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Free TV-Show Streaming Hurts Online Sales, Research Finds (torrentfreak.com)

Posted by msmash on from the shape-of-things dept.

New research from Carnegie Mellon University shows that online piracy is not the only worry for TV distributors. Based on Downton Abbey streaming and sales data provided by PBS, as reported by TorrentFreak, the researchers find that free legal streams can significantly reduce download sales. However, that doesn't necessarily mean that free streaming options should be banned. From the report: The researchers were able to estimate the impact in a natural experiment, since PBS was required to pull the free streams for all episodes at the same time. This means that some were streamable for more than a month, while others only for a week, or two. In addition, they had sales data for several seasons, allowing them to make an alternative comparison between years, where the streaming windows varied. In both cases, they show that free streaming cannibalizes download sales. "Our analysis in our primary specification indicates that availability in the free streaming window reduces EST sales by 8.4%. Using an alternative specification we find that free availability reduces EST sales by 9.9%," they write. The negative effect is not unexpected. However, it doesn't mean that it is wrong to offer free streaming in the long run, as there are several positive side-effects. That's where the puzzle starts to get complicated.

43 of 67 comments (clear)

  1. DUH! by Anonymous Coward · · Score: 4, Insightful

    You don't say.

    1. Re:DUH! by ClickOnThis · · Score: 1

      In other news ... water is wet. Film at 11.

      --
      If it weren't for deadlines, nothing would be late.
    2. Re:DUH! by pr0fessor · · Score: 3, Interesting

      I'm sure that other companies have already figured out that free and legal streams offer an addition avenue for advertising look at CW they have a lot of their current content provided as a free stream with ads then when it goes to netflix or dvd at the begging of the next season they take down the old content.

    3. Re:DUH! by tripleevenfall · · Score: 3

      If there isn't a free streaming option, most people will either (a) Pay, (b) wait for Netflix or whatever, (c) make appointment to watch live or use DVR, or (d) decide they don't want to pay and don't watch. Probably in that order. Very few average people will know how to pirate or make an effort to do so.

      It's hard to see how a meager amount of revenue from streaming advertising could ever make up for the loss of people who choose options A, B, or C. Therefore, not having a streaming option makes the most sense.

      You could use it for promotional purposes, like only having select episodes online, but they still have to get paid.

    4. Re:DUH! by The-Ixian · · Score: 2

      Why is it always "at 11"? That is way too late to start into a film...

      --
      My eyes reflect the stars and a smile lights up my face.
    5. Re:DUH! by The-Ixian · · Score: 1

      If there isn't a free streaming option, most people will either (a) Pay, (b) wait for Netflix or whatever, (c) make appointment to watch live or use DVR, or (d) decide they don't want to pay and don't watch. Probably in that order.\

      My order is b > a (unless it is too expensive) > e (redbox) > d

      too expensive = forcing you to BUY the movie instead of allowing rental.... newp not gonna do it.

      Also, I can count on my right hand how many TV shows I would be willing to shell out for a season pass... that is like 3 months worth of streaming right there...

      --
      My eyes reflect the stars and a smile lights up my face.
    6. Re:DUH! by squiggleslash · · Score: 1

      It's actually an article of faith among some here that having your content available to download for free doesn't in any way affect your sales negatively, an argument frequently used as a justification for mass copyright infringement.

      The presumption people who make the argument usually have is that people download what they want to test it, and then buy the stuff they think is good. I'm not convinced, but there you have it.

      --
      You are not alone. This is not normal. None of this is normal.
    7. Re:DUH! by AvitarX · · Score: 1

      I suspect the actual list would be C B A (for people with cable), or B A C (for those without).

      It only impacted sales by 10%, and I don't see people not paying for cable paying for shows (I type this as someone that has once, but probably won't again, the price was just too steep).

      There's a lot of entertainment out there, and very little of it is must watch (which I'm defining as enough people in your social circle watch it knew that you need to watch it when you can talk about it).

      Until online ads get the same money per viewer as TV ads it won't really work though (and I really don't get why they don't, in theory they should be more targeted and pay more).

      --
      Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
    8. Re:DUH! by chipschap · · Score: 1

      It's actually an article of faith among some here that having your content available to download for free doesn't in any way affect your sales negatively, an argument frequently used as a justification for mass copyright infringement.

