The Future of TV Blackouts: As Big Companies Consolidate, Viewers Get Screwed
YouTube users who logged on to the site’s app from an Amazon FireTV or Echo Show device in December were met with this ominous message: “Starting on 1/1/2018, the YouTube app will not be available on this device. You can continue to enjoy your favorite creators and videos in many other ways. Please visit https://goo.gl/LefFGe for a list of devices you can use.”
The list of supported devices on which YouTube will run is still quite comprehensive. It includes all of the game consoles, every brand of smart TV you can think of, and several other streaming devices including those by Apple, TiVo, and Roku. And YouTube has been working perfectly well on Amazon’s line of Fire TV devices — themselves based on code that originally came from Google’s Android — since the first one launched in 2014.
So why would YouTube suddenly stop working on Amazon products?
There’s nothing sudden about it, and there’s no hardware reason. Amazon Fire TV device owners are losing their access to YouTube because Google and Amazon are having a fight.
Consolidation is not just for our cable companies and internet service providers anymore. Most of our internet-delivered content, and most of our streaming devices that can deliver it, also come from just a small handful of big tech companies. And when it means one company has its fingers in too many pies, the viewer can end up screwed.
The streaming TV era has truly come into itself as a full cable replacement — which includes programming blackouts as well. And it’s only going to get worse.
Cable Blackouts: An Old Tactic
YouTube wasn’t the only service at the end of a blackout as 2018 opened. Altice pulled Starz off its Optimum and SuddenLink TV systems (which reach around 3.4 million customers) on Jan. 1 after both sides failed to come to terms on a new pricing structure — and no resolution is in sight yet.
That’s just the first carriage dispute of the new year, with more surely to come. But even though channel blackouts on cable and satellite providers aren’t exactly rare, they don’t particularly benefit anyone.
A cable TV network makes its money in two main ways. One (for basic cable, at least) is through ad sales: Businesses love to aim commercials at your eyeballs, and networks get paid for airing those commercials. Straightforward. The other is from an affiliate fee. Pay-TV companies pay content companies for the right to carry their channel, basically. A company like Disney gets between $7 and $8 per subscriber per month from every cable company that carries ESPN, for example — that’s something on the order of $375 million each month from Comcast (Xfinity) and Charter (Spectrum) alone. ESPN is notoriously the most expensive network to carry; fees for the rest of them pretty much vary between $0.05 and $3. Still, the principle is the same.
But media is, of course, a business: Both content companies and pay-TV carriers are out to maximize their profits, and neither side wants to spend a penny more than they have to. So when these contracts come up for renegotiation every few years, it’s a minefield. The cable or satellite company wants to pay less for networks; the content companies want to make more.
So they play chicken with each other. Each party — the network and the provider — bets that the other party would rather negotiate and come to slightly less advantageous terms rather than have the network go dark. Carriers can hold it over networks, because a network nobody can watch is a network that doesn’t make money and you can’t sell ads for. And networks can hold it over carriers, because without channels to watch, why are you even paying for a TV package? Subscribers, the theory goes, will cancel.
But the thing about a game of chicken is that you’re waiting to see how long you can play it out before you ultimately veer away. And in recent years, there’s been a whole lot less veering and a bit more crashing. Some of the more notable contract disputes that have gone to blackouts in the few years include…
- Dish Network and CBS, Nov. 2017
- Dish Network and Hearst Communications, Mar. 2017
- Charter and Univision, Feb. 2017
- Optimum (Altice) and CBS, Jan. 2017
- Dish Network and Tribune Broadcasting, June 2016
- Dish Network and Sinclair Broadcast Group, Aug. 2015
- Verizon Fios and The Weather Channel, March 2015
- Dish Network and Fox, Dec. 2014 – Jan. 2015
The more consolidation we see among networks and carriers, the more impact each of these disputes will be able to have. For example, the pending merger of Sinclair and Tribune would mean that a Sinclair blackout could affect millions more households in the future than it has in the past — or there’s the Disney’s $52 billion purchase of Fox, meaning that access to channels like FX and National Geographic will be negotiated alongside the likes of ESPN and Disney Junior.
Wave of the Future
But this is the age of the cord-cutter, as we hear over and over. Millions of households are opting out of subscribing to cable or satellite TV, instead relying on their broadband connections to bring them all their programming.
Some of that programming comes from new “networks” like Netflix, Hulu, or Amazon Video. And some comes as bundles of traditional, linear cable channels, from new or traditional players — Dish Sling, DirecTV Now, Hulu, Playstation Vue, or YouTube TV.
The over-the-top, internet-delivered versions of traditional, linear networks aren’t immune to the disputes that plague their cable-delivered brethren — and as distribution moves to the internet, blackouts could become even more far-ranging.
Analysts first started to wonder about this years ago, and the question of “what next” is far from academic. Imagine Comcast and CBS were get into a carriage dispute, for example: Sure, CBS channels would go dark for Comcast cable subscribers — but what of the millions who only use Comcast for broadband service? Would they be blocked from using CBS All Access as well — especially if net neutrality actually is dead, and no law requires broadband companies to be even-handed? (Altice, for its part, has been suggesting that its customers buy Starz’s standalone streaming service, for $8.99 a month, if they want to continue to watch the channel.)
Big Business Spats
Which brings us back to Amazon and Google.
Amazon has, famously, transformed from an internet bookseller to the nation’s largest Everything Store. But it doesn’t actually carry everything. In fact, it’s very selective when it comes to carrying products that compete with its own flagship devices. And so while you can buy any number of Kindle, Fire, and Echo devices from Amazon, since 2015 you’ve been unable to buy an Apple TV, Google Home, Chromecast, or many Nest devices.
How best can a hardware company retaliate against a retailer that is also a media content company? With a blackout, of course.
After two years, however, Apple and Amazon at least came to a truce: The Amazon Video app became available on Apple TV devices in December, and you can now buy an Apple TV device from Amazon if you so choose.
The Amazon and Google spat is a little more difficult to predict the conclusion. The companies report that they are in “productive talks,” and the Chromecast, like the Apple TV, has returned to Amazon’s listings.
But however “productive” those talks may have been, they aren’t yet enough. By the last week of December, many sites running workaround guides to help FireTV owners keep streaming YouTube video. And by the time the clock ticked over to Jan. 1, Amazon’s YouTube app itself directed users to open a browser instead.
Amazon and Google will probably hammer out some deal eventually, though it’s anyone’s guess whether viewers wait days, months, or years. But this won’t be the last time consumers are stuck in the middle between new media companies and new methods of distribution. Giant conglomerates, endless mergers, vertical integration, and constant horizontal growth all mean that increasingly, millions will lose access to content that they’re paying for any time two companies decide to make each other sweat.
