Hugely Profitable And Consolidated Streaming Platforms Suddenly Too Cheap To Pay Residuals And Writers, Or Keep Niche Shows Online
from the dysfunction-junction dept
We’ve noted repeatedly that as the streaming sector grows and consolidates, it’s revealing many of the same problems we saw inherent in traditional, shitty, cable TV. As in the need to provide Wall Street improved quarterly returns at any cost has them doing the sort of things common in the traditional cable sector they used to criticize and disrupt (see Netflix’s password sharing cash grab).
Elsewhere, we’re seeing the byproduct of mindless consolidation results in other problems. Such as with the AT&T/Time Warner/Discovery mess, a series of utterly pointless mergers that have made the end product decidedly worse, while resulting in thousands of layoffs, price hikes, companies too cheap to pay artist residuals, writer strikes, and widespread annoyance and angst.
Warner Brother Discovery has been too cheap to pay artist residuals, resulting in a lot of popular shows being pulled from the company’s HBO Max streaming platform. We’re seeing the same thing over at Disney+, which apparently has proven unable to keep shows they’ve just recently produced — like Willow — online and available to a handful of customers via streaming.
The reason we’re given is that the same giant media conglomerates that spent hundreds of billions of dollars on pointless megamerger sprees, and received tens of billions of dollars in tax breaks for doing absolutely nothing, suddenly can’t afford to pay their writers a living wage, or keep shows like Willow available to consumers:
Streamers like Disney+ have to pay rights-holders and content creators continually in many cases to keep their content on their platforms, but often that content is being viewed by too few people and isn’t driving new subscriptions. As such, these businesses see cuts as obvious ways to save money during turbulent times.
The cuts are occurring at the same time that corporations are once again flexing their muscles in the wake of a brief shift of power toward labor during peak COVID. As the narrative goes, this kind of belt tightening is only wise given the “turbulent times” and a purported recession (?) waiting in the wings. You’re lucky to have a job. Sit down and shut up.
In reality, chipping away at your own streaming catalog is one of several ruthless determinations made by bean counters who are no strangers to wasting hundreds of billions of dollars on failed luxury amusement parks and massive megamergers, but somehow now can’t afford to maintain user access to a relative handful of niche programming:
So who decides which shows should get the boot? Bean counters, mostly, who consider the cost of carrying library content based on how much is paid toward residuals, participations and royalties. That is weighed against viewership and a title’s ability to lure more subscribers — like The Office on Peacock, for example — and create less churn. Ahead of Showtime dumping titles, Chris McCarthy, President/CEO, Showtime and Paramount Media, said that “we will divert investment away from areas that are underperforming and that account for less than 10% of our views.”
But again, it’s not just less popular shows like Willow getting the axe. Sesame Street and other popular kids’ programming have been shown the door. Mad Magazine was an early casualty of merger mania. There’s logic-driven belt tightening, and then there’s just being fucking cheap.
Routinely lost in the conversation is all the endless promises of “untold synergies” that accompanied decades of mindless media consolidation. Synergies that were supposed to have made these companies lean and resilient long ago. In reality, that consolidation instead created a massive, wasteful mess fraught with consistent managerial incompetence that’s increasingly catching up to the industry:
On Tuesday morning, subscribers took to social media to complain that they were having problems logging in to Max, which is replacing the three-year-old HBO Max service. As reported by users, the issues spanned the Max.com website as well as mobile apps including iOS and connected-TV apps on Roku and Samsung TV.
It’s growth for growth’s sake. Change for change’s sake. And dealmaking for dealmaking’s sake. Usually simply to generate tax write offs and let incompetent media executives fail upwards while pretending they’re savvy dealmakers.
You’ll notice that how much money gets wasted in mindless consolidation, pointless megadeals, and sustained managerial incompetence kind of gets lost in the weeds when it comes time to explain why streaming catalogs are shrinking, prices are rising, writers can’t get paid, and layoffs abound. But harmful and often pointless consolidation remains a primary reason streaming is slowly turning into the terrible cable TV sector it used to make fun of.
