Don't Like Content Exclusivity? Get Used To It

If you wanted to watch last night's State Of Origin on a mobile device, it was exclusive to Telstra. If you want to legally watch the next season of Game Of Thrones, it will be exclusive in Australia to Foxtel for the full length of the season. With the spectre of all-you-can-eat Netflix-style streaming video providers looming, this kind of thing is only going to become more common.

I'm no big fan of content exclusivity, but it strikes me that in a world where video is increasingly going digital, and shifting from an owning to a rental-via-subscription model, it's more or less a given.

If you use the music streaming services as a guide, it's not hard to see why it would make sense for a content provider to sign up an exclusivity agreement with a provider, whether it's a hybrid Pay-TV provider such as Foxtel, or anybody who wanted to mimic what Netflix has done very successfully in the United States.

When a track gets played on Spotify, artists make a fraction of a cent. Nobody can seemingly agree on what the exact figure is, but it's well below the level of actual physical currency you can hold in your hand. Complaints about that rate aside, it could work, because a three-minute music track can be played and replayed an awful lot over the course of a day, and the fractions of a cent can stack up. Money can flow, again bearing in mind I'm talking in an idealistic way; I'm well aware that the music industry often provides the template for corrupt artist contracts.

But how does that work when you're talking about video? There are two challenges here. Firstly, there's the cost of production. While it's not cheap to make an album, the scale for even a cheap bit of TV is much higher, and for a blockbuster production it's even bigger again. That means more folk to be paid for each and every episode — which means, if you apply the kind of pricing models that streaming music services go on, there are fractions of cents to be spread around a whole lot more people.

Secondly, there's the scale of consumption. I'm going to throw around some illustrative numbers here; they're nothing I've extensively researched, and I'm just using them to make a point. Bear that in mind.

There are 1440 minutes in each day, which means a three minute music track can be played 480 times. Let's say, for the sake of argument, that each play is worth half a cent. I suspect it's much lower, but go with me here. That means that in a day, a song could earn $2.40 in playback duties if played continuously, and if it was being played by 100 people, that's $240.

It seems unlikely that you'd get exceptionally larger sums of money out of people for a streaming video service. Yes, the fees could be a little higher, but Foxtel in a way provides a benchmark figure for this. People complain heavily about the price Foxtel charges for its service, and whether they're right or wrong, that suggests that anything more than $100 a month wouldn't be paid by too many people at all. Netflix, for a start, is much cheaper than that, and I'm sure that's the kind of price that people would pay, which means you're back in the same kind of income territory as a streaming music service.

So what happens if you apply the same playback figures to a three hour movie?

That same movie can only run eight times in the same span of time, which means you're looking at a grand total of four cents of playback revenue, or perhaps four dollars if all 100 of the same consumers run it eight times. Which, unlike music, they're highly unlikely to; people may leave music streaming, Pandora style all day long, but they'll probably only watch a movie once, and almost never eight of them in a row. As such, the current streaming music prices wouldn't serve TV production well as an entire revenue stream, but they could — if you factor in an exclusivity payment.


Exclusivity isn't offered up for free. HBO's deal with Foxtel — and BBC Worldwide's deal, for that matter — will have cost Foxtel a pretty penny, and those are pennies that HBO and BBC Worldwide can take directly to the bank with no risk involved on their part. It's up to Foxtel (and Telstra, in the case of State of Origin) to manage that risk by signing up enough customers so that they can make money on top of whatever they've paid HBO.

For a streaming video service, it's not likely to be that much different. Netflix dominates the US scene so astonishingly that it's got enough money flowing in to fund its own content, but services from Amazon and Hulu are consistently nipping at their heels by signing up exclusives.

Amazon has just done exactly that in the US for a whole bunch of Viacom shows, with a focus on children's shows. That's not quite Game of Thrones, unless Dora's become a lot more visceral since my kids stopped watching it, but it's a sign of things to come.

I'm all too well aware that plenty will use that exact same exclusivity as an excuse to pirate, but in many ways that just makes the exclusivity argument stronger for the production studios. If the content is being pinched from every direction with nobody paying, at least exclusivity money will help to pay the bills. I've said it before, and I'll say it again; if you really want to protest content exclusivity, piracy isn't the answer. Removing your eyeballs from the equation entirely and letting the studios know why will put vastly more pressure on them if done en masse than any amount of piracy.

In the meantime, the future might be video on demand, but the smart money says you'll probably have to sign up for several services to get it all.

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Comments

    Sorry, but if I can get everything I want legally and with a better deal, and then someone like foxtel comes along and says "hey fuck you, not only do you have to pay for our overpriced incredibly crappy sevice for game of thrones, but you have to pay for a whole heap of channels you don't want, AND then pay extra for the one you do", I have zero problems with pirating that one thing.

