.

All the players understand that the power will be in distribution and the direct relationship with the consumer (and their juicy credit card) rather than content creation, which will proliferate beyond even today’s crazy level and result in a few distributors who can afford to be very picky and cheap when it comes to what content they want to pick up. When those distributors control access to the audience, everyone will finally understand that content is NOT king.

Whatever says:

Karl, nice of you to wake up to the reality I have been trying to explain to you for more than a year. Cutting the cord doesn’t always lead to cutting the costs, rather if you want to maintain what you have you may end up spending more unless you are going to pirate stuff (and you could pirate cable for free too, so it’s a moot point).

Even if you shave down your programming options, it’s pretty easy to spend a fair bit of money each month on various streaming services to get what you want to watch.

The next step almost certainly will be “cable companies” for streaming, who will unite all of the various streaming services into a single interface app / settop box / website so that you can pay a single fee to get a selection of channels, putting everyone right back where they were.

Perhaps this proves the theory that there is no such thing as a free lunch, not even a FREE! lunch.

PaulT (profile) says:

Re: Re:

“unless you are going to pirate stuff (and you could pirate cable for free too, so it’s a moot point)”

“Perhaps this proves the theory that there is no such thing as a free lunch, not even a FREE! lunch.”

So… there’s no such thing as a free lunch. Unless you pirate, then it is free. You’re not even logically consistent within your own ramblings, as per usual.

Also, who’s trying to get something for free in the article you’re imagining in your delusional little mind? Certainly not the people who are paying for services, as per the article that exists in the real world.

Reality, as ever, is hard for the basket case known as Whatever.

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