MIT Technology Review

Tuesday, April 17, 2012

Starz, DirecTV Take on Netflix, Hulu

TV fragmentation has become farce. And that's OK.

I’m reminded of a line I read somewhere that for me has come to sum up what we unfortunately now need to refer to as the TV “space”: “It’s as though fragmentation itself has become fragmented.”

Fittingly, for a medium derived from theater, the world of television has become a kind of farce, in which identities are fluid and confused: boys are girls, girls are boys, and the finance, distribution, and creative sides of the business are increasingly switching roles. The latest example comes in the form of an announcement from Starz, the cable channel, and DirecTV, the satellite service provider. At least, I think that’s what they are--or were.

DirecTV and Starz Entertainment, report various outlets, are extending a deal in which Starz content will bolster the DirecTV Everywhere platform, which basically allows people to watch some cable content across multiple devices. Derek Chang of DirecTV managed to put out a statement, despite an apparent malfunction of his caps lock button: “We are pleased that the STARZ and ENCORE premium channels and service are a part of our DIRECTV Everywhere platform," he said in the release announcing the arrangement. "Providing our STARZ Super Pack subscribers with online access to their subscription content from Starz through DIRECTV Everywhere later this year will bring even more value to our customers."

We don’t know the financial arrangement the two struck up, nor do we know the length of the contract. But we can expect Starz to have driven a hard bargain: after inking a four-year content deal with Netflix back in 2008, negotiations to renew faltered in the fall, leading Starz to pull its streaming content from Netflix in February. Suddenly, by the first of this March, if you wanted to watch Toy Story 3 but had a streaming-only plan from Netflix, you had to take your business elsewhere.

And it looks like DirecTV is hoping that “elsewhere” will be DirecTV.

For all the frustrations of fragmentation, it’s better than the alternative: monopoly. Watching the DOJ’s lawsuit unfold against the major publishers, great bastions of our country’s culture, has been, to many onlookers, unsettling. My colleague Christopher Mims has dialed back his assertion that an Amazon monopoly over e-books wouldn’t be so bad, and offered another strategy for publishers to beat Amazon--one that doesn't rely so heavily on Apple.

When I think about TV, books, and entertainment and culture more generally, I find myself siding with arrangements that strengthen the creative people who actually make these great works, and the talented executives who are able to identify and nurture that creativity. I’m glad that HBO, which puts out a premium product if ever there was one, has retained such control over how it distributes its content; I’ve been using the HBO Go service almost daily since it has come to the Xbox 360, and confess that my perception of the brand is only strengthened, strangely enough, by being forced to access HBO content under an HBO banner, on HBO's terms. We don’t know yet what exactly DirecTV Everywhere will look like--it’s currently being tested--but if Starz, which also has produced great TV in recent years (to wit, the immortal Party Down), has negotiated both better financial terms and greater autonomy in this new arrangement, then bully for it.

If the TV business is playing out as farce, so be it. Let’s just help steer it clear of tragedy.