The Streaming Service Oligarchy
In this day and age, the film industry is repeating history. I’m not talking about the countless remakes and reboots that have been plaguing our screens; I’m talking about the rebirth of the Studio System. With large amounts of original content being created and the depletion of traditional theaters, streaming services have become a monopoly reminiscent of the studio era, and subscribers are paying the cost.
What is the Studio System?
The Studio System refers to the factory-like film production era occurring from the 1920s to 1940s. Created by large studios acquiring smaller ones, the “Big Eight” studios ran Hollywood like an oligarchy, producing and distributing their own films. Five of these studios, MGM, Warner Brothers, Paramount, RKO, Twentieth Century Fox, also owned their own theaters. Studios churned out high-budget, successful A films, as well as low-budget, filler B films. Their films were sent out to theaters in packages in a practice called block booking. During this time, studios also had film talent such as directors, writers, and actors signed directly to them. This period is known as the Golden Age of Hollywood.
However, this era came to an end when the Justice Department filed an antitrust lawsuit against the Big Eight. According to the Justice Department, the studios illegally fixed film prices to monopolize film distribution and movie theater markets. Because they were found guilty, each of the studios entered into a decree with the Justice Department that mandated a separation between distribution of film and exhibition of film, meaning studios could not both distribute movies and own theaters without court approval. The decree also banned block booking, setting minimum prices on tickets, and owning specific, exclusive film licenses for certain geographical areas.
Outcome of the Paramount Decree
In response to the decision from the Paramount Decree, studios had to change how they made films. MGM, Warner Brothers, Paramount, RKO, Twentieth Century Fox divested their theaters so that theaters were independent from studios. Studios also adopted the “United Artists” approach to producing film, meaning they would turn to independent producers that would provide a “packaged film” that studios would green light for production. In this approach, studios no longer produced their own films, instead offering finance, distribution, and leasing help for production facilities. Actors also regained independence and signed with agents instead of signing exclusively with studios. These changes made the film industry into the Hollywood we know today.
The Rise of Streaming
Now, we’ve entered into a new and unprecedented era: the Streaming Age of Hollywood. Although Netflix championed streaming services all the way back in 2007, we now have almost 50 available streaming platforms, with a majority of viewers subscribed to Netflix, HBO, Disney+, Amazon Prime, and/or Apple TV+. (Shoutout to Paramount+ and their relatively new streaming platform. Never one to miss a studio era, huh?)
In 2007, Netflix launched their streaming service closely followed by Hulu (now owned by Disney). They both started their “humble” origins as clearing warehouses for B movies and TV shows. As more streaming platforms appeared, film and television rights soon became a competitive market. In a “departure from tradition,” Netflix began creating original content to help pay for the cost of streaming rights. But as Netflix originals like House of Cards and Orange is the New Black grew popular, creating original content became a common trend across streaming platforms. Thus, A films are to the Studio System era as original films and tv shows are to the streaming era.
Nowadays, any popular movie or TV show has a streaming service attached to them: Euphoria and HBO, Cruella and Disney+, The Handmaid’s Tale and Hulu, YOU and Netflix, just to name a few. When is the last time you’ve seen an ad for a movie that didn’t have a streaming service in the title?
Repeating History
Today, those A titles attract subscribers and are often originals or exclusive to the streaming platform. The days of using streaming platforms as clearing warehouses changed when original A titles began drawing in new subscribers. It’s directly comparable to the block booking tactics used in the studio era. For every big ticket show or movie a streaming site produces, there are lesser known films or shows that are released alongside it. In December 2021 (prime blockbuster season), Netflix released the second seasons of two original shows Emily in Paris and The Witcher, and they also dropped the star-studded movie Don’t Look Up. Last month, HBO notably aired Return to Hogwarts and the second season of Euphoria. Along with those headliners they also released a slew of popular films and DC movies designed to keep subscribers interested in their platform after binging the big name shows.
