Wednesday, July 27, 2011

How content owners will kill your favorite service

This month its become clear.  Content owners, such as movie studios, music publishers, and game publishers are all looking to cash in on the latest online distribution methods.  Hint:  the consumer loses.

The Ghost of Distribution Present...
The biggest service, Netflix, made big news this month when they increased fees by 60%.  I'll make this clear, I love Netflix and I love their streaming service; out of all the available options online.  But don't blame Netflix.  Its been predicted, the publishers royalty fees will increase by 200% over a span of 2 years (between contracts).  The reason for this increase.  Content owners now have their own service, which directly competes with Netflix.  HBO "on Demand",, or Hulu (which is joint owned by NBC and Fox) just to name a few.  Sony recently pulled all their videos from Netflix, in favor of their own media streaming startup.  Remember how nice it is your Wii/Xbox/Blu ray will stream Netflix videos. No way those box venders will be able to keep up with the 101 streaming options that are coming your way.  So it'll be premium pricing, or nothing.

The Ghost of Distribution Past...
Another service I had enjoyed was a gaming service called Gametap.  Gametap was basically a place where old games could go to die.  Gametap basically has a library of games subscribers can play at anytime, as long as they are members.  Annual fee was about $60.  Soo, a library of 1000+ classics was really awesome.  Then....Publishers learned they could still make money from their old IPs.   Xbox arcade, and HD renux versions of classic became profitable.   So, as expected contracts ran out, and were never renewed with Gametap.  It decimated the library in half, where most of the Gems were lost. Gametap holders were forced to sell its company where it was picked up by a European company that now pushes mostly obscure social crap games to their service.  Again, not Gametaps choice, but that's the reality.  If Netflixs looses too much revenue, it'll follow the Gametap story (i.e. a library of triple B movies). 

The Ghost of Distribution Future...
Lastly, there's Steam.  Another gaming service, that's more of an electronic distributor of games that sell majority of games, and often for great deals.  However, EA, one of the biggest game publishes are pulling their games from the virtual shelves of Steam.  Their citing contract talk breakdowns, but you can bet, EA will be more then happier if you'd go to their online store to download their latest games.
[EDIT: EA has announced Origin, their Steam killer]

While this may open up the options, the results will not equal cheaper for the consumer.  Content owners will price out the competition, not with better deals from their service, but by raising royalty fees.  Yes, even the iStore could be at risk (though the model is a bit different).  Aside from higher costs, they all seem to have their own special app, that needs to install their own special application, which will equal more resources being used and more conflicts to occur.  The joys of one more id/password to remember.

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