Streaming killed the video star, but is Netflix ruining the viewing process too?

Netflix changed the way the world watches television, killed off the DVD and threatens legacy broadcasters. But, its global dominance is far from certain as new challengers enter the market

How many streaming services would you sign up to?

When one of the world's biggest consumer electronics companies halts the manufacture of a product after more than 20 years, you know there's a cultural shift afoot.

Samsung's announcement last week that it is commencing an exit from the Blu-ray player market may well sound the death knell for DVD and Blu-ray, consigning those formats to the same waste heap as laser-discs, cassettes, minidiscs and VHS. But predicting the future of physical media in a digital world isn't straightforward. After all, the market for books is healthy, and the sale of vinyl albums is rising in many parts of the world. But these cherished, collectable formats have no equivalent in the world of video entertainment, which has been upturned by subscription video on demand (SVOD). Its rapid rise in popularity has radically reshaped the kind of things we watch, and the way we watch them.

The lure of video on demand

According to market research firm Statista, every week, around one million households across the world start to use SVOD services, lured by both their content and their convenience.

“Netflix has become famous for producing original content like there’s no tomorrow,” says Max ­Signorelli, analyst with research company IHS Markit. “And they’ve seen a lot of success on the back of that.”

Now, to try and replicate that success, you’re seeing film studios, TV and telcos trying to do the same thing.” The result of this, due to play out this year, is a complete fragmentation of the world of SVOD.

Companies will create their own libraries of films and TV shows, remove them from existing services and persuade us to pay monthly to access them. By going directly to the consumer, they bypass the likes of Netflix and gain insight into our viewing habits, but whether this makes our lives any easier is another question. Indeed, some have talked of the end of the “golden age” of streaming.

Companies looking to make the move in the next 12 months ­include WarnerMedia, MGM, Apple and Disney. They will join names such as Netflix, Amazon Prime, Facebook Watch and YouTube Premium. In the UAE, they will also jostle for position with services such as Wavo, Starz Play, icflix and MBC Shahid. It’ll pose a dilemma for consumers, who only have so much money to spend on top of existing television services.

Juggling streaming services

“We did a survey to find out how many SVOD services people were willing to subscribe to,” says David Sidebottom, lead analyst at market research firm Futuresource. “In the US, the average was just over three, and in Europe it was just over two.” Sidebottom believes that it’s far from clear we’d pay for four or five, while Signorelli notes that keeping track of subscriptions represents an additional headache. “Netflix is famous for saying that you can cancel anytime,” he says. “And if other services follow its lead, you will start getting subscription service juggling, and there’s a lot of inherent effort involved in doing that.”

As the streaming landscape fragments, the dream of more choice and convenience for the viewer also begins to fall apart. Locating specific films and TV shows across a pack of competing services is already difficult and is set to get worse, with no easy way of searching across multiple services at the time – although some third-party services are emerging that are designed to solve that problem. Reelgood and Justwatch (both yet to launch in the UAE) combine databases from multiple providers to allow you to search for a show and work out the cheapest way of accessing it. "More of these services are going to be needed, but to execute it well is much harder to achieve than people thought," says Sidebottom.

A resurgence in piracy?

The global buzz surrounding shows such as 13 Reasons Why has driven demand for SVOD services in the UAE, but if these shows become more difficult and more expensive to access, it raises the possibility of a resurgence in piracy. Techdirt, a website dedicated to legal questions surrounding technology, noted in September that BitTorrent traffic was rising sharply, and placed the blame for this squarely on the break-up of SVOD services. "There are both real dollar costs and mental transaction costs that come with signing up for multiple streaming services," it reported. "In addition, [there is] the cost associated with access to all kinds of content the customer has no interest in. In other words, the streaming industry risks making the exact same mistake the cable industry made, with the exact same result in pushing people to pirate content."

The existence of so many services should, believes Signorelli, eventually force them to start competing on price and for subscription costs to be lowered, perhaps by including advertising within the streams. But that isn’t the current direction of travel. Netflix has been steadily increasing its prices over the years to cover its investment in new shows, raising the question of whether SVOD can ever be profitable. “There’s no guarantee that even the largest operators will have enough money to survive,” says Signorelli. Industry observer Martin Peers estimates that Disney would need to find 37 million people across the world willing to pay $9 (Dh33) a month to cover its programming costs for its new streaming service, and while Netflix currently has 139 million subscribers globally, it has had a 10-year head start. As the battle for our eyeballs plays out and firms enter and exit the business, it’s going to be a period of great flux.

Cancelled subscriptions

The wider cultural effects of SVOD’s popularity are already being seen. This year, revenue from streaming services is set to overtake global cinema receipts, as people choose to stay at home rather than head out. In the 28 countries of the world that have television licenses, people are choosing not to renew them as they shun programmed content in favour of streaming.

It’s not tipping entirely in SVOD’s direction; the overwhelming quantity of video material being pushed at us has caused some people to turn their backs, cancel their subscriptions and rely entirely on free-to-air ­channels – particularly in the USA, where sales of old-school TV antenna are on the rise. But SVOD’s stamp on the world of television is already profound.

As we choose what to watch, our prefe­rences are instantly registered, noted and acted upon, as experiments are tried and trends take off. The death of the shiny silver disc has precipitated the birth of perfectly tailored television. And at least for the moment, we’re loving it.