HBO is set to launch their steaming service HBOMax, and other major entertainment giants (like Disney) are launching before the end of the year. On the surface it sounds like great news for the cord-cutting generation that no longer pays for TV. It also sounds like great news for the entertainment groups who hope to take on Netflix and gain a share of the rapidly expanding video streaming market. But there is a huge obstacle to success: fragmentation will lead to a large increase in piracy.

Let’s go back a few decades and look at what happened to music. Computer technology made it possible to rip songs from CDs and save them as MP3s. As Internet connections spread so did those music files, via torrents and services like Limewire and Napster. People wanted content and when they found they could get it for free, piracy became the bane of the music business causing an enormous disruption that resulted in plummeting revenues across the board.

The iTunes Store and the iPod stepped in to offer a different model. People could buy one song at a time, paying to own a digital version. Apple had contracts with the major labels so it could offer a large part of the world’s recorded music library. That helped turn the tide against piracy because of the better experience it offered than downloading. It was fast, easy, and by offering to sell one song at a time, cheap for people to use casually.

But by this point in time people had of course already built up libraries of music, they had their CDs or vinyls or cassettes and the MP3s they had ripped or pirated to upload onto their MP3 players. The iTunes Store was just a place to top up a few songs. For filling in a library it was still easier to go to a torrent site and download all of Led Zeppelin’s albums at one time.

As data connections improved, streaming became a possibility. When Spotify first launched it was a revelation. I’ve already written about it being my favorite part of the tech revolution. But it wasn’t until the value proposition of streaming hit a tipping point that everything changed.

First, a streaming service had to offer a listening experience that was equivalent to listening to MP3s, data connections enabled that. Then the service had to offer a complete enough catalogue to be able to become a sort of one stop shop for all your music needs. Finally it had to offer a freemium model so that it could be a viable alternative to any other solution since the cost to use was nothing to try it out.

Spotify (and the other music streaming services) took off because they allowed people access to a wide enough catalogue that it could effectively replace most of anyone’s existing MP3 library reliably enough to become a legitimate alternative. But then it went further. Now Spotify has such a big library that there is no way that anyone could download even a portion of that music. Spotify is also constantly promoting new music from new artists so the fact that it is always updated with the latest releases makes it a million times more relevant than anything else (I’m lumping Apple Music, Deezer, and YouTube Music into this too as they are just different colored versions of the same thing).

There are of course some glaring exceptions. Jay Z is an owner of Tidal, a rival music streaming service where he keeps access to all of his music. But this sort of exclusivity is anathema to the promise of streaming music, and it is the perfect transition to talk about the coming decade of rampant piracy that the video world will see.

A hard truth is that consumers do not have any sort of affinity for one streaming service over another. No one chooses based on the brand appeal. People choose based on service quality and convenience. Is there enough music I want to justify using it? Is it easy to use with the technology I already have?

But once people are in, they can get stuck. Spotify is a wonderful example of this because the more I use it the better they get at recommending music I will like, which means I listen to more music, and the virtuous circle spins gloriously. I have also built up playlists that make the platform sticky – I am not going to leave for another service because that means losing my Delta Blues and Running Playlists that have been evolving with me for the better part of a decade.

Going back to the video streaming services and we see that the war for the consumer is on and it’s based upon fragmentation if catalogue. Unlike Spotify and YouTube and Apple Music, there is almost no overlap of content. Disney owns the Disney universe, Netflix has its own plus some syndication, and Hulu has the NBCUniversal ecosystem. Even Amazon Prime Video has its own content now, further driving a wedge into the overall pie.

Disney+ will of course win with families and superhero fans, since no one else can compete there. But across the other platforms, it will come down to which shows and movies win over fans. The problem is that getting someone to sign up to watch a show means either providing them with the full show, which they can binge over the course of a few days, or making them drag it out with a new episode each week. In the latter case no one is going to shell out 10 – 15 bucks per month to watch one episode of one show.

Netflix has a huge audience already, but will suffer from shows being pulled, like Friends which represented something like 10% of total Netflix viewing time as the fragmentation continues. Prime Video benefits from being bundled into Prime delivery so I don’t really count it here.

I think that HBO Max is doomed to fail. Game of Thrones is over. There is nothing as big as a cultural phenomenon to replace it. While Hulu can stick around in the US and syndicate to other services around the globe, HBO doesn’t have enough pull to justify the amount people will have to pay.

Video streaming is thus still in its infancy. Until we see one service with access to a large enough slice of the video content pie, people will take the route of pirating and stream via streaming sites that offer every show ever filmed, while paying for only one service or another.

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