    UnblockUS + Netflix + Hulu Plus is less than $25 a month. Foxtel streaming is $25 a month for the base package, which is crap, and another $10 a month for extra channel packages, while all the channels you want will be split up into different packages. Not only that, but the cheaper Netflix and Hulu have bloody better video quality! As for paying $100 a month for real foxtel, I ask, are you stupid?

    Last edited 06/06/13 11:36 am

      On a related note, how do you pay for Hulu? I've got Unblock-US and I can get Netflix but Hulu I haven't found a work around as they check that you have a US credit card (Netflix doesn't.)

        Just buy a pre paid card off eBay. Mine was about $40 for the year.

          Buy why bother? What you are doing is illegal. Illegal and costing you money. It might make you feel better paying for it, but it is still illegal. So why not just torrent the content?

        To be honest I'm still on a trial, so haven't had to work around that one yet. Hopefully it's not too hard though. How does PayPal go?

          I just tried signing up for the trial with my credit card and it worked - about a year ago when I first tried it wouldn't let me sign up at all (even for a trial) using Unblock-US as it checked the credit card when you signed up to ensure it was a US one. It'll be interesting to see how it goes when you come off the trial, but so far I think it's working better than it has in the past since I've had real difficulty signing up for the trial in the past.

          If that works, I'll have Netflix, Hulu and Amazon on my Roku - barely need Aussie TV any more except for Australian shows and live broadcasts.

          Well the trial is working, but I'm quite disappointed that most of the shows I tried to watch were web only. Maybe I wasn't missing out as much as I thought by not having Plus!

        Put a zero in front of your postcode.

        I've been told that all Australian postcodes are actually 5 digits, to allow for growth. Or something like that. Anyway, it worked for me, so give it a shot.

    So basically if you don't subscribe to the outlet for your program of choice you can't watch your program. I'm with 'dknigs' on this, and feel no guilt for doing it!

    Actually, I believe the future of multimedia is the opposite of what this article suggests. In the age of digital distribution, relics like cable TV networks aren't needed any more, and digital exclusivity both limits audience size and encourages piracy. The future of multimedia, once companies cotton on, is direct sales - put your TV series up on iTunes, Netflix, Youtube subscription channels, insert any and all other distribution networks here, including your own site if you want. The competition encourages the distribution channels to remain competitive with their margins, allows your product to sell to a much larger audience, and sends more profit to your own pockets instead of sharing it with an outdated middle-man.

    Last edited 06/06/13 12:23 pm

      Unfortunately still doesnt work. Game of Thrones is available on iTunes the day after the US. Remains one of the most heavily pirated shows in Australia.

        Because iTunes is one distribution channel, and many people, myself included, don't want to use it. GoT effectively is exclusive to iTunes in the digital sense.

        If i could get it off iTunes and then load it into my XBMC setup i would.
        But to play it i need to play it through iTunes and seeing as i dont have an AppleTV (nor do i want one) its not a very attractive avenue.

        Ill be buying the Blurays tho.

        Because I can't watch your iTunes video on my Windows computer without installing the awful Windows iTunes program, I can't watch it on an android or windows phone, I can't watch it on my Playstation or Xbox.

        I'm not going to buy an apple device to watch Game of Thrones just because they have an exclusivity, when I prefer the better devices I have for the same functions by other companies. Same as I prefer my streaming from Netflix and Hulu rather than Foxtel.

        Funnily enough, if I could get HBO Go in Australia though, I bloody would.

          Yeah HBO Go would be awesome. Is it available in the US on PS3? I know it is on Xbox. Either way I have heard its still limited to certain ISPs or an extra to certain cable packages or something else just as stupid.

            Not sure, but I couldn't get it to download on my Xbox, even with a US account, region set to US and a VPN it still wouldn't let me.

        I don't own any Apple Product or Software so that statement is pointless for me.

        That said if it was available on Xbox Video I could get it faster than Blu-Ray. I already buy TV shows on Xbox Video as well as some movies unless I want the 3D version or want to be real picky about quality on certain movies then I go Blu-Ray.

        So the responses are 'I dont want to install the necessary software, therefore I'll just take it without paying.' You choose not to access one method of payable distribution? Fine, wait for the DVD. You're not entitled to free content the way you want it.

          Nobody said they were. We've said that if they release their product on a broader range of distribution platforms, they'll get more sales and have less piracy.

    Exclusivity *used* to be a thing we had to "get used to". What the people that make these deals don't take into account is they have competition now, their "exclusive" deals are anything but.

