It's not so black and white. Stratchery posits consolidation may promote competition at the distribution layer, where Netflix presently stands to dominate:
"To that end, might it be better for consumers, not-so-much today but ten years from now, if Disney were fully empowered to compete with Netflix? What is preferable? A dominant streaming company and a collection of content companies trying to escape the commoditization trap, or two dominant streaming companies that can at least try to hold each other accountable?" [1]
An analog might be found in the T-Mobile/Sprint merger [2]. It is not obvious whether their consolidation would have reduced competition, by turning two options into one, or increased it, by creating a stronger number three to AT&T and Verizon.
Agreed, I have no idea what the OP might be referring to about Netflix. It's got a ton of competition, and has had an increasingly smaller selection of media due to companies pulling their own content to roll their own media services.
Netflix is becoming more of an HBO than anything. Hardly the holder of all media on the internet or some type of media monopoly.
Netflix is on the trajectory to becoming a monopoly, yes. HBO is hamstrung by its lucrative cable tv deals in the US, which prevents it from competing effectively with Netflix in the streaming market. They will keep making money hand over fist from cable tv until suddenly they don’t. If Netflix is Google, HBO is Yahoo. Amazon in this analogy, of course would be Bing. At a glance they seem to have what is required to compete with Netflix: Deep pockets and technological competence. But to compete in this market is for Netflix a matter of life or death, whereas for Amazon, it’s a side show.
As for the multitude of smaller competitors, they are all the search engines we’ve forgotten the names of or never heard of to begin with.
If HBO is hamstrung by lucrative deals, then it stands to think that HBO's own deal making has prevented them from usurping Netflix. To my knowledge, I haven't heard of Netflix having overtly anti-competitive behavior but I'm all ears for examples. It seems as though HBO is capable of competing, but they have to make a risky play and get out from their cable TV bubble to do so, which is no fault of Netflix.
If anything, this shows that the monolithic telecoms that have large stakes in these cable TV brands are facilitating monopolies elsewhere because likely competitors are locked into their current markets.
EDIT: to be clear, HBO's unsuccessful attempt to be level with Netflix in the streaming arena is more "don't want to" and not "can't". I wouldn't call a lack of wanting to be monopolistic. If HBO suddenly turned around and wanted to compete directly with Netflix and got boxed out by Netflix in some way, i.e. Netflix striking deals with Level 3 or similar providers to prevent HBO from getting equal treatment, then there's a strong case for them being labeled a monopoly.
To my knowledge, I haven't heard of Netflix having overtly anti-competitive behavior but I'm all ears for examples.
I’ not aware of any either, but one does not have to engage in anti-competitive behavior to become or be a monopoly.
If anything, this shows that the monolithic telecoms that have large stakes in these cable TV brands are facilitating monopolies elsewhere because likely competitors are locked into their current markets
Yes, that’s right. But like HBO, they are trapped by their business model.
> HBO is hamstrung by its lucrative cable tv deals in the US, which prevents it from competing effectively with Netflix in the streaming market.
HBO's library is far smaller than Netflix's (though average quality of titles is higher). Their streaming service is also objectively terrible: slow, unreliable, bad UX. On top of that it's 50% more expensive than Netflix. I'm not sure it's just the lucrative TV deals keeping them from competing with Netflix in streaming.
> HBO is hamstrung by its lucrative cable tv deals in the US
I'm not sure this is true. HBO Go is available for subscription in the US, is available on many streaming platforms. Additionally, you can subscribe to HBO through Amazon Prime (among other places; I just happen to use the Prime subscription). I can't comment on differences in marketing spend or consumer goodwill, but from my perspective, I see the same level of service between HBO and Netflix (though admittedly, Netflix is usually more stable).
> HBO is hamstrung by its lucrative cable tv deals in the US, which prevents it from competing effectively with Netflix in the streaming market.