      So sales are affected negatively by free legal streaming, though under 10%. No surprise; I actually might have thought the lost sales would be substantially higher.

      But the illegal download argument is different (note that I don't claim that copyright infringement is acceptable). Illegal downloaders likely wouldn't buy the content anyhow, so the lost sales would seemingly be small or even negligible.

    9. Re:DUH! by squiggleslash · · Score: 1

      But would people who stream it for free watch it anyway? I don't really see any reason to suppose the communities would be that different.

      --
      You are not alone. This is not normal. None of this is normal.
    10. Re:DUH! by pr0fessor · · Score: 1

      I don't have cable TV the options I use in order is (a) Netflix (no commercials) (b) Channel Streams (with ads) (c) buy the dvd (or redbox I do this a lot for movies) or paid stream (d) I don't really care enough to want to watch it.

      (b) has plenty of options available on the roku if you can find the good ones buried in the random garbage

    11. Re:DUH! by Anonymous Coward · · Score: 1

      c.5) Go to the Library.

      There is more television then I can ever watch at my library and I can get anything (produced worldwide) within about 6 months to a year for the less popular shows. No money down.

      For those who live near a big library and are willing to delay gratification, there is an option for TV content that is cost-free, ad-free, legal, unlimited, unedited, high(est) quality, low bandwidth, low-tech and time-shifted to fit your schedule.

  2. The obvious solution by Calydor · · Score: 3, Interesting

    Make the first part of the first season free for streaming. Like, the first four-six episodes so you can get a taste for the show.

    Is the show good? People will buy the rest.

    Is the show bad? People will not give it money it does not deserve.

    Win-win.

    --
    -=This sig has nothing to do with my comment. Move along now=-
    1. Re:The obvious solution by Anonymous Coward · · Score: 1

      Hahaha. That is the exact opposite of what they want. They want you to PAY to see if it is any good and if it is not, they will go find something else for you to PAY to see if it is any good. The point is, you are paying 100% of the time. They do strive to eventually create a good show but they don't want the risk of failure on their hands. This is the past TV (and movie) model.

      If they were judged(paid) ONLY on their successes they would earn a lot less money.

    2. Re:The obvious solution by gfxguy · · Score: 1

      So honest people who respect the rights of others will buy the rest. The others aren't causing loss of sales, although they are being selfish and greedy.

      --
      Stupid sexy Flanders.
    3. Re:The obvious solution by gfxguy · · Score: 1

      This already happens with a lot of shows; on Amazon Prime, for example, the first season (or few seasons) of a show are available for free, but you need to pay for the more recent or final seasons. True Blood, for example... all the seasons except the last (or last two, I forget) were free. Sadly for HBO, the last two seasons were the ones not worth paying for.

      --
      Stupid sexy Flanders.
    4. Re:The obvious solution by freeze128 · · Score: 1

      How many shows started out really good, but then got really lame? I bet you can name a few.

    5. Re:The obvious solution by gfxguy · · Score: 1

      See, the difference is that it's just entertainment media - your entitlement mentality is what is helping making the world a shithole. Thanks, douchebag.

      --
      Stupid sexy Flanders.
    6. Re:The obvious solution by Darinbob · · Score: 1

      No, if the show is good and the price is inexpensive, then people MAY pay for the rest. However the prices are absurd at the moment.

    7. Re:The obvious solution by Darinbob · · Score: 1

      It's not free on Amazon Prime. You have to pay for that. True, there are shows on Amazon Prime where you have to pay extra but that's not the same as the other shows being free. It's $99 a year or $10 a month or something like that.

  3. Six of one.... by gfxguy · · Score: 4, Insightful

    I will pay a reasonable price (*) for commercial free episodes of the shows I like. I mostly use Hulu with the commercial free option, and would pay double if they actually had more of the content out there. Now things are going to disparate services, or wholly owned services (likes individual apps from networks themselves), and all without even the option of paying for commercial free. There's no commercial free option for Sling, there's no commercial free version for PS Vue... why pay for a service and still be saddled with commercials? At the same time, iTMS style per-episode pricing adds up too quickly to make it worth it.

    At the same time, neither will I illegally download someone else's IP. I don't have the right to unilaterally take that away from them just because I don't want to pay, but if they made it easier and more reasonably priced to get the content legally then it's not hard to imagine they'd be increasing their sales.

