Netflix just played themselves
Streaming providers like Netflix are losing huge amounts of revenue because people are illegally streaming or downloading their content. For example, five years ago, in 2018, streaming providers recorded 37.4 billion USD in losses from illegal playback of series and movies. In 2022, estimated losses grew to over 50 billion USD. In 2010, the entertainment industry actually lost more revenue to piracy than it gained from legal consumption. Although this is no longer a reality, losses due to piracy continue to increase every year. But why is piracy back on the rise?
Spotify, Amazon Music and Apple Music. Probably all of us have at least one of these apps on our phones to listen to our favorite songs from our favorite artists and bands. This wasn’t always the case. Before Spotify, Amazon and Apple with their convenient all-in-one music packages, we used MP3 converters to download the latest hits from YouTube to our MP3 players. It was too inconvenient and impractical to always walk around with a bunch of CDs. You wanted to have all your favorite tracks with you when you were on the go, and YouTube downloaders gave us just that exact freedom. Music streaming services recognized why people were using these services which were still in a legal gray area at the time, and found ways to make our digital music libraries so easy to use, that people were willing to pay money for the content they provided again. Today, hardly anyone resorts to the now-illegal services, because streaming services are much more convenient compared to their shady predecessors.
Similar things happened for the video game industry. People used to buy games on physical media like CDs and DVDs. With an ever-growing personal library, this became very inconvenient to manage your collection. At the same time, the Internet became more and more sophisticated. One could now digitally download music and games, store them, and take them virtually anywhere. However, gamers soon encountered an ever-increasing problem: Due to their popularity, the illegally downloaded games were infected with viruses that would brick their computers.
Digital gaming platform Steam was supposed to eliminate these problems. To this day, Steam lets you purchase, download, and play video games legally and virus-free, and there are no prompts that require an original DVD in your physical drive. However, the gaming paradise that Steam had created did not last long. Other companies sensed the high potential of online platforms for gaming content, and so game launchers like Origin, Uplay, and Epic Games found their way onto the market. This had major drawbacks for customers: Namely, the initial problem of handling a growing collection manifested itself in a new form. Today, gamers don’t have to physically handle their game library, but still lose track of which platform they own which game on. With platform-exclusive games, fans are forced to have multiple accounts on different online services and also have to keep track of their log-in details to their profiles.
But let’s get back to Netflix. After all, streaming providers have another problem besides illegal content playback: In 2019 alone, entertainment giants lost 9.1 billion USD due to account and password sharing among friends and family. This is a popular tactic among users to cut down on monthly costs and enjoy the offer at a small price. But why do movie and series providers have this problem and not other entertainment service providers?
As with video games, one possible clue could be the oversaturated market situation. In addition to Netflix, many also have an Amazon Prime membership, since this includes other benefits like music streaming and free shipping on Amazon in addition to streaming movies and series. However, if you want to have the entire entertainment lineup on demand, you need additional paid subscriptions for exclusive content on HBO Max, Paramount Plus Hulu, and Apple TV. A normal consumer just can’t afford that many subscriptions, so people are forced to resort to other means.
But rather than improving themselves and making their services more attractive to consumers, streaming providers are increasingly putting obstacles in the way of their customers. Netflix, for example, recently implemented verification technologies to take targeted action against those who share their accounts with others in order to save costs. What executives over at Netflix seem to fail realizing, however, is the following: The company has not lost 9.1 billion USD due to piracy. Rather, they failed to convince people to subscribe and spend money to use its services. But the company won’t do that by restricting password sharing or making it more difficult. If anything, that’s more likely to scare off even more customers. More and more pirates are setting sail from ever worsening conditions on land. And if digital content providers don’t watch out and return to their customer-centric roots, even the last land rat will soon abandon them.
