The entertainment landscape is changing faster than anyone 30 years ago could have anticipated, and it’s morphing into forms that even the most dedicated futurologist could never have predicted. The still-powerful traditional media behemoths have been left gasping for air, trying to adapt and wondering what if any future awaits them. The most volatile wild card in the deck, at least for now, seems to be digital streaming media.
Established media giants are facing not only new platforms such as PCs, tablets and mobile phones, but also new forms of delivery such as on-demand viewing. Unsurprisingly, traditional broadcasting, particularly TV broadcasting, is having trouble competing with new business models that allow users to view what they want, when they want and how they want it—on a smartphone while commuting to work, for example.
Streaming services have now overtaken traditional TV
The writing is on the wall, and future historians may identify 2016 as the tipping point that ushered in a new era. According to Ofcom’s Media Nations report, 2016 was the year when streaming services subscribers first outnumbered pay-TV subscribers in the UK—15.4 million to 15.1 million, respectively.
Given the recent stagnation of Pay-TV revenue along with the 38% annual revenue growth rate enjoyed by online streaming media, however, the 2016 comparison looks less like a neck-and-neck race to the finish and more like a snapshot in time that captures one form of media zooming past the other.
More ominously, at least from the point of view of traditional media, is the fact that the rise of streaming services has been most pronounced among younger viewers. According to Ofcom, broadcast TV viewing time among 16- to 34-year-olds amounts to little more than 60% of the average viewing time among all age groups. Meanwhile, investment in new programming by the major PSB networks hit an all-time low in 2017.
Adapt or die: the impact of streaming services on traditional TV services
The rise of digital streaming services is being driven by technology. Streaming video completely bypasses expensive infrastructure such as broadcast towers, cable lines, and satellites, making these huge investments look increasingly obsolete. Meanwhile, the relatively inexpensive infrastructure required for in-home streaming video is now available in the great majority of UK households, and mobile devices such as smartphones are virtually ubiquitous.
That doesn’t necessarily mean it’s all over for the traditional TV giants. These companies enjoy a long history of adapting to changes in technology and viewing habits. They survived, and even thrived, as black-and-white TV gave way to colour, as cable and satellite TV burst into prominence and, most notably, as three major network channels blossomed into hundreds of channels. But never before have they faced anything like the challenge they face today.
Salvaging traditional media through innovation
One way that broadcast TV is responding to the challenge is to offer TV as an attractive alternative to digital streaming media by upgrading existing services and offering new conveniences. Some of these innovations include creating channel portfolios to offset the decline in viewing of the main PSB channels, and launching the Freeview and Freesat platforms to increase the availability of broadcast TV.
In addition to polishing up their traditional service offerings, the TV giants are simultaneously pursuing the old “if you can’t beat ‘em, join ‘em” strategy by offering their own on-demand and streaming services to the public, including: “Catch-up” services for viewers who miss episodes due to scheduling conflicts; The iPlayer from the BBC; Now TV from Sky; All4 from Channel 4; ITV Hub from ITV; My5 from Channel 5.
Given the tremendous financial assets held by traditional media, the potential of these new sources of revenue cannot be discounted.
The regulation of online piracy: putting a finger in the dike?
The explosion of streaming video options has resulted in market fragmentation, with many different options available in different jurisdictions. This has in turn triggered rampant piracy as users, unable to afford subscriptions to all of the content they desire and unable to legally access content only available in certain jurisdictions, resort to pirating content using technological aids.
The piracy problem is hardly in its infancy. A survey conducted by YouGov indicates that nearly five million UK adults use pirated TV streaming services via various technological aids such as Kodi boxes, Amazon Fire TV Sticks and various illegal streaming apps on mobile platforms. The UK Intellectual Property Office estimates, for example, that a million set-top boxes with supplementary software allowing illegal downloads are being used in the UK.
Social media piracy
Social media sites such as Facebook Live and Twitter offer further opportunities for illegal streaming. This type of piracy is particularly difficult to combat, because it allows an extraordinarily high volume of illegal streaming to reach a small audience within the account owner’s private social network. The volume and dispersion of this type of streaming has the makings of a nightmare for enforcement.
As traditional broadcasters diversify their content distribution systems, they inevitably generate opportunities for unintentional piracy. As broadcasters multiply their distribution channels in order to keep up with competitors like Netflix, viewers become confused as to which activities are legal and which are not. As unintentional piracy becomes inevitable due to the sheer complexity of the content distribution system, ethical lines tend to blur to the point that nobody is sure which side of the line they are on—and before long, nobody cares.
The law has always struggled to keep up with changes in technology, markets, distribution patterns, consumption habits and business models. The regulators and the courts both play a role in ensuring that streaming services remain legal and effectively combating online piracy when it does occur. Regulations and litigation strategies must evolve rapidly to keep up with the ever-changing media environment.