What are you basing this on? They partnered with the same company that Disney just bought to create HBO Now, their video on demand offering. It has 2 million subscribers and is another revenue source for them.
The "problem" with HBO Now is that subscribership spikes when the Game of Thrones starts and plummets when the season ends. Now that the series is winding down, they need to find another one but with their history of great shows I wouldn't bet against them.
Yeah, Netflix is a monopoly, or almost a monopoly.
Amazon Prime is basically US-only.
HBO gets hired during GoT season and then dumped.
Meanwhile, the majority of the people out there have Netflix. We even see ads on the streets and all over the place, while the other two competitors are still inexistent.
Netflix is the poster child not because of monopoly issues but because there's a public, known record of Comcast slowing down Netflix before the Title II regulation came into being, it's the most prominent and widely concerning proof that non-neutral stuff does (and will) happen.
This deal kills one streaming platform. We previously had Netflix, Hulu, and Amazon as the big players. Disney recently purchased BAMTech which does the streaming for MLB, HBO, NHL, WWE, ESPN, League of Legends, and others. After this purchase, Disney planned to create a streaming service with the BAMTech technology and Disney catalog in 2019. [1] That new service would be a strong instant competitor with Netflix, Hulu, and Amazon. Now BAMTech and Hulu have the same majority owners so it is unlikely that they ever come into direct competition with each other.
HBO? I went to kubecon last week and one of the keynotes was from the HBO team which detailed how they transitioned from ec2 to k8s on aws the past two years...
HBO's streaming strategy has been a little strange. They built one streaming product internally that wasn't particularly great and couldn't handle a lot of the huge traffic spikes they see with things like new Game of Thrones episodes.
They then contracted out to BAMTech to build a second nearly identical streaming product. BAMTech previously specialized in live event streaming, so they were better able to handle huge demand spikes. The unusual part is HBO never retired the first service and they have been running both side by side for years. Which service you get is dependent on whether you subscribe to HBO through a cable company or whether you subscribe to HBO directly.
HBO has recently started reinvesting in their internal streaming option with the likely long term plan of ditching the BAMTech run service. Odds are that was what they were talking about at KubeCon.
It would be more accurate to say, he's ok with reclassifying internet services as Title I, given that 1) ISPs have almost never tried to throttle by traffic type, 2) business model innovation (e.g. zero rating, etc) can have positive effects, and 3) internet access has lots of room for improvement that will require investment, and tying the hands of the providers may prevent that.
(I don't necessarily agree with all those points, but Stratechery has been about the only useful counterpoint recently.)
Do you actually believe that these points are useful? You're distancing yourself from "agreeing" with them, maybe because you know how wrong they are, but you still seem to be sympathetic to them.
>1) ISPs have almost never tried to throttle by traffic type
They have been shown to do this, have an interest in doing it, and it's illegal to do it. Say you're playing chess, and you consider making a move such that, if they move their rook to h7 it would be mate for you. Is it a reasonable argument in favor of making the move anyway to point out that your opponent "almost never" moves his rook to h7?
>2) business model innovation (e.g. zero rating, etc) can have positive effects
This is difficult to disprove since the statement is incredibly weak. "Can have"??! ISPs have local monopolies everywhere they exist. Business model innovation for monopolies is exclusively going to be about charging people more money for the same service, and protecting your monopoly status. You could argue that this is a positive effect, but not to me, and probably not to this board.
>3) internet access has lots of room for improvement that will require investment, and tying the hands of the providers may prevent that.
They have no incentive to improve it as long as they maintain their monopoly status. People are already being charged as much money as they are willing to pay for their internet access, you can't improve the service and expect to extract more money from them.
In short, none of these points have any merit at all, and if you present them in the future, you should also explain why they don't make any sense.
