When Netflix started its transition from DVD to streaming (and finally making their name make sense), they were really the only game in town. That meant that any studio that had content they wanted to make available only had a single choice through which to distribute. It also meant that consumers only had a single place to go to see if a certain piece of content was available to stream. Today, the market is beyond fragmented, with general purpose services like Netflix, Hulu, and Amazon Prime Video, plus network-specific services like CBS All Access, HBO NOW, and more. In addition, DC just launched a service, and Disney is looking at as many as 3 separate services.
As the number of distribution platforms increases, so does the number of pieces of content that sign exclusivity deals with a particular platform. The platforms believe that locking content in as an exclusivity to their service, it essentially holds consumers hostage to paying for their platform. On F5 Live: Refreshing Technology, we have discussed several times that the fragmentation of the industry has caused a new problem for consumers: too much cost. For example, if you want to watch Futurama, you have to pay $8 per month. If you also want to watch Disenchantment, also from the same team, you need to also pay $8 per month for Netflix. So, just to watch the two shows, it's $16 per month.
As the cost of streaming options increases, due to too many choices, customers have another choice to make: whether or not to pay. However, the internet generation is not going to be dissuaded from watching the content they want. If you need any proof, ask the music industry how preventing streaming has worked for them (hint: it created Napster). As it turns out, the choice they are making is to pirate the content.
According to a new report from Sandvine titled Global Internet Phenomena, as streaming availability raised, the use of services like BitTorrent decreased. However, as the industry has continued to fragment, the use of BitTorrent has increased once again. In 2011, the report showed that 52% of all upstream traffic in the Americas was BitTorrent traffic. In 2015, only about 28% of all traffic was BitTorrent. This year, however, usage shows a reversal of the trend, and exclusivity deals are likely a cause.
Unfortunately, this report is unlikely to make any changes in the industry. There is a certain amount of content piracy that is expected and, if the companies are smart, planned for. Until that loss is exceeded, the industry won't look at its behavior and begin to make changes. However, if the wireless industry is any indication, they will eventually discover that exclusivity is not good for business.