August 24, 2017
How about the recent news of several content houses starting their own streaming services? Disney for one is pulling content from Netflix to start their own streaming service, and FX is going down a similar path of partnering with Comcast to deliver their own original content for a $6/month fee.
So, what does all of this mean for the people creating the content, distributing it, and ultimately viewing it?
1. There will be a creative renaissance where artists will flourish and consumers will win.
This is going to be an amazing time for creatives. Writers, directors, actors, etc. are going to be given the ability to create more freely than ever before and the consumer will be the beneficiary of this great content. As competition picks up across all of these streaming services, the fight for original content is going to become even more ferocious. Artists will be able to create content; and actually get paid to do it.
Sure, they'll be plenty of garbage created too, but it won't matter. Great content will rise to the top and we'll all be there to binge it right-up. And with all the services competing for your dollar, the cost per piece of content available to you will never be cheaper.
2. Consolidation will eventually lead to the artist getting screwed over first... and the consumer second.
After the deep pockets dry up from the initial investment in content, the services that aren't turning a profit will go under or be gobbled up by the big dogs. In order to offset the cost of some of these acquisitions, companies will look for ways to cut expenses and increase revenue. The streaming services won't be able to afford to jack up prices on consumers yet (a la cable companies) because gaining a piece of the market share will be too competitive and the acquisition cost-per-customer in conjunction with possibility of losing recurring customer revenue will be too risky.
Companies will cut expenses by paying content creators less. Why pay an artist to create something when they'll do it for free? A slight exaggeration here, but it's an unfortunate truth that historically artists are willing to perform their craft as a labor of love as their first priority and a distant second is getting paid for it. Unfortunately, this squeeze on the artist is going to result in a decline of content quality for the end user. Eventually segments of customers will cancel their service; as the value won't be there in their eyes any longer.
Of course, once companies realize people are leaving in droves, they'll smarten up and invest in the artist again. Just kidding, of course they won't do that. At that point, that plan will be too long of a runway for shareholders to buy into. “Spend more money while revenues are down?” That's not going to fly in the boardroom. Instead they'll find ways to increase the cost to the consumer. If not a direct hike, we'll certainly see a move from monthly billing to longer term contracts, front loaded with discounts to entice consumers to sign on for worse annual or multiyear deals.
3. Technologists will reign supreme.
Through all of this, the one constant area of investment will be in technology and innovation. Consumers will not settle for a mediocre user experience and will force companies to continue to push the boundaries. And unlike artists, developers aren't going to work for free. Hell, they're not even going to work for a six-figure salary without bean bag chairs, unlimited snacks, beer and free lunch.
The good news for the artist and consumer is that just when things are looking bleak, technology will step in and open new doors for everyone. The technological breakthrough in online delivery is what enabled all of this to happen in the first place and it will lead us to the next disruption again; it always does.
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