1) no. From Inception of the Internet until 2005 they were regulated under Title II, from 2005 until 2010 there were loose rules on a case by case basis, from 2010 to 2015 there was the Original Open Internet Order as a direct result of Comcast Bad Actions, which were struck down by the Courts so in 2015 the ISP;s were moved back to Title II in order for the Open Internet Order to be Enforceable
2) Good for you, Are those options all wireless... Wireless is not a replacement for wired service. Further How about you think of Americans other than your self. As of 2015 under the current definition of broadband (25mpbs or higher) there are no ISPs at all in 30 percent of developed census blocks options for Fixed Broadband, 48% had 1 Option, only 3% had 3 or more choices...
2) Cable and DSL are the two I'm thinking of. (Though AT&T has just rolled out fiber-to-the-home, Comcast probably will too soon.) I'm currently paying Comcast $20/mo (intro-rate) for 16mbs. It's not broadband, but it's plenty for streaming Netflix, etc. I don't need broadband.
3) I'm also hoping that any abuses will encourage competition of ISPs.
2) Not if you want to stream 4K content, or do anything else while streaming HD Content...
And that is just with Today's Usage, the problem is one this type of service is ingrained it will be hard to get rid of it, so we will either never see the next new technology because the gate keepers will have killed it, or if we do it will be prohibitively expensive for the average consumer
One reason 4K is getting such good adoption is open internet.
Under a Closed Internet we are moving to we will see an EXTREME slow down in technology improvement.
As for 3), current market forces are clearly not sufficient to create good competition across most markets. It's extremely capital intensive to build a wired, to-the-home network.
Heck, look at Google Fiber. Even Google threw in the towel and said 'no more', basically.
It was prohibited by regulation from 2010-2014 and 2015-2017 and contrary to non-regulation FCC policy enforced through case-by-case action from 2005-2010.
> 3) If the ISPs abuse their power, the FCC can always switch them back to Title II.
The ISPs did so repeatedly throughout the case-by-case enforcement period, which is why the FCC adopted the first regulatory package in 2010 (while this was finalized after case-by-case was struck down by the courts, the process was started earlier.)
Verizon has openly said they would discriminate by traffic type.
> In response to Judge Laurence Silberman’s line of questioning about whether Verizon should be able to block any website or service that doesn’t pay the company’s proposed tolls, Walker said: “I think we should be able to; in the world I'm positing, you would be able to.”
Is Disney planning to start their own Netflix-like service or are they planning to just open the online Disney store where it will only have Disney content. The latter doesn't seem like a proper Netflix competitor.
Netflix serves more than their own home-grown content.
They're actually doing two services, one for sports based on their ownership of ESPN and another for TV/Movies.
Not sure if their plan is to license other content or just rely on their own. If it's the latter I don't think it will be much of a Netflix competitor, it will be more like HBO Go. Otherwise, if I was Netflix, I'd be very worried. Disney has some deep pockets!
> Not sure if their plan is to license other content or just rely on their own. If it's the latter I don't think it will be much of a Netflix competitor
All of the Netflix original Marvel shows alone may be a reason they can "win" just by taking all their balls and going home to a streaming service they control. They've already admitted that all of their current contracts with Netflix have been set to expire in 2019 precisely for this launch (and presumably a part of why this still unnamed service has such an explicit but two year away launch date).
That's just Marvel's relationship with Netflix. Factor in all of Star Wars, the Miramax back catalog, the Buena Vista back catalog, Pixar, ABC, and of course the Disney brand itself. (…and potentially now the entire film and TV catalog of 21st Century Fox is on the table to be controlled by Disney going forward.)
If they're smart they will just build a backend delivery platform and APIs and make their franchised content available to anyone who wants to consume it.
This is covered in the linked article, read around this quote:
> Moreover, not only does 21st Century Fox have a lot of content, it has content that is particularly great for filling out a streaming library: think The Simpsons, or Family Guy; according to estimates I’ve seen, in terms of external content Fox owns eight of Netflix’s most streamed shows
Yea, but they could invest in new content aside from 21st Century Fox... Netflix didn't build up their original content via acquisitions, they invested in content creation... Disney could do similar, especially with the various IPs they already control.
