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Why Consumers Are Already Losing in the Streaming Wars

Big media has inadvertently come up with a way to lasso cord-cutters.

As Walt Disney, NBCUniversal and AT&T’s WarnerMedia work furiously to stand out in the streaming-video arena, they are betting heavily on something that rivals like Netflix and Amazon can’t produce: decades of hit TV series to which the old-school entertainment companies ultimately control the rights. To keep watching some of their favorites, fans will have to pony up more dough for a wider selection of services.

In the early streaming wars, one could posit that it’s consumers who are losing: The companies are creating a new and complex world for TV watchers who love to binge.

“In the next few years, it is going to be an avalanche of consumer confusion and angst,” says Tim Hanlon, CEO of The Vertere Group, a media and marketing industry consulting firm. “The reality is that consumers will not have an endlessly elastic ability to pay for multiple streaming services over the long term — something a cyclically overdue economic correction will eventually put into stark relief.”

Consider that in 2019, all a fan of on-demand video delights has to do to watch “The Office,” “Friends,” various CW dramas, sundry Disney, Pixar, Star Wars and Marvel films as well as a growing pile of original series not available anywhere else is to take out a subscription to Netflix. In just two years or so, they will have to buy four different services and likely pay much more for the same content.

NBCU and WarnerMedia have in recent days asserted more direct control over some of their most popular assets. NBCU said in June it would take over “The Office” in 2021 and add it to a streaming-video service slated to launch next year. WarnerMedia last week said it would start to stream the Warner Bros. production “Friends” on its new service in 2020. Both series currently appear on Netflix under licensing deals.

The series takebacks come as a new Disney Plus streaming service, filled with Disney, Pixar, Marvel and Star Wars films that have been made available on Netflix, is anticipated to debut later this year. Some of those properties are expected to migrate to Disney exclusively over time.

And there will be more. A die-hard fan of video entertainment could conceivably have to shell out $8.99 to $15.99 a month for Netflix; $12.99 a month for access to Amazon Prime Video; $5.99 to $11.99 a month for Hulu; $7 a month for Disney Plus; and potentially more than $14.99 a month for the new WarnerMedia service, HBO Max. NBCU’s projected entry is expected to be free to people who maintain a cable or satellite subscription but cost a monthly fee for those who do not. And then there are other options, like Disney’s ESPN Plus ($4.99 per month) and a streaming-video service from Viacom’s BET slated to launch this year.

The dizzying array of choices — and the cost required to gain access to all of them — is enough to make a new-age TV watcher run back to cable. “Will it be cheaper? Not so,” says P. K. Kannan, a marketing professor at the University of Maryland’s Robert H. Smith School of Business. “Prices for content will generally increase.”

Confusion is also likely as consumers try to figure out where their favorite programs reside.

Take the case of the remake of “One Day at a Time,” a clever Netflix update of the CBS sitcom that won critical acclaim. The streaming service passed on a fourth cycle of the series, but producer Sony Pictures Television has licensed a fourth season to CBS-owned Pop. The cable network can run the first three seasons on air, but Netflix can, under its contract, block streaming rivals from picking up the show. Streaming-only households will presumably have to toggle between different services to binge “One Day” from start to finish.

Consumers will “have to have many studio-specific streaming services to gain access to all the titles they could previously get from a one-stop shop,” says Mark Houston, a professor of marketing at Texas Christian University. Viewers will have to hope that the decision to take old shows and put them behind a streaming paywall isn’t as profitable for media companies as licensing has been, he says. If that’s the case, maybe viewers will be able to fish for their favorites in a single stream once again.

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