Filed Under: cable tv, mergers, streaming, streaming tv, video, wall st., willow, writers
Companies: warner bros. discovery
Comments on “Hugely Profitable And Consolidated Streaming Platforms Suddenly Too Cheap To Pay Residuals And Writers, Or Keep Niche Shows Online”
Lay down with dogs…
Funny how these oppressed types always live in mansions.
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Maybe piracy has consequences.
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It’s almost like you didn’t read the article.
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Maybe piracy is the result of decisions like these.
Re: Re: piracy will happen anyway
Streaming got overbuilt. Too many platforms, too much content, especially garbage, interchangeable content. Investors overestimated the size of the streaming market. Maybe the numbers of households was correct but the amount they would pay was not. North America pays the most, for Netflix it’s $15/month but in Asia it’s half that. Look at Disney: the gap between N America and Asia is even bigger. In India, they can only get people to pay something like 45 cents a month.
Now people in the most lucrative market are learning to churn around and keep their subscriptions low. Why should I pay $15 for Netflix when it’s half of that in Asia? Well the solution for me is to subscribe for half the time. Or less. Netflix makes so little good content a visit for a month each year should do it.
So the whole industry needs to adjust expectations downwards. Some platforms will go under and the assets bought by stronger ones, probably named Amazon. Free, ad-supported tiers will pop up with older, cheap content percolating down there from the higher priced premium tiers. There will still be garbage content, but less overall. A small percentage of high quality content will still be made, focused on HBO and Apple.
And piracy will continue thru all of this because it’s never been a fight over pirates. It’s a fight over the paying customers. What do they want, how much crap will they tolerate. And that changes all the time.
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“North America pays the most, for Netflix it’s $15/month but in Asia it’s half that”
It’s €17.99 (around $19 US) in Europe for 4 devices.
“Why should I pay $15 for Netflix when it’s half of that in Asia?”
Do you have the same level of choice? Because the number of titles available can vary wildly between countries, especially if they’re not “Netflix Originals”.
“And piracy will continue thru all of this because it’s never been a fight over pirates”
This is the real lesson. “Piracy” has happened long before the internet, be that mix tapes or people copying VHS tapes to sell on a market. What changed with the internet was the blurring of the lines between for-profit piracy and people just sharing with their friends. But, what’s been clear is that most people will pay if that choice is available at a reasonable price. So, piracy went down when people could get a 99c iTunes song instead of buying a $20 CD for the song they like. Piracy went down when people could turn on Netflix instead of downloading a movie. Introduce more barriers (by, for example, telling people to sub to 4 services instead of one to access their shows), and piracy goes up.
The only fix for this is to have a reasonably priced way for people to access what they want without chasing around multiple platforms. But, that might just mean whining about lower profits as we’ve seen when people switched to renting through Spotify instead of buying. I’m not sure of the solution that pleases everyone, but I think it’s definitely not forcing people to go to Justwatch or similar to work out where they need to pay to stream what they want – and if it’s on what they already pay for or if they have to pay yet another service to watch it.
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Like “keeping someone’s portfolio viewable”?
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Maybe doing without has consequences.
But that’s what you asked for. Turns out it’s not any better, is it?
I can see a twisted logic with Willow. While I think that the problem there was with its release strategy and the end product now getting a lot of hype, the business model with these platforms is to produce content to keep people subscribing every month while attracting new subscribers. With Willow, that seems to have failed. So, they want to sell it off to others to recoup their investment, but they probably won’t get top dollar if they’re competing directly with the people they’re trying to sell to. So, they remove it.
It’s frustrating and very anti-consumer, but I can sort of see the logic from their end. The rest is just nonsense, though. At some point, they might have to come to terms with the fact that people don’t want to be endlessly searching around for the content they want, they want one place to subscribe to that had everything they want. The question is how to achieve something like that without trying to return to cable-style bundling, which was a primary reason people people abandoned cable in the first place.
