TV, movie industries futilely fighting future

Some people like to have a drink at the end of a long day—or, if you’re Don Draper, in the middle of a long day—but me, I like to collapse on the couch with dinner and an episode of one of the way-too-many TV shows I follow.

This should not be hard.

But a few months back, when I fired up Hulu to catch up on USA’s White Collar , I noticed with surprise that there were far fewer episodes available for streaming than had aired on TV. What gives?

Licensing is what gives. On further inspection, I discovered a note on the show’s Hulu page:

The first two episodes of the current season will be available the day after air. Subsequent episodes will be available 30 days after their original airdates.

30 days? Who the heck is going to wait 30 days to watch a 40-minute television episode? Not me, that’s for sure.

To be fair, if I had a DVR, I could simply have recorded the show. But I don’t have a DVR. In fact, I don’t even have a cable or satellite TV subscription.

And that gets to the root of the problem. To put it bluntly, I'm the person the content providers and distributors fear: the man who wants to watch all his TV shows wherever and whenever he wants, without paying an arm and a leg for all those channels and shows that he doesn’t watch.

Legality doesn't pay: Due to availability windows, you can't watch certain shows online until weeks after they air.

Right now, when it comes to watching TV shows and movies online, I’m at the whim of the content providers. But I'm also the future. And, while I may be in the minority right now, you may remember a time not so long ago when it was only a small minority that downloaded digital music—and we all know how that turned out.

Playing hard to get

In making their content hard to acquire through legitimate means, the movie and television studios are falling prey to the same classic blunder as the music industry—trying to enforce scarcity. After all, if people can only get your content from your prescribed sources, then you can enforce whatever price and terms you deem fit. It’s kind of the digital content equivalent of security through obscurity.

But the very nature of digital content is that it’s not scarce. I won’t go so far as to trot out the old—and frequently misquoted—adage about information “wanting to be free,” but digital content is undeniably easy to consume, easy to reproduce, and easy to transport. Too late, the producers have realized that they’ve built a beautiful sand castle for themselves—and the tide is coming in. And no matter how good the dams and barrier they build are, sooner or later everything’s going to come crashing down.

Of course, when technological measures fail—and if there’s anything we should learn, it’s that technological protection measures will always fail as long as someone has an interest in breaking them—companies move on to their next line of defense: lawyers and licensing agreements.

Close the doors, open the windows

Hulu’s not the only site to fall victim to this concept of the “availability window.” Earlier this year, Netflix struck a deal with Warner Bros. wherein new releases are not available for rental via streaming or DVD until 28 days after they go on sale in retail stores. In exchange, Netflix received access to a broader library of titles from that studio—and it ingratiated itself with the content providers. That’s a smart strategic move for Netflix, given that the content providers still hold all the cards, but it’s potentially frustrating for those consumers who aren’t interested in purchasing a movie they may only watch once.

If anything, it reminds me of a scene in the Christmas classic Miracle on 34th Street, where Kris Kringle is instructed to “push” certain toys to children who haven’t made up their minds. It’s not so different from what the industry’s trying to do: By making the media exclusive to a single channel, even for a limited time, the producers hope to entice consumers into paying a higher price for something they don’t really want (and, it should be noted, on which the content producers reap a higher profit).

But unlike the innocent little tykes lining up for Santa Claus, the consumers who already have Netflix and Hulu are mostly a savvy lot. They’re likely going to wait for the movie or TV show to appear on their service of choice anyway. So the industry isn’t really losing sales—those people were never going to buy it to begin with. And it has the potential to backfire on the producers as well: If a title’s not available for streaming until a month after it hits retail (which coincides with the biggest advertising push), there's a good chance that consumer will have lost interest by the time it actually shows up. Now, instead of less money from that person, the studios are potentially getting no money at all.

Unsubscribe?

(No) License to stream: Many of Hulu's TV shows can't be streamed to other devices.

While the availability window is one of the industry’s more prominent Byzantine licensing tactics, it’s far from the only weapon in its arsenal. Take Hulu Plus, the site’s $8-per-month subscription service: Paying the monthly fee entitles you to stream video from the site via the Hulu app on your iOS device, as well as on certain set-top boxes and video game consoles. Sounds reasonable, right?

However, there’s a “but” so big that you might want to alert Sir Mix-a-lot: Not all of the content available on Hulu’s Website is eligible to be streamed to those devices. So, even though you might be looking forward to catching up on the latest episodes of Fringe or Chuck or, yes, White Collar, you can only do so on your computer. If you’re browsing via a mobile app or set-top device, you’ll see a “Web Only” badge. Visit the site, and you’ll politely be told:

This show is available online at Hulu.com through your computer web browser. We do not have the rights to make it available on TV or mobile devices at this time—we continue to work on securing these rights.

As someone who has slapped down my $8 per month for Hulu Plus, I have to say I felt like a pretty big sucker when I realized that almost half the shows I watch can't be streamed to my iPad, iPhone, or Xbox 360. Yes, my money has entitled me to access content in more places, but not to the content I atually want to watch. Not to mention that being a Hulu Plus subscriber doesn’t eliminate the service's ads, either. It's like paying someone to paint your house, only to find that they just painted the front—and left their sign in your yard for months on end.