Regulatory Efforts In 2015 Ofcom issued minimum regulatory standards that apply to “TV-like” On Demand Programme Services (ODPS). The regulations apply regardless of platform—connected TVs, mobile phone apps and set top boxes are all subject to them. Broadcast TV, by contrast, is regulated through a separate set of standards. A service is subject to the regulations if it:
provides “TV-like” programming as its principle purpose;
provides primarily “on-demand” services; includes a party (an individual or a company) with “editorial responsibility” for the content, which makes this content available to the public;
and is subject to the jurisdiction of the United Kingdom.
Ofcom directly regulates the editorial content of ODPS providers, and it works with the Advertising Standards Authority (ASA) to regulate advertising content. Ofcom faces numerous challenges in regulating on-demand and streaming content, including:
The sheer volume of content that’s being generated and shared;
The variety of content, including content that’s unique to the online environment such as user-generated content;
The fact that so many online platforms do not create or commission the content that they provide access to;
The global dispersion of content creators and online platform operators, to the point that many if not most of them are situated outside of the jurisdiction of UK regulators;
and changing user expectations, including a relative lack of concern for objectivity and factual accuracy.
Ofcom’s response to online piracy has been widely criticised as too feeble. Nevertheless, Ofcom is currently working closely with the Information Commissioner’s Office (ICO) and the Competition and Markets Authority (CMA) to adjust its regulatory standards and enforcement practices.
Lacing up the gloves: litigation strategies Although copyright law remains robust and flexible enough to provide a sound legal basis for civil sanctions and criminal prosecutions against online content pirates (resulting in up to ten years in prison under recent amendments to the Copyright, Designs and Patents Act 1988, for example), the practical enforcement challenges are daunting to say the least. More than ever before, IP rights holders are relying on copyright infringement claims to prevent illegal streaming of their broadcasts. Applying these relatively clear principles in a dynamic environment is more difficult in practice than in theory, however. When applied to streaming media, traditional legal enforcement solutions have shown themselves to be cumbersome, expensive and slow to react to the speed at which the new media is evolving. Targeting the ISPs The first hurdle in a lawsuit is identifying the appropriate defendant. In practice, however, identifying the source of infringing content is difficult at best. Even when offenders are found they are often located abroad, far beyond the UK legal system’s ability to enforce sanctions. As a consequence, Internet Service Providers (ISPs) are being targeted for litigation so frequently that some feel that they are serving as convenient “deep pocket” scapegoats. Meanwhile, the primary offenders escape justice by utilising their superior mobility along with a multiplicity of false identities.
Section 97A of the Copyright, Designs and Patents Act 1988 allows UK courts to force an ISP to remove infringing content if it has “actual knowledge” of the infringement. At that point a clever infringer can switch to a “shell game” strategy, where it simply relocates its servers to another jurisdiction, changes its IP address or employs a sophisticated evasion strategy that takes advantage of both of these manoeuvres.
Targeting the servers
A recent legal strategy has been to strike closer to the source by targeting servers rather than specific websites, by seeking court orders requiring ISPs to block access to specific server IP addresses. In The Football Association Premier League Ltd v British Telecommunications Plc and Others (2017), the High Court, which ruled for the plaintiff, set forth four conditions that must be met before such an order can be granted:
The defendants must be ISPs;
the users and/or operators of the targeted servers must infringe the plaintiff’s copyrights;
the users and/or operators of the targeted servers must use the defendants' services to effectuate the infringement;
and the defendants must have actual knowledge of the use of their servers for infringing purposes.
This four-pronged approach, although likely to enhance the effectiveness of litigation, is also significant for what it lacks—a positive duty for ISPs to police the content of their own servers. The prevailing view seems to be that such an obligation would be so burdensome that compliance with it could drive ISPs into bankruptcy.
Virgin territory: the uncertain road ahead
An either/or set of assumptions, which asks whether traditional media or new media will eventually come out on top, may completely miss the mark. Traditional media are beginning to invest heavily in streaming services, and both traditional and new media are starting to collaborate on the production of content. Perhaps the real question is, will streaming and on-demand content render broadcast content obsolete? Only time can answer that question.
In terms of the expectations of industry insiders, however, the answer is already clear. A report issued by Level 3 Communications and Unisphere Research, based on responses from nearly 500 industry leaders, found that more than half of these leaders expect the viewership of standalone internet streaming media to exceed that of typical broadcast TV by 2020 . A solid majority of over 70% expect this tipping point to be reached no later than 2022.
Changes are expected within the streaming video market as well. Traditionally, streaming services have been divided into two categories—on-demand and live, with on-demand consistently taking the top spot in terms of popularity. Now it appears that live streaming is bifurcating into two types—pay-per-view (football matches, for example) and live-linear distribution (traditional broadcast content via streaming delivery), with two divergent futures.
In the not-so-distant future, media competition may no longer focus on the rivalry between traditional broadcast services and streaming media, but among different types of streaming media. Don’t expect the pace of change to slacken if this happens—once one media revolution is complete, another revolution may have just begun.