Is the same modern take on antitrust that is responsible for the continued rise of Amazon also responsible for the balkanization of streaming video services?
I recently watched a video in Crash Course’s excellent Film History series, discussing the Golden Age of Hollywood. One of the points in this video pertained to the 1948 antitrust case United States vs. Paramount Pictures, Inc., in which the Supreme Court ruled that the vertical integration of movie studios constituted an illegal monopoly and forced movie studios to divest their ownership of movie theater chains.
Then yesterday, Netflix bought comic book publisher Millarworld. Millarworld publishes several popular comic book series, including the sources of two recent cinematic franchises Kick-Ass and Kingsman. It’s easy to see why Netflix might want a comic book publisher of its own—it’s recently invested heavily in producing its own original programming, so it won’t have to worry as much about other studios yanking their own shows away. And given that Disney owns Marvel and Warner Brothers owns DC, it’s hardly the first audiovisual content producer to decide to add some comic book pulp to its portfolio.
But all this got me to thinking. Over the last few years, we’ve started seeing the rise of vertical integration in movie production yet again. Disney, Warner Brothers, and Netflix now own the sources of adaptations, the studios that produce those adaptations—and, in the form of the streaming video services that they’ve launched or are launching, the means of distributing those shows direct to their audience. Disney’s got its own Movies Anywhere service, Warner Brothers has that new DC service it’s launching to put Young Justice on, and of course Netflix is Netflix. For that matter, Amazon and Hulu are making their own original content for their own streaming services, too. (Update: And just today, it came out that Disney will be pulling all its titles, including Marvel movies, from Netflix in order to launch a new streaming service of its own.)
Sure, those streaming services aren’t the movie theaters from that Paramount lawsuit—but just as movie theaters were the main source of video entertainment back in the 1940s (TV being barely a blip on the horizon as yet), streaming video has now become that source for millions of consumers who are finding it more rewarding to stay at home. And the ongoing balkanization of those video services has some commonalities with the 1940s movie theater situation.
As the Wikipedia write-up I linked above notes,
The major film studios owned the theaters where their motion pictures were shown, either in partnerships or outright and complete. Thus specific theater chains showed only the films produced by the studio that owned them.
Gosh, that sounds familiar. I can’t say I’m terribly excited about having to subscribe to a zillion different streaming services just to watch all the new TV shows I want to see.
Where are all the antitrust enforcers who saw it as their job to break up these vertical entertainment monopolies back in the 1940s?
Probably in the same place as the ones who would see it as their duty to bust up Amazon.com. Earlier this year, I covered a law journal piece discussing the way the courts’ interpretation of antitrust law has drifted over the last few decades. Starting in the 1970s, the courts started applying a new yardstick of “consumer welfare” toward deciding whether monopolies were good or bad things—and looking back, it occurs to me that many of the same points currently applied in Amazon’s favor could also explain why other media megaconglomerates are able to continue reaching out their octopus-like tentacles.
These businesses are, in their own way, just as capable of thinking in the long term as Amazon. They’re diversified into many different fields, so they can use their investments in one area (owning comic book companies) to help them in others (making movies and TV shows, then streaming those shows to consumers). And a streaming platform certainly does have “platform lock-in”—if you want to watch shows made by the companies that own the platforms, the only legal place to do it is on those platforms.
Compared to cable TV subscription costs, streaming platforms are amazingly cheap—and there’s that low price “consumer welfare” thinking again. People are pulling out the scissors and cutting their cable connections in droves, because for $10 a month they can watch an amazing variety of shows—and unlike with cable, they can watch any given show any time of the day or night they want to.
I doubt this will change any time soon—at least, not for as long as Amazon doesn’t change either, if it is the same shift in legal thinking that’s responsible for it being allowed to flourish. And movie studios buying distribution direct to consumers isn’t exactly new either—Disney bought ABC television in 1995, after all.
But on the other hand, movie studios and their theater chains had been in operation for several decades at the time the government suddenly stepped in to break them up in 1948. Suddenly, “the way it’s always been” was no longer legal. And the same thing holds true even now: legal thinking might have changed from how it was in those days, but nothing says it couldn’t change back if enough people start seeing actual harm—and if that happens, just because things had been that way for decades won’t confer immunity to the new necessity of sudden change.