“we will divert investment away from areas that are underperforming and that account for less than 10% of our views”
I wonder how many people they have subscribing just to access that 10%, and how much they’ll lose by refusing to serve them. I can imagine that there’s a lot of people subscribing just to access a particular couple of shows, but never watch anything else. So, they subscribe while not viewing. lot of content, but while it’s only 10% of the content to Paramount, it’s 100% of content to those subscribers. I wonder how many this strategy will lose them.
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Seems like the solution is to just change the way residuals are allocated. Instead of paying the creators a lump sum just for a show being available to watch, whether the show is watched or not, the creators should be paid by the view, something that is easily trackable and verifiable in this streaming age where computers keep track of every data point.
Yes, that means some creators won’t make as much if their shows aren’t popular but that’s the way it should be. Make good stuff, you get paid well. Make shit, or shows that only appeal to a tiny demographic, and you don’t make as much.
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“Seems like the solution is to just change the way residuals are allocated”
Indeed, but that involves changing licencing agreements, which involves negotiations, which might involve removal from places with the old agreements.
I’m not saying I agree, but I can understand why if Disney want to, say, licence the show to Tubi (which apparently is very profitable) they feel the need to remove it from the original platform while they negotiate.
“Make good stuff, you get paid well. Make shit, or shows that only appeal to a tiny demographic, and you don’t make as much.”
Herein lies the issue. What’s “good”? That’s very subjective. There’s also plenty of examples of shows or movies held up as the best ever made that weren’t profitable. Unless you want people to only cater to the lowest common denominator (which can also very much fail to find an audience), you might have to take risks, and those can lose money.
Maybe the best way to go forward is residuals, but that also risks less interesting content. We will see what this latest tactic means along with the results of the writers’ strike.
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I think it’s fair to assume that any decision made by executives is a risk for less interesting content. You’re expecting business leaders to intentionally make a less safe or niche choice that runs a non-zero risk of making them less money.
Short of a barrel to their forehead or a knife to their neck, I don’t see these executives changing their approaches any time soon. What was the result of the previous writer strike in the late 2000s? Were decisions made that benefited writers, and forced their employers to change their ways and treat their writers more equitably? Or did the studios perhaps pay a nominal fine as a cost of doing business, knowing full well that they hold almost all of the bargaining power, and can always outsource for cheaper labor if push came to shove?
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Well, in this context, ‘good’ would be equivalent to ‘popular’, in that they’d be paid by the view. A lot of views by a lot of people would indicate a ‘good’ show in the sense that its creators would be paid handsomely for it.
Also known as a self fulfilling prophecy, as their belt tightening reduce the money being spent in the economy.
In other words, the business model is unsustainable once the market is saturated.
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It’s only saturated if you don’t produce new content and instead regurgitate the same inane shit over and over again.
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No, eventually there’s going to come a point where signups slow down, no matter what the quality or quantity of what you’re selling.
Re: the market became saturated earlier than expected
The streamers thought they could charge $10-$15 out there in the world beyond America but got cold water in the face when they found that the standards in most of the world is, we watch content for dirt cheap or free in exchange for watching ads.
So the future really is a lot of FAST tiers with cheap, old content and a few premium services surviving charging $10-$15 or even $20/month but households aren’t going to get 6 of those, more like 1 or 2 and churn around.
As the adjustment period continues, the weaker competitors will fail and get bought by Amazon, which will be fattening up in the coming years and who knows how much IP they will control. They’ll probably get Paramount and Peacock’s. Maybe Warners’. Disney and Netflix will probably maintain their freedom.
Those who don’t want more consolidation, well sorry. It’s going to happen. I don’t see how the streaming market can support the current number of competitors. They’ve already lasted longer than I would have expected.
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“The streamers thought they could charge $10-$15 out there in the world beyond America but got cold water in the face when they found that the standards in most of the world is, we watch content for dirt cheap or free in exchange for watching ads.”
Not strictly true. There are streamers who charge that much in the Western world, but they have to adjust to local markets with less wealthy countries. Then, there’s less general choice outside of North America that can be beneficial (for example, Disney+ having Star, which combines Hulu and Disney+ content that’s separate in the US, or the new Star Trek series being on Prime or Netflix until recently because there wasn’t a new service to promote).
