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Jonathan Poritsky on Streaming Competition

Thu, 26 Jul 2012 «permalink»

Jonathan Poritsky at the candler blog with a thoughtful piece on movie/television streaming services, including a response to my short spit from a few days ago:

Competition needs to happen at the top. Filmmakers and distributors need to challenge the studio system and get work out there that isn’t tied up in the awkward gerrymandering of streaming exclusivity.

He makes a strong argument for the idea that to truly innovate in this space and provide a service that is great for consumers, the real revolution needs to happen at the distribution level instead of at the middleman level, and I couldn’t agree more. Just take a look at how much attention some comedians like Louis C.K., Jim Gaffigan, and Aziz Ansari got when they decided to self-distribute their most recent specials. And at the very least, we know that one of them was wildly successful.

Unfortunately, there’s just entirely too much money in the current model for the old guard to give up on it yet. HBO has time and again said that they have no intention of moving away from a model supported by cable companies, and studios like Starz! have begun to back out of their exclusivity deals because they just don’t make enough money.

The truth is that in our current ecosystem, the consumer of the product (you and I, the audience) is not also the customer, at least not in the first-run market. We are the customer of the distributor, whether that be via movie ticket sales or cable subscriptions. This entire business model would be inarguably hampered by such a fundamental shift. A single guy like Louis CK can be wildly successful with self-distribution, but this strategy does not benefit from any sort of economy of scale. You start losing out on people to show ads to, you start losing out on people paying money for dozens of channels they don’t actually watch, you start losing out on families spending over $100 in a night1 at theaters for snacks and tickets and IMAX and 3D.

Disruption in this space is going to ruin the status quo, which is why these companies are so damn scared about net neutrality and piracy and the like. The immediate impact of lost revenue is nothing compared to the idea of their whole structure falling down around them because they didn’t have the foresight to innovate, but I strongly feel that this is the deserved fate of any market that assumes they can coast off old-world strategies by stifling innovation instead of having the gumption to pioneer it.

  1. Jesus, does anybody else remember when going to the movies was something you did when you didn’t have a lot of pocket change to throw around?