    When consumer want to watch something, they now have the ability to access it how they like. Sites like thepiratebay facilitate this. The only way to compete against these free alternatives is to actually provide the content to people in the way they want. That usually won't be through an exclusive arrangement with a pay TV provider. If they want people to pay for Game of Throne (for example), make it available before it's on torrent sites, make it available on every device people own, and make it available for a reasonable price (the iTunes season pass is pretty reasonable).

    Exclusive deals drive more and more people to illicit methods of obtaining content, because in a lot of cases, there's simply no other option.

    Last edited 06/06/13 12:35 pm

      I don't pirate music anymore because I have a pay per month subscription for all I can eat, I don't pirate any TV shows that don't have exclusivity deals because I also have pay by month all I can eat subscriptions.

      I do pirate things that are exclusive to Pay TV or Apple however, because I don't want to pay for rubbish Pay TV for one thing I want, and I don't want to give Apple my money for crap hardware I don't want.

    I’ve said it before, and I’ll say it again; if you really want to protest content exclusivity, piracy isn’t the answer. Removing your eyeballs from the equation entirely and letting the studios know why will put vastly more pressure on them if done en masse than any amount of piracy.

    Do big American companies really give a shit about what we as Australians do? I don't think any action on our part would really phase the Americans. Plus, orchestrating a large boycott of a product or system is damn-near impossible. Many companies are guilty of much worse conduct ( fashion labels using cheap labour in dangerous buildings, oil companies polluting the planet, electronics companies working employees to the point of suicide) and we don't boycott them.

    None of this is a justification for piracy, but I think it's a little naive to think there will ever be a coordinated boycott of exclusivity. Piracy seems to be the only thing companies will pay attention to.... And then deal with it in all the wrong ways.

    I’ve said it before, and I’ll say it again; if you really want to protest content exclusivity, piracy isn’t the answer. Removing your eyeballs from the equation entirely and letting the studios know why will put vastly more pressure on them if done en masse than any amount of piracy.

    I don't agree with this. Whether or not you watch the show makes no difference to Fox's finances. Its whether you PAY for it or not. If you don't pay, Fox doesn't get their expected revenue and won't renew their exclusivity agreement.

    The other issue is that GoT is currently still exclusive to Fox and Apple devices. I'd happily pay the $3/episode if I could just watch it through my TV.

    Warning: Unpopular viewpoint incoming.

    Is it just me, or does everyone seem to have lost sight of the fact that access to things like TV shows is not at all a 'right'. Would I rather everything be available to me immediately, at a price I deem reasonable and on any device I choose? Sure. But that want shouldn't in any way translate into 'I don't want to pay the asking price for this thing that I want, so therefore it's acceptable for me to steal it'.

      It may not be a right but as people here have mentioned its so easy to get it by other means.

      Companies need to make it available in more places properly for a decent price. Go back to the late 90s. Virtually every single digital song downloaded on the internet was an illegal MP3. Then came Apple with iTunes that showed that you offer a simple service that gives easy access at an alright price and people will go legit. Now look at the Music scene. There are countless legitimate Music services that all compete against each other and they are flourishing. Xbox Music being one I subscribe to happily.

    My workaround is to wait until a series goes to DVD/Blu-Ray, goes on special somehwere like Amazon, and then get it from there.

    The downside is spoilers, but the upside is I (more or less) legally get the content where I want, how I want, when I want. As an Australian, I'm used to contemptible treatment from publishers and distributors when it comes to timely supply of overseas content, so this model is a kind of payback from the demand-side.

    what i got from this article is if I want to watch what I want on the device I want when I want I should continue to pirate everything video related until the content and distribution industries pull their heads out.

    @Alex Kidman What a well-rounded article, thanks.
    It is interesting to read peoples different views on the morality of methods as much as the clever ways of circumventing the restrictions! :-)

    I personally believe that the eventual solution will be subscriptions for everything out there, but as part of the evolution is the soon-to-end squillion dollar blockbuster movies, as they are replaced by clever kids in garages with secondhand graphics consoles and more interesting stories.
    As usual, Mr Spielberg is in front of the pack - he got out of the Big movie business this month.......

    I'm with the majority here. I don't think that Foxtel should be able to tie up the exclusive rights to streamed content on the internet. With any luck the NBN wont be scraped after the next election and we the consumer should have the right to choose content providers (Netflix, Hulu, BBC, HBO Go.,...etc) without being forced to use VPNs because an over priced cable service provider has already been along and purchased all of the exclusive rights to the region.

    I also agree with those who say that GoT only being released on iTunes the day after the USA is a bad thing. There are plenty of mediums for companies like HBO to maximise their ROI for their content surely they want it available on as many platforms as humanly possible,

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