Hollywood screwed up on streaming, now they’re making you pay

Last month, Vulture published a great story about the TV industry that was nonetheless infuriating to read.

Entitled “The Binge Purge,” it’s full of anonymous quotes from Hollywood bigwigs looking to blame anyone but themselves for the “broken” state of TV. Their scapegoat of choice? Netflix, whose explosive streaming growth made media executives nervous and envious. That in turn prompted them to blow up the lucrative cable TV model and bet heavily on their own streaming services, which haven’t been nearly as profitable.

The story provides valuable insight into the Hollywood mindset, but its quoted execs are mistaken if they think it makes them look good. The truth is that traditional media companies bungled the transition into the cord cutting age, but rather than reflect on what they did wrong, they’re more interested in playing the victim.

None of this would matter if streaming TV was getting better. But as the TV industry tries to fix its mistakes, it’s making everyone else pay the price—viewers included.

Streaming services are getting worse

In their rush to go all-in on streaming, streaming services offered seemingly limitless catalogs of movies and TV shows. Concepts like the Disney Vault—the practice of making old movies unavailable to the public—started to seem obsolete, and viewers never had to worry about original series going off-air. While some folks complained about the number of services on offer, the bounty of available content at least provided a clear upside.

Faced with rising interest rates, slowing subscriber numbers, and Wall Street’s sudden demands to show profitability, media companies are changing course. Warner Bros. Discovery, Disney, and Paramount have all started cancelling productions and pulling content from their catalogs, looking to make tax write-offs or avoid paying residuals. Some movies and shows are being licensed to other streaming services, but others have simply vanished.

At the same time, these companies are trying to squeeze subscribers with higher prices and new restrictions. Netflix’s password sharing rules are the most notable example, but we’ve also seen Disney+ charge a stiff premium for ad-free viewing, while Warner has removed 4K video and a third simultaneous stream from its standard Max package.

The upshot is that you’re paying more for inferior service, yet it may not even pay off for the companies involved. Warner is still deep in the debt it took on from AT&T. Disney doesn’t expect to turn a streaming profit until at least next year. Paramount may be hoping for a bailout via acquisition. Meanwhile, the TV bundles they’ve relied on for profitability continue to bleed subscribers, who are fed up with persistent price hikes and fewer must-see shows.

The path avoided

What could have been done to avoid this? Here’s one idea: Instead of trashing the pay TV bundle model that served Hollywood so well, the industry could have tried to improve it.

TV networks had every opportunity to cultivate more attractive bundles, with lower prices and more flexibility. Randy Freer, the former CEO of Hulu, once talked about plans to offer smaller bundles with different kinds of programming. Sling TV once billed itself (inaccurately) as “à la carte TV” and expressed a desire to offer more à la carte-like packaging. T-Mobile even tried to offer its own TV package with two channel lineups, one with more expensive broadcast, news, and sports channels, and one without.

At every turn, TV networks smacked those efforts down, and viewers got pricier, more bloated bundles instead. The networks threatened T-Mobile over its split package strategy, which they claimed to be duped into supporting. (T-Mobile responded by shutting down the entire service.) Hulu’s oft-stated plans for skinnier bundles never materialized. À la carte channel selection remains a pipe dream.

Instead of trying to stabilize TV bundles, media companies adopted a scorched-earth strategy that involved fleecing pay TV subscribers to help pay for their nascent streaming services. Now, those pay TV subscribers are fleeing in record numbers, and the streaming side still isn’t healthy.

Sure, you could blame Netflix’s growth for making media companies jealous. But you could just as easily blame short-term thinking and an endless string of mega-mergers, whose primary purpose was to raise rates on pay TV packages. Hollywood badly miscalculated how this would pan out, and now it’s in panic mode.

Now what?

If you thought streaming was messy before, this new era will be even more chaotic.

Shows that you were in the middle of watching could disappear at a moment’s notice, vanished from existence or shipped off to some free streaming service with unavoidable ads and an inscrutable interface. Pay TV packages will keep getting more expensive—and with more blackouts—as networks dig deeper into demanding higher carriage fees.

And don’t forget about live sports, whose broadcast rights have been scattered across an array of pay TV channels and streaming services. Instead of opting for cohesiveness, major sports leagues carved their rights into tiny exclusivity deals, taking advantage of media and tech companies fixation on growth at all costs while it lasted.

It’s another example of short-term thinking that will alienate and turn away audiences in the long run, but one that has nothing to do with Netflix. If it backfires, the industry will need to find another scapegoat.

Sign up for Jared’s Cord Cutter Weekly newsletter to get more streaming TV insights every Friday.