    Of course, some selfish cheapskates wouldn't pay no matter how reasonable it was, but then they wouldn't be losing out on the sales from those people, either.

    So yeah, I like the Walking Dead... and I will wait until next year to watch this year's episodes commercial free on Netflix. I don't care about spoilers, and I'm generally a patient person - especially when it comes to something so inconsequential as TV shows.

    --
    Stupid sexy Flanders.
    1. Re:Six of one.... by OffaMyLawn · · Score: 1

      I get your point about subscription services still having advertisements. Amazon Prime stuff has started popping ads at the beginning of shows when I watch them, but they're relatively short and not inserted into the middle of the stream so they do not bother me.

      I'm not entirely sure SlingTV or Playstation Vue could go ad free though, given their model is just to live stream the actual broadcast channel.

    2. Re:Six of one.... by gfxguy · · Score: 4, Interesting

      Ah... the single ad at the beginning of the show doesn't really bother me. I have prime, too, and there are a couple of Hulu shows that do that, too, even if you have the commercial free option. It really doesn't bother me. I also don't need to watch the show live, but right after it airs, or the next day, or even the next week is fine for me. For some shows, Hulu will post it immediately after the broadcast ends; for others it's the next day. The problem is Hulu only has about a quarter to a third of what I would like, but I have found originals that are good, too, and it's only $13 month for the commercial free subscription. I would pay $50 if it had AMC (Walking Dead and Preacher) and a handful of other shows.

      --
      Stupid sexy Flanders.
    3. Re:Six of one.... by cayenne8 · · Score: 1

      There's no commercial free option for Sling, there's no commercial free version for PS Vue

      Hmm. I forgot about how it is with SlingTV...but with PS VUE, I have most all my shows as 'favorites' and it gives me the DVR functionality on them...its pretty trivial to skip the commercials.

      --
      Light travels faster than sound. This is why some people appear bright until you hear them speak.........
    4. Re:Six of one.... by gfxguy · · Score: 1

      Is it? The experience I've had with systems like that (although I don't have Vue) is that sometimes you can skip, sometimes you can't. Usually you can't.

      --
      Stupid sexy Flanders.
  4. Shocking! by mattyj · · Score: 4, Funny

    I'm totally surprised to hear that when given a choice between free or paid, people pick the free, legal stream. I wonder how much that study cost them. I'm glad they have a crack team of scientists verifying common sense.

    1. Re:Shocking! by Anonymous Coward · · Score: 2, Insightful

      I wonder how much that study cost them. I'm glad they have a crack team of scientists verifying common sense.

      Scientists verify common sense because it is frequently wrong.

    2. Re:Shocking! by Saithe · · Score: 1

      This study cost the MPAA $1 million. Bought and Paid study. https://torrentfreak.com/mpaa-...

  5. Product placement by tepples · · Score: 1

    There's no commercial free option for Sling, there's no commercial free version for PS Vue

    Would you prefer $200 per month? Because that's what Sling and the like would cost if every channel were as expensive as HBO.

    why pay for a service and still be saddled with commercials?

    What would the film The Wizard be without commercials for NES games?

    1. Re:Product placement by PRMan · · Score: 1

      Cable's already almost $200 a month, and it has commercials.

      --
      Peter predicted that you would "deliberately forget" creation 2000 years ago...
    2. Re:Product placement by Anonymous Coward · · Score: 1

      Sure. Just let me choose the channels I want. Maybe I don't need six channels of ESPN.

    3. Re:Product placement by gfxguy · · Score: 1

      Hulu only gives me about a third of the shows I want (although some of the original shows are quite good, too), but the commercial free Hulu subscription is only $13 a month. Yes, I'd pay $50 to get all the shows I like legally and commercial free.

      --
      Stupid sexy Flanders.
    4. Re:Product placement by squiggleslash · · Score: 1

      You're being ripped off. Our satellite is about $60 per month, that includes a DVR and all the other things you'd expect but I have a gut feeling cable companies still charge extra for like HD.

      --
      You are not alone. This is not normal. None of this is normal.
    5. Re:Product placement by tepples · · Score: 1

      Just let me choose the channels I want. Maybe I don't need six channels of ESPN.