In the Paramount Decree, they specified that “after an initial theatre run, today’s consumers can view motion pictures on cable and broadcast TV, DVDs, and over the Internet through streaming services.” Although the court used the phrase “after an initial theatre run”, today in the midst of a pandemic, theater-goers and theater revenue have been steadily declining. As a result, streaming services have boomed. With any film or TV show available on our laptops, who needs the theater anymore? Movie theaters have transformed into digital spaces and tickets into subscription costs.
With Netflix raising subscription prices (again) and Disney+’s ridiculous “Premier Access" cost, streaming has become very reminiscent of the Golden Age of Hollywood. Major streaming services produce original content that’s unavailable everywhere else, forcing viewers to subscribe to that streaming service for access. And as long as these streaming services keep producing their own original content, they can keep raising subscription costs. Sure, there is competition between streaming services which doesn’t make them a true monopoly (arguably), yet they each have enough original content to make their platform unique. Although with Disney’s wide reach and exclusive vault content, they exist in their own monopolistic reign (down with the mouse!).
The Paramount Decree and Streaming
But we have the Paramount Decree to protect us from a monopoly over the film industry, right? Wrong! On August 7th, 2020 the Paramount Decree was terminated. According to the Justice Department, the Paramount Decree was “outdated” due to the rise of streaming services and decline of theaters. Assistant Attorney General for the Justice Department’s Antitrust Division Makan Delrahim defended the termination when he said, “without these restraints on the market, American ingenuity is again free to experiment with different business models that can benefit consumers.” Admittedly, the Paramount Decree does mostly deal with theaters and could not have predicted the uncharted territory of streaming services, but it was still one of the landmark cases that shaped Hollywood and made it less oligarchic.
Original Content Dominates
Similar to the Big Eight’s tactics, streaming services churn out original content like factories: all of Disney+’s content is in house. Netflix’s original content shot up from 25% in February 2020 to 40% in August 2021. If Netflix continues that trajectory it’s original content is predicted to reach 75% in May 2025. Hulu has less original content than Netflix, sitting at 3,000 titles compared to 5,000, but seeing how all streaming services follow Netflix’s example, it would not be surprising if that number continued rising.
Streaming services are putting quantity over quality. They crank out as much original content as possible to give viewers a reason to choose their platform over competitors. The product is content like Emily in Paris, Hype House, and He’s All That that is made by algorithms and only goes viral because they are so cringe. In this industry, however, all publicity is good publicity; streaming services get all the gain while viewers paying for the subscriptions and firm talent suffer the most. Writers are deterred from creativity and encouraged to write what sells. Directors have to sacrifice film quality meant for theater screens for compatibility with streaming screens. And as seen with Scarlett Johansson v. Disney, actors are cheated out of theater residuals.
With streaming services producing and distributing original content, it’s hardly distinguishable from the Big Eight’s rule over the Golden Age of Hollywood. Streaming services control film content, pricing and distribution, all things that were once outlawed because it “monopolized film distribution and movie theatre markets.” But with this new age of streaming services the courts don’t know exactly what the future holds as shown with the termination of the Paramount Decree. I think Peter Gruber, president of Mandalay Entertainment, says it best in SHOOT magazine when he says “it will be a new studio system. Instead of MGM and Fox, they’re going to be Disney and Disney+, Amazon, Apple, Netflix, HBO Max and Peacock.” Streaming services have become the fertile planting ground for the kudzu vines of the studio system to take root again.
Sources:
https://mattboydsmith.files.wordpress.com/2015/08/schatz_studiosystemandconglomeratehollywood.pdf
https://www.justice.gov/atr/paramount-decree-review
https://www.justice.gov/opa/pr/federal-court-terminates-paramount-consent-decrees
https://econreview.berkeley.edu/the-economics-driving-the-streaming-industry/
https://www.shootonline.com/news/new-studio-system-emerging-pandemic-may-change-hollywood-forever
https://daily.jstor.org/are-you-still-watching/
https://www.whats-on-netflix.com/news/netflix-originals-now-make-up-40-of-netflix-us-library/
https://www.reviews.org/tv-service/hulu-vs-netflix/
https://www.tvinsider.com/1026710/new-on-hbo-movies-shows-january-2022/
https://screenrant.com/black-widow-disney-streaming-release-lawsuit-scarlett-johansson/