Screaming About Streaming

This will interest anyone who watches movies.

I have long been quietly (well, not so quietly if you live under the same roof as I do) complaining about the state of movie streaming services, none of which I subscribe to because I think they’re a scam. The problem is they are openly engaging in anti-competitive practices that many, including myself (not a lawyer), say violate anti-trust laws.

Let’s go back to 1948. A landmark case known as United States vs Paramount Pictures busted up movie monopolies that engaged in “vertical integration” of movie production, distribution, and exhibition of motion pictures. In plain English movie studios not only made movies, they also owned the theaters their movies played in, which stifled competition. There were independently owned theaters, too, but they had to agree to play blocks of movies selected by the studios whether or not theaters wanted to play all of them.

The courts, including the United States Supreme Court, agreed with the plaintiffs that these practices inhibited competition at both the production and exhibition levels. As a result the studios were required to sell either their theaters or their distribution systems to open up competition. Block booking was also banned. Among the positive results of this decision, known as the Paramount Consent Decrees, theaters had greater flexibility in setting admission prices and smaller independent studios were able to gain a foothold in the industry.

The movie business operated successfully under these rules for the next 72 years. But if you did the math you’d realize that 78 years have passed since 1948, and the big studio monopolies are back with a vengance! In 2020 they managed to convince a gullible court that because there are now many more avenues of movie distribution than there were in 1948 the Paramount Consent Decrees no longer apply. According to a DOJ press release announcing the termination of the Consent Decrees “The conspiracy and practices that existed decades ago no longer exist."

Oh, really? One independent theater owner didn’t think so. During the public comment period prior to the court’s decision he wrote: “Unfair trade practices, vertical integration, monopolies and oligopolies were thought to be bad for the country and its citizens as far back as the Sherman Act in 1870. The base greed of mankind in the form of unfair practices, price fixing and gouging were as much a reality in 1870 as they were in 1948. Those vices are still in play now. That is why there are rules. Whenever the vices of big money private interests can make a new appearance, they still do and always will. The recent Great Recession is the latest big bad example of what happens when manipulation of markets, vertical integration, consolidation and deregulation occurs. The same vices that drove certain Wall Street financial interests then are inherent in the human condition and just as strong now, just look around you. Have we already forgotten what corporate greed did just ten years ago? Yes, it's only the movies and not the entire financial market. Yes the movie industry has grown and changed like all industries do, but people stay the same and, in this case, the old adage that the more things change the more things remain the same still applies to people and greed today.”

How prophetic he was. Vertical integration is back and in full force again in the movie business. Not so much at the theatrical level, but in the dominant mode of distribution now in play: streaming. The major movie studios now produce exclusive content and disseminate it through their individual streaming services so that if you want to watch a Paramount movie you have to have to subscribe to Paramount+. Likewise for Disney content you must subscribe to Disney+, and so on. Netflix and Amazon, which used to simply be distributors of streaming movies are also producing and/or purchasing content you can’t see anywhere else. At the same time they have lost rights to present movies from other studios on their platforms, strangely making them both victims and culprits of vertical integration.

If anything, this situation is much worse for consumers than the corrupt system that existed prior to 1948. Back then, you could still go to any theater and pay for one movie at a time. If theaters back then operated like today’s streaming services you would have to pay a monthly fee to each theater you wanted to be a member of. Once you paid your monthly or yearly dues you could come and go as often as you wish, which seems like a bargain until you realize that since each theater was limited to movies from one studio you would have to join multiple theaters to see all of the popular movies, and that adds up quickly.

But, you point out, the court determined that “New technology has created many different movie platforms that did not exist when the Decrees were entered into, including cable and broadcast television, DVDs, and streaming and download services.” Therefore “Without these restraints on the market, American ingenuity is again free to experiment with different business models that can benefit consumers.”

So rather than apply the principles of the Consent Decrees to modern technology we’re back in the wild west of no regulation at all. The court’s promise of greater competition through technological innovation hasn’t materialized. As streaming has become more popular the market for physical media, streaming’s primary competition, has taken a big hit. Video rental stores are almost nonexistent now because it’s easier to sign in to Paramount+ than to drive to the video store (though it is just as difficult to decide what to watch). So where is this supposed competition coming from? Nowhere.

The one area where physical media beats streaming is in private ownership. Streaming services offer the opportunity to “buy” your favorite movies with the implied understanding that your purchases will remain in the cloud for you to watch anytime. But that promise is only as good as the licensing agreement between the production company and the streaming service, which you don’t have access to. So the movies you “own” in the cloud can be yanked away at any time.

Physical media solves this problem, to a point. Once you buy a disc it’s yours to keep even if they stop making the disc (in which case you can often buy used discs). Ownership also lets you see the movie in its original form, not censored or reformatted. Furthermore, every DVD/Blu-ray collection serves as a mini private film archive ensuring that somewhere somebody will always have a copy of a movie. But thanks to streaming fewer stores are selling movies these days, and not all of the movies on streaming services have been released on discs so in many cases streaming is your only option. And because streaming has cut into disc sales many titles are now hard to find. So again I ask, Where is the court-promised competition?

It has been suggested that streaming services should be required to offer individual movies for rent so nobody is forced into a subscription when they want to see a movie. And consumers should be able to download any movie they “buy” online so they can have access to it as long as they want. These steps would help, but they wouldn’t make the market any more competitive. The courts need to step up and put an end to vertical integration in the movie business so consumers can watch movies on the streaming platform of their choosing.

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If movies are your thing you will enjoy learning about movies filmed on our beautiful Monterey Peninsula in my guide to Monterey In The Movies.