      Local ABC affiliate: $20/mo
      ESPN, Disney Channel, Freeform, A&E, and several others: Included at no additional charge with ABC subscription through your participating multichannel pay TV provider

      Would you accept such a model?

  6. As someone who streams, legally.... by mark-t · · Score: 4, Insightful

    All I can say is *DUH*.

    Why would I pay to download episodes on itunes or whatnot of the same TV shows that I can stream entirely legally for a week following the broadcast from the tv station's website? While I do have to put up with commercials, the online ads seem to be nowhere near as insufferably long or as frequent as the ads seem to be on television these days (although they are unarguably more repetitive).

    --
    File under 'M' for 'Manic ranting'
    1. Re:As someone who streams, legally.... by Cro+Magnon · · Score: 1

      When I tried free Hulu a few years ago, the ads were frequent, repetitive, and glitchy (I got caught in an infinite loop of ads), and though other than that loop, they were shorter than TV ads, I found them even more annoying. It sounds like the online ads are the same, except maybe for the glitch. To me it's well worth paying for Hulu (ad-free) to avoid the crappy commercials.

      --
      Slow down, cowboy! It has been 4 hours since you last posted. You must wait another few hours.
    2. Re:As someone who streams, legally.... by Solandri · · Score: 1

      That's probably it right there. AFAIK the streamed PBS shows do not include ads, so they're identical to the downloaded version. In that light, PBS probably isn't a good way to test the effect of streaming on sales, since a lot of the people opting to stream PBS probably just don't want to bother with downloading and saving the video first. While purchasers of, say, shows available on Hulu might be trying to avoid the ads.

      In fact, try as I might, I wasn't able to find these purported paid download version of shows on the PBS website; only DVD and T-shirt sales. There are free downloads of some older episodes, but I could find most of their library only as a stream. There was one Frontline episode I really wanted as a permanent downloaded copy and was willing to pay for, but I wasn't able to find any way to download or buy it except as non-HD DVD. I ended up downloading a copy someone had put on YouTube.

  7. Re:Ursine Defecation Rife in Woods, Research Finds by kelemvor4 · · Score: 1

    Downton Abbey is shit anyway. It's not even worth it free.

    You speak the truth.

  8. Re:Fan Base Development by bill_mcgonigle · · Score: 1

    Without the free streaming how would there be any fans?

    I have several New Yankee Workshop books but never paid to watch Norm on TV.

    Fast-forward 15 years, and my daughter has never directly paid for a Dr. Who download but her room is full of merchandise. Heck, her closet door is a 3/4 size Tardis.

    Since they pulled it from Netflix, though, she hasn't bought any more as it wasn't fresh and exciting in her mind. Now she's on to YouTuber merchandise (I'll let you in on a little secret - she doesn't pay for YouTube either).

    I don't get why this is hard to understand, but then again the PBS/NPR funding model has always been to DoS themselves and hold their own programming ransom.

    --
    My God, it's Full of Source!
    OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
  9. Re:Ursine Defecation Rife in Woods, Research Finds by The-Ixian · · Score: 1

    It's an acquired taste for sure. But I really enjoyed it. Still haven't seen the latest season though because you have to pay for it still (actually, this may have changed now. I haven't checked in a few months).

    --
    My eyes reflect the stars and a smile lights up my face.
  10. Money lost by future+assassin · · Score: 1

    I fucking hate articles that point out how some industry is loosing money because of some social attitude change or say pirating. The money doesn't just magically disappear from the world if goes into other sectors of the market whether it be more alcohol on the weekends or someone buying more food or get this, putting it into a savings account and not spending it at all.

    --
    by TheSpoom (715771) Uncaring Linux user here. I have nothing to add to this but please continue. *munches popcorn*
  11. street corner wisdom by frovingslosh · · Score: 1

    Giving it away free hurts sales. Prostitutes could have told them this and saved a lot of research. An analogy that has even more meaning when you consider the TV distributors involved.

    --
    I'm an American. I love this country and the freedoms that we used to have.
  12. Is it though? by voislav98 · · Score: 1

    Presumably PBS paid money for the rights to air the show, including streaming it online for a limited time. That revenue has to be offset against the reduced online sales revenues. With this methodology almost anything will reduce online sales revenue. Caveat: methodology assumed from the Torrentfreak summary not from the TFA which is paywalled.