Will Viewers Rebel Against Video Streaming Changes?

Could increasing competition from AT&T’s Warner Media and Disney bring some unpopular changes to the video-streaming service sector? And, if so, could those changes result in an increase in viewers turning to pirated “services”?

Yes, it’s a seemingly dramatic leap in logic, but consider the possible consequences if subscription streaming services ramp up advertising with all that subscriber data. After all, new entrants expect some profit that market-leader Netflix has foregone with its high market capitalization and huge debt load (more than $8 billion).

Newly minted vMVPDs have been selling their services at a loss to gain subscribers. Now they’re looking to increase subscriber fees and adopt more aggressive advertising practices. Signals from players like AT&T’s Warner Media and Hulu show more advertising is around the corner. Netflix has increased fees and is also experimenting with ads.

And why would such developments result in increased “subscriptions” to pirate services? The illicit services already provide abundant on-demand programming, convenient access, low cost and no ads all wrapped up in something that mimics legitimate streaming services. Consumers do risk being caught in the middle of an illicit-service take down, which usually happens just as their team is about to score or win a championship.

More viewers might be open to taking that risk if legitimate services add in a dash of annoyance with more advertising, sponsored previews and other revenue-generating actions. Early efforts will likely be palatable to most viewers as service providers will introduce changes carefully. And it is true that advertising creep has a long history of acceptance. After all, more radio spots per hour, longer and more frequent television commercials, movie-theater advertising, and other promotional efforts have, over time, been tolerated.

But consider how, in the past, illegal service acquisition was difficult, and, in some cases, dangerous (climbing a pole to tap into a cable TV signal). On top of that the services delivered poor quality. Therefore, most people accepted the annoyance of advertising creep rather than go to the trouble of finding a work around. But then came the DVR and viewers got used to fast-forwarding through those promotional messages. And then came popularly priced streaming services without the advertising.

So, yes, some things have changed. And, as DTC analyst Greg Scoblete points out, the now fractured distribution market has made it difficult to get all desired content from a centralized place. This can be an opening for one-stop shop illicit service providers. Unlike the past, the consumer barrier isn’t all that high now if the people don’t mind consuming illegally obtained copy righted material. (Napster anyone?)

The implication is that consumers now have a more acceptable black market option. After all, some have embraced the new streaming options because lower prices and the on-demand convenience.

A sprinkle of advertising and promotional messages won’t likely put streaming subscribers in full retreat to the black market, but if the experience hints of the general web experience (without ad blocking software or browser optimization), look for a revolt.

Streaming-service providers are still playing with business models and pricing structure. The near future will bring higher subscription costs, possibly thinner content menus, and new revenue-generating actions. Will viewers rebel? Stay tuned.