“Those who don’t want more consolidation, well sorry. It’s going to happen”
I think it depends on ho they decide to compete. The current situation is because they thought the Netflix model would get everyone to sub to enough services to pay the same as the old cable model. But, realistically most people will only sub to a couple unless they’re really into a Shudder/arrow/criterion type niche service. Past that, people will try to avoid the charges, and they really hate having to chase a specific show between services.
The ultimate answer is for services to compete on service quality, recommendations or curation instead of “you have to come to us to get X show”, but I can see many not liking that and fighting because they can’t use a lack of net neutrality to game the system outside the US. It might end up being that more copy the Tubi model which would be great from an availability point of view, but split the market between those happy with ads and those who want the old Netflix model.
Bean counters, mostly, who consider the cost of carrying library content based on how much is paid toward residuals, participations and royalties.
This would only be a cost and a problem if said bean-counters (and law-prodders) didn’t insist on the sorts of bulk contracts that tend in the extreme to favor Corporation McCorporationface until their bets don’t pan out. If they had the sort of contracts where everyone was getting paid for views, it wouldn’t be any worse if viewership wasn’t as high or as long as expected. Oh, but then they wouldn’t be margining it all over the people with rights to residuals and royalties when viewership is good or crazy high. Can’t have that, so we can’t have nice things.
Why is this surprising?
It has always been about control. A media company will go bankrupt while people are pressing millions of dollars on them rather than not being able to jerk people around. When VCRs became common in the 1980s, the media companies lost a level of control thanks to the first sale doctrine. They’ve been working hard to reclaim it, and now they have thanks to streaming and DRM technology. It took 40 years, but we’re back in the 1950s again.
Who said anything about “afford”? Hollywood has fully taken over online video streaming, with Netflix having joined the MPA(A) and most of the other services being owned by long-established members. These are the people who brought us “Hollywood accounting”. So, no, streamers like Disney+ don’t “have to” pay till it gets to trial and a judge’s eyes start to bug out. Till then, why not keep only the most popular shows online, and redirect the monkey-point royalties to executive bonuses? As for the less popular stuff, I’m sure it hardly seems worth even the effort to fudge the numbers. As if the people involved care anything for preservation of art.
To paraphrase Goodfellas: It made him sick to have to turn money over to the guys who wrote it. He’d rather whack their shows.
On the positive side, I hear that reading books is becoming more popular again.
(Of course, it needs to be acknowledged that the major book publishers are trying similar tricks, and even trying to sideline public libraries — but the printed word is harder to control.)
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the printed word is harder to control
And ebooks are much easier to pirate!
The Other Way to Look At It...
If the long tail programs are too expensive to keep on the service, then maybe the problem is the payment model. Let’s say I want to see My Mother the Car or McHale’s Navy. (OK, I’m that old. Actually, those were before my time – so let’s say Dallas or The Magician with Bill Bixby). Nobody has those because someone wants too much money. Logically, like music streaming, the answer is in pay-per-view. The provider should be able to tally up hours watched per program and pay accordingly to copyright owner, artists, etc.
My guess is the ones selling the licensing are being greedy – asking too much just to list whether it gets viewed on not. It’s a negative feedback loop – ask too much, things don’t get listed. Fewer listings, less interest and less customers… rinse and repeat. Everyone loses – streamers, media owners, clients.
As the saying goes, “If things can’t keep going on like this … they won’t.”
Capitalist ideals
Make more make more make more….Money.
As with the Current Stock exchange.
There is no Company that is held STABLE.
But Much of this also deals with those they have to deal with wanting more.
Internet TV, has shown that there are Tons of companies that use Films and shows, as collateral. It might as well be gold, for all the collections out there that we had NO access to.
Then those groups figured WOW, now we can make money with what we have.
Anyone around, when SciFy tried Multiple times to create a Internet service to show Everything, Rather then use HULU? Finding out that 1,000,000 people trying to gain access WAS crashing everything.