Barn door, horses, yadda yadda

The content providers have to realize that their fundamental model is changing. Like the music industry before it, they're fighting an uphill battle. All that precious content they’re guarding like Fort Knox? It’s already out there, available to anybody who knows where to look (just ask your friendly neighborhood geek about BitTorrent). And while most consumers may not be going down that road just yet, the more that the industry withholds content through arbitrary, capricious licensing measures, the more potential viewers will slip through its fingers. Encouraged by dissatisfaction, consumers will discover what many before them have found: Piracy actually provides a more flexible, more convenient, and often higher quality product than what the content providers themselves are handing out.

Piracy on the Internet seas: Illegitimate content continues to abound on the Web, despite the industry's attempts to stop it.

Still, the industry insists on doing its level best to wipe piracy from the face of the earth. Only, piracy can’t be eradicated; it follows what I call the “hydratic equation”: Every time one torrent site gets taken down, two more spring up in its place.

There’s another option, though. As the overwhelming popularity of digital music has shown, attempting to eliminate illegal downloading isn’t the only way to win the game. You can adapt and compete with piracy successfully, as long as you don’t make it onerous for people to consume your content on their terms. (Case in point: According to recent numbers, Netflix accounts for more traffic than BitTorrent.)

This is where the television and movie studios have gone wrong, and they’re going to learn the same thing that the music industry learned over the past decade: Fighting—and fearing—your customers is bad for business.

The very model of a modern major movie studio

As frustrating as the situation is, I’m heartened that some people on the inside seem to get it. Take Hulu CEO Jason Kilar, who made waves earlier this year by writing about the future of TV.

…we believe the wise move is to find ways to exploit these new trends and leverage them to build great businesses. History has shown that incumbents tend to fight trends that challenge established ways and, in the process, lose focus on what matters most: customers. Hulu is not burdened by that legacy.

Ding ding ding. Somebody give that man a prize.

Despite their flaws, Hulu and Netflix are great examples of where the future of TV is going. They’ve managed to shake up the industry in a way that on-demand TV purchases and rentals from the likes of Apple and Amazon have not; simply put, they deliver what consumers want: a large library of content available for instant watching, on a variety of devices, for a reasonable monthly fee. With Netflix, I can start watching a movie on my iPad, pause it, and then resume watching on my Apple TV, Xbox 360, iPhone, or Mac. Hulu lets me subscribe to most of my favorite shows and provides a handy queue so I can easily see which programs I still need to catch up with. These are features that make watching a movie or a TV show a substantially better experience for consumers.

That seems to frighten the studios, when, really, it ought to delight them: more and better ways for people to consume their products! But over time, the industry has become entrenched in its comfortable, lucrative position. You can see it in the paltry attempt it makes to embrace digital media; every few years it seems like the content producers concoct another new scheme. But they all have the same fatal flaw: They focus first and foremost on how to protect the content rather than how to consume it. By doing so, the content providers have shown they have the wrong people's best interests at heart and proved that they're far less interested in creating a product that consumers want to buy than they are in creating one that consumers are forced to buy.

And in that case, they ought to be scared. As we've seen time after time, people respond far better when they can choose something they want than when they have no choice at all.

History repeating

We’ve been through this before, with the battle over music protected by digital rights management. It’s not exactly the same, of course, but the strategies are largely identical: The producers impose artificial limitations on how people could consume media, in the hopes of keeping their precious content safe and controlled. But you can’t just seal all your content away in a vault. After all, what’s the good of music nobody can listen to, or movies that nobody can watch?

All that’s left is to change, to adapt. It’s a painful process, especially for companies that have held the reins of control so tightly for so long—and there will be casualties. Everything rises but to fall.

Cloudy as the future may be, my magic 8-ball says the current fight will end pretty much the same way it did with the music industry: The movie and TV industries will be dragged kicking and screaming into the modern era, whether they like it or not. If they keep fighting it tooth and nail, well, then, my money’s on “not.”

And yet fighting it they are—and their tenacity would be almost admirable were their motives not so self-serving. In recent weeks, both Showtime and Starz have said they will be dialing back and delaying Netflix's access to content from their networks. Industry executives have said pretty openly that they plan to use Netflix as a dumping ground for their “least-valuable material.” The radical statements by Hulu's Kilar have reportedly put the streaming site at odds with its network backers.

But while they're fiddling, Rome is burning and the Visigoths are pounding on the door. YouTube is investing big money in original programming. Netflix even outbid traditional networks to secure rights to an original series, produced by top-tier talent like David Fincher and Kevin Spacey, that will broadcast online-only starting next year. Independent studio Miramax has made multi-year deals with both Hulu and Netflix to bring its extensive catalog of popular and critically acclaimed films to the streaming services.

This is how it ends: not with a whimper, but with a bang. If the content producers are going to take their toys and go home, then the upstarts are just going to come up with a new game that doesn't need those toys. Despite comments from Netflix CEO Reed Hastings that he doesn’t want to incite World War III, it seems undeniable that the new and old guards are on a collison course. All it might take is one big player—for example, HBO, which has already proved that customers will pay for premium content—to step away from the conglomerate of producers and distributors, and it's a whole new ballgame.

I can't help feeling that there's a perfect phrase to sum up the precarious, untenable nature of the content producers' position. And in a stroke of coincidence, it also just happens to be the title of that first original Netflix series: House of Cards.

[Dan Moren is a Macworld senior associate editor.]

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