The Streaming Media Mind (And Money) Games

How much do you pay for streaming media? If you had to think about it, that’s probably good news for subscription-based services like Netflix. In the game of on-demand entertainment, all the major players perform a little sleight of hand.

You’re at home; you want to watch a movie.

Not just whatever happens to be airing on TV at that time, mind you. You want to choose what movie you watch. In fact, maybe you don’t often watch or even have traditional TV service. Maybe you — like a majority of millennials and a good percentage of 35-to-54-year-olds (according to comScore’s 2014 U.S. Total Video Report) — are a cord-cutter, one who relies entirely on streaming services for your entertainment needs.

If that’s the case, you’re in a decent spot because your range of choices has increased substantially over the last few years. Whereas once you had to pay for each piece of hefty content, wait excruciatingly long for it to download and then watch it on the single device that you had that was capable of storing it, you can now stream nearly any content to your mobile device, your tablet, your desktop or your internet-enabled television. Media delivery services have continued to expand, shift and seismically change their service offerings — thereby changing not only how the masses consume movies and television programming but even how it is made.

Getting back to the movie, now — what are your options?

There’s Apple iTunes — the big guy, the grandfather-who’s-still-in-phenomenal-shape-for-his-age of the (legally attainable) digitized entertainment media movement. It’s got the movie you want to watch, but, wait, that’ll cost you maybe $5 to rent, if not a little more. And once you do rent and select “play,” you’ve got 24 hours to finish watching that movie before it disappears from your account. Life happens, though. You’ve got work, friends, family; you have to sleep at some point. Who knows what could come up that would prevent you from watching your rented iTunes movie in the time allotted. If anything does, you’re out five bucks or more.

Of course, iTunes also gives you the option to buy the movie and own it forever. But that’ll cost you $15, maybe $20. You haven’t even seen this movie. How can you make such a purchase commitment with any kind of confidence? Or maybe you have seen this movie, and you know darn well that it’s worth renting only. Either way, time to explore other options.

You turn to Netflix. It’s such a ubiquitous platform that one can easily forget that, only a few years ago, the death knell had been rung for the company when it was coughing and sputtering out as a provider of tactile DVDs rented through the mail. After a weird, brief name change, Netflix rose from the ashes to change the game for streaming movies and television and has only flown higher since, now producing original material that competes with — and often surpasses — the products of some of the more established television and movie studios.

That movie you’re searching for? Netflix has it! Great news. Now, instead of paying $5 to rent it, you’re getting it for free!

Or — OK — not necessarily free … but actually as part of your $7.99 (and — ahem — rising) monthly subscription fee for the service. Which feels like free by comparison! Right? Kind of? Sure, let’s say kind of.

This notion of “kind of,” or “free by comparison (to à la carte streaming services like iTunes),” is almost literally money in the bank for subscription-based services like Netflix, Amazon Prime Instant Video and Hulu.

These are companies that attract new customers with a free trial period, one that — provided they get the customers’ credit card data during the trial signup — segues without a hitch into that recurring monthly charge of $7.99 (in Netflix’s case), billed right to the subscriber’s account. Amazon Prime Instant Video, meanwhile, gets a whole year out of the way with a $99 flat fee (which includes free two-day shipping for Amazon purchases); the customer never has to think about it again … especially, Amazon hopes, when that year comes back around and the credit card gets charged again. Hulu (née Hulu Plus) splits the difference, offering its customers the choice of a recurring $7.99 monthly fee, like Netflix, or a $95.58 recurring yearly fee in the Amazon mold.

(While these price settings may appear arbitrary, that could not be further from the truth. They are, have been and — for now, anyway — will continue to be arrived at as a result of a tenuous dance between existing creators of content, artists, the holding companies of the rights and what the consumer is willing to pay … which, as many streaming services have found out, can be a very fickle thing in such a fast-evolving industry.)

Hulu — a paid service, keep in mind — even goes the extra mile to create the experience of free TV by including third-party advertising in its programming. Should the “living the standard TV-viewing experience” not suffice for a customer who questions why he or she is paying to use the platform but still has to watch commercials on it? No doubt Hulu could point to the fact that, unless you’re using rabbit ears, no traditional TV service — like cable or satellite — is actually free.

To which the hypothetical, quizzical Hulu customer could — and, based on the leading indicators of why most traditional television subscribers stick with their packages, most likely would — retort, “Yeah, but cable and satellite packages offer live sports, and I like live sports. In fact, maybe I should—”

No, no, no, might say Hulu, joined in chorus by Netflix and Amazon. Dont blame us for you not being able to watch live sports. That’s a larger issue.

Although Amazon might add, perhaps in a private, side conversation with the customer: We don’t own the app, but Sling TV — which streams live television on the Internet for $20 a month — is available on Amazon Fire TV. Perhaps, youd be interested in purchasing—

“Not the major broadcast networks that air live sports,” might note the increasingly savvy hypothetical customer. “Even Sling TV doesn’t have those.”

One imagines Netflix would get this whole thing back on topic, reminding all involved — in particular, the consumer — that, regardless of the perceived drawbacks of it or other subscription-based streaming services, the simple truth is theyre all much cheaper than iTunes because iTunes is an à la carte service.

And that is a fair point. Just because subscription-based streaming services can inherently “take advantage” — in appearance, at least — of basic human forgetfulness, causing some consumers to let their automatically charged payments slip to the backs of their minds and create, on a subconscious level, the false notion that the media on these platforms is free of charge, the fact remains that what they are charging is by and large a lower cost than what iTunes does, taking into account its pay-per-view model.

But there is a difference-maker for iTunes, compared to the other streaming movie and television services. That movie you happened to find on Netflix? Based on its current (non-original) programming model, it’s very likely that it is an older release. Had you searched for it even a number of months after its initial release on the home video market, it’s likely that you would not have found it on Netflix. And this lag in availability on the streaming services gives iTunes the advantage.

Fair or not, iTunes charges more for those new release movies because its the only service of its kind that has them. You, of course, don’t have to shell out six, 10, 20 bucks to watch a new release movie; you can wait for when it’s not so new anymore and is available on more streaming platforms. But Apple is betting that you — along with most millennials, who are largely seen as having a need for instant gratification — won’t do that. And as long as enough people do pony up the dough to buy movies as soon as they’re available, the current premium pricing business model will continue.

Insofar as it relates to iTunes, Apple has, in many respects, earned the right to be resistant to shift from an à la carte-based media download model to a subscription-based service because — as aforementioned — the company pretty much invented it. It began with music on its iTunes platform, which supplied early adopters of its iPod MP3 players with content, and it’s grown to include movies, television and podcasts — a beacon, if you will, for the growing population of cord-cutters who, for better or for worse, are willing to pay the premium Apple price for immediately available content via iTunes.

If there’s any chance that Apple would even consider having to adjust its strategy and allow services like Netflix and Hulu and Amazon Prime Instant Video to play in its sandbox, it would have to arise from … say … some kind of situation where an immensely powerful media figure forced the company’s hand by politely shaming it in a very public manner.

And if you ask the competitors of Apple’s new, subscription-based music service — such as Spotify, Tidal and the like — they’ll tell you that kind of thing is absolutely never going to happen.

What’s that? That’s exactly what happened? And it was Taylor Swift?

That’s weird.

Well … we’ll keep an eye on that; but in the meantime, let’s watch a movie.