Dennis D. McDonald (ddmcd@outlook.com) is an independent consultant located in Alexandria Virginia. His services and capabilities are described here. Application areas include project, program, and data management; market assessment, digital strategy, and program planning; change and content management; social media; and, technology adoption. Follow him on Google+. He also publishes on CTOvision.com and aNewDomain.

Streaming Disney, Balkanization, and the Harsh Realities of “Ceteris Non Paribus”

Streaming Disney, Balkanization, and the Harsh Realities of “Ceteris Non Paribus”

By Dennis D. McDonald

Mainstream media now acknowledge that proliferation of TV streaming services (for example, Freedom from cable isn’t free: Flood of streaming services will make cutting the cord more complicated) will lead to cost increases even as cable TV subscriptions decline.

While I believe this is probably true, other things being equal, I would not necessarily be upset if, for the monthly dollars I now spend on streaming and cable media, (A) prices for the streaming alternatives would actually be equal to what I'm currently paying, and (B) such options would not result in my having to pay for programming I have no interest in.

As with classical economics, however, ceteris paribus is rarely true. What is more likely to happen is that (A) we’ll end up paying more for what we want, not less, and (B) our actual choices will, at the end of the day, be more restricted than they are now.

What brought the above home to me was Disney's recent announcement they will be removing their movies from Netflix and setting up their own streaming services. Other examples of the “balkanization” of streaming TV include CBS's decision to restrict access to the new Star Trek series only to its own streaming customers or Netfix subscribers, and availability of the new "Mr. Mercedes" series to AT&T’s Audience network.

Ordinarily I would be interested in all of these. I consider Pixar’s Inside/Out an imaginative example of artistic genius, I'm a big Star Trek fan, and I'm curious to see a good productions of Stephen King novels.

As our choices proliferate, though, I suspect that, increasingly, primarily "hardcore" fans will be catered to as streaming and exclusivity expand. It's as if the planners at these networks are running the numbers and saying to themselves, "So what if we get only 68% of the audience within only one standard deviation from the mean? With premium pricing we’ll still make more money when we stream it ourselves, plus we can make it inconvenient for people to unsubscribe once they've seen the shows that really interest them!"

Much of the above thinking depends on exclusivity and the imagined ability to restrict access. For many years Disney artificially created scarcity by restricting the sales windows for its movie backlist in order to justify higher prices for properties when they finally did become available for sale. They appear to be trying to repeat that by establishing their own streaming service and may be willing to ignore occasional customers like me (an "empty nester") who doesn't "need" constant access to a full back catalogue of child- and adolescent-oriented programming. (I’ll seek out something else to watch, thank you very much.)

Another concern about the push to exclusive streaming will be its effect on smaller "niche" players and specialized programming. While it is true that cloud-based technology is available today for nearly anyone to set up the web based plumbing for a commercial video streaming service, the reality is that deep pockets are still required to do everything else including marketing, sales, customer support, management, HR, program selection, and program development. As exclusive streaming proliferates, the big will continue to get bigger. The small will get left behind as increased unit costs for market access are accelerated by the steady chipping away of net neutrality.

An important assumption is that demand for streaming video is sustainable. Disney assumes, perhaps appropriately, that demand for its properties, both classic and contemporary, is sustainable. After all, what parent would want to not expose a child to childhood favorites like "The Lion King" or "Beauty and the Beast"?

On the other hand, there are only 24 hours in a day. Demands on leisure time are many. Will the always-connected children now being born always supply a guaranteed market for stories or entertainment produced and packaged by large corporations? After all, we’re talking about private property and entertainment here, not basic Constitutional rights.

Or will the kids turn to other pursuits including hiking, sports, or even -- don’t laugh -- reading a good book while sitting outside under the shade tree?

Copyright © 2017 by Dennis D. McDonald

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