Now the large corps are trying to get access to OTHERS collections by buying them out.
There is no Pride in having a Stable company any more. If they aint making more, and screwing the Stock holders, they are doing enough. They have to show a loss as a writeoff, and at the same time give a Cost of living increase PLUS to all the top wage earners from the last 30 years.
The real problem of going Bust on the stock market is How many rich person will loose money. Its not the Company failing. Its the Over estimated Value created to Justify selling MORE stocks.(love inflation, dont you?)
Netflix is the only profitable one, but...
I wouldn’t count on that lasting. They’re pissing off their customers pretty badly and when was the last time they even made something worth watching? I’m thru all the Seinfeld episodes, I’m gone. Netflix is incapable of ever producing a Seinfeld type series, they seem mainly interested in making teenage vampire true crime heist knockoffs of better series and movies so bad they could induce feelings of suicide.
Amazon and Apple are the most stable but who knows whether streaming is, or is intended to be, profitable for them. They’re a black box and I don’t see that changing.
Disney and Warners might be able to survive. Paramount and Peacock, nah. Time for more consolidation. Streaming was overbuilt because investors threw money at it on the assumption the global market was 3/4 billion households. It probably is, but most of them will pay well under $1/month. All the streamers need to work on free ad supported platforms and can shoehorn all their cheap crap into those tiers.
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Because Seinfeld was 9 seasons long. Netflix would’ve ended it, probably with a cliffhanger, after 3 or 4.
Re: part of the problems
Is trying to DEAL with the movie industry, After the industry Saw what could be DONE.
Its like Apple Itunes popping up, after all the others got nailed by the music industry. And even now they are having fun with the contracts again.
They will be taken to court as Internet archive has. And the reason will be the same. You can buy disks and RENT disks, but you cant Sell access to the data, as you cant prove its BORROWED.
New streaming service with a nice price point only offering the content other streamers have abandoned.
proliforation then consolidation
I see nothing unusual, there were lots of people who were getting into the digital space to get their foot in the door, and eventually the market consolidated, just like every new market.
Notably nothing in this article describes the changes in advertising revenue, and does come off to some as the cries of the first world problems.
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I don’t think it’s a First World Problem to complain that you’re not being adequately compensated by the company you write for.
Interesting how their frugality never seems to extend to things such as CEO salaries, much like the “conservatives” in our government screaming about deficits while greedily clutching their own inflated salaries AND PENSIONS. Hypocrisy is The American Way, and oligarchy The American Dream. It’s not so much what you have, as long as you have more than the other guy.
Streaming choices
When streaming took off some time ago, many of us complained about how many services we needed for what content.
Many of us still like the mergers even if we loose one or two things.
The problem here isn’t the (obvious) greed factor. It’s the way things are paid out for.
YouTube/google has the right idea. As do other semi-user based services like daily motion et al. Even, in general, Amazon.
It’s a method the Discovery, Netflix, crowd could learn from. You don’t pay to “host” something. You pay per view. And you pay based on how much is viewed.
If an hour of a two hour film is viewed, you pay half the value.
That’s the way rights should be. There’s a reason Amazon is the largest commercial streaming host now. The value to the customer. And the creators get paid.
They also have more subscribers than any individual service. Which is why so many have chosen to offer their services on Amazon as well. Eg Max, Discovery, Eros, Paramount. Etc
That’s the way it works! Pay per view. Not for hosting something 50 people watch once, eg Mad.
complete and utter duh
Welcome to duh, but we were both already here…duh…
As I’ve repeatedly stated:
-cable cutting is a misnomer, because you’re paying the same cable company that you were paying before you “cut the cord”
-the cable companies raise their rates in order to make up for lost cable tv customers who thought they were slick by dropping cable tv and going for streaming instead
-in addition to paying the same cable company to stream, you’re also paying the separate streaming companies
-shocker: the various streaming companies raise their rates == savings from “cord cutting” are eliminated
-welcome to duh