Sure, perhaps there's a difference to be drawn between "is in competition" and "is competitive".
Disney is currently able to _try_ to compete, but their new streaming service is not competitive due to a lack of content, and won't be for years if they try to build up their portfolio organically as Netflix did.
If they bought 21st Century Fox, then arguably they would be immediately competitive with Netflix.
This is a classic build vs. buy decision, where (regulatory concerns notwithstanding) it's often better to buy as a well-funded new entrant that's trying to catch up with an incumbent.
In the long term only content matters, not distribution. Netflix has built a very technically impressive distribution platform, but it is only as valuable as the content they have the rights to deliver.
It will only get easier and easier to make a distribution platform as the technologies required get cheaper, and the body of knowledge of how to do it grows.
Disney's content library is already far more valuable than Netflix's and acquiring Fox only increases the gap.
If we as a society are going to grant someone a monopoly over an idea. Then they should have to allow distribution via multiple channels and not restrict the content to just approved or exclusively owned distributions channels
I should be able to watch the shows I want on what ever streaming services I choose to use, be it netflix, Hulu, Amazon, etc.
One should not have to subscribe to all of them just to get access to a single show, or single movie they want that is "exclusive" to that platform.
It seems Streaming services are going the exact way Cable Channels did, only more costly...
We are quickly coming to the point where you have to have 6 or 7 $10-$15 per month subscriptions to several different providers to get Sports, Movies, and TV Shows you want...
At that price point you might as well just subscribe to cable again...
If copyright were a more reasonable term (say a 20 year term with registration for a 20 year renewal, which would allow most works to be available quickly, but also allow creators to control their works for the majority of their lifetime), then there would be less of an issue.
e.g. the early seasons of MASH would now be public ___domain under this rule, so they would probably be available on every single streaming service, as would the first two generations of Disney features with the 3rd generation starting to become available at the end of the 20s.
And this doesn't even capture the opportunity cost of all the works we don't have because of long copyright terms. Under today's rules, Tchaikovsky's estate would have held the copyright for his ballet still in 1959 and the Disney version could not have been made.
I watch far more original content from Netflix and Amazon than Disney and Twenty-First Century Fox. Disney's market cap is only double that of Netflix. Considering Netflix doesn't own theme parks or run a merchandise machine, I'd say they are more well positioned with content than you portray.
"Shilling" implies, perhaps to the point of requiring, monetary compensation for publishing certain views. The only people I know who pay for Stratchery use it to invest in start-ups. Maybe there is something shady going on. But reducing any argument you disagree with to shilling isn't productive discussion.
> But reducing any argument you disagree with to shilling isn't productive discussion.
Neither is referencing that site on issues.
Disney has tried streaming before and failed, not because Netflix had locked them out of content, but because their service sucked.
You can draw a parallell to Steam and all competing game market platforms for PC, they all had just as much opportunity, and a lot of them lock content only to their own platform, yet they're all worse.
I don't disagree with the fact that large competing platforms are good for keeping the market competitive, but that buying and locking in content instead of providing a better service is the wrong way of going about it, when you can't compete on service.
And as for Stratechery, I don't have access to their books, I can only read a pattern into their recent history of posts on the industry, and it's not good.
"To that end, might it be better for consumers, not-so-much today but ten years from now, if Disney were fully empowered to compete with Netflix? What is preferable? A dominant streaming company and a collection of content companies trying to escape the commoditization trap, or two dominant streaming companies that can at least try to hold each other accountable?" [1]
An analog might be found in the T-Mobile/Sprint merger [2]. It is not obvious whether their consolidation would have reduced competition, by turning two options into one, or increased it, by creating a stronger number three to AT&T and Verizon.
[1] https://stratechery.com/2017/disney-and-fox/
[2] http://money.cnn.com/2017/11/04/news/companies/sprint-t-mobi...