The media industry is one of the largest in the world, with a predicted gross of $771 billion in 2019 just in the U.S (SelectUSA, 2016). With this amount of money in the industry it is easy to see why authors create new content, due to the large source of income. However when new content is made it will have an author; who is the creative mind behind the project, and an owner; who owns the rights and licences to product. This segregation is due to intellectual property laws, where owners and authors are regarded as separate (Keller, 2016). These laws create issues around who the profit of the content should go to. These issues have become even more complex with the introduction of multimedia platforms and online streaming sites as the owners of content lend out licenses to these sites which allows them to generate their own profits. This set up will affect new content creators due to the way ownership and profits are distributed, and may discourage them from their work.
One online streaming site that uses licences is Netflix. It started in 1997 as a DVD rental service but has later developed into one of the largest online streaming services for TV and film, with over 86.7 million subscribers worldwide (Smith, 2016). Users pay a monthly subscription to gain access to thousands of TV shows and films through smart TV’s, laptops, games consoles, phones and tablets (Help Centre Netflix, 2016).
An example of a multimedia platform is Steam. Steam, opened in 2003 for the general public, is predominantly a gaming platform owned by Valve where its users can play thousands of games or produce their own content. It is has a user base of 125 million worldwide in 26 different languages and be accessed through Microsoft, Linux and Apple operating systems (Translation.steampowered.com, 2016).
The way licences for content work will affect how sites such as Netflix and Steam are run and the type of content that they provide, this is due to the availability of these licenses and the issue of who owns the rights to the content on their respective sites. This essay will explore how the ownership of content and their licenses work on Netflix and Steam and how they differ. It will also look at how this affects new authors of art and apply this to a real life example in Five Nights at Freddy’s and look at how this has been affected.
- Ownership and Netflix
Netflix uses licencing agreements with production companies and license owners in order to be able to show a range of TV shows and films. Netflix will purchase these licences, which will vary from show to show, based on the popularity and ratings of the specific media. This process means that Netflix does not own any of the content that it presents on its platform unless it has been stated otherwise. The user will pay a monthly fee of £5-10 in order to access all of the content on the platform. All of the revenue generated from these subscriptions goes directly to Netflix, which they can use to negotiate and purchase new licenses in order to keep the user base happy. (Help Centre Netflix, 2016).
This process is beneficial to the users of Netflix, as it allows for a wider range of popular content for a small cost, giving the user a more enjoyable experience for a lower cost compared to a satellite television provider. The pay monthly subscription also negates the need for advertisements, which can be conceived as annoying, as the subscriptions generate massive revenue for Netflix. In fact in 2015 Netflix’s total revenue reached $6.78 billion (Miglani, 2016). These contracts also allow for relationships to be built up between Netflix and production companies to get licenses for exclusive content. This can be seen with Netflix’s partnership with marvel studios and Disney, as they have been given the licenses to show all of marvels TV shows exclusively on Netflix (Keyes, 2013)
However the way Netflix manages their licenses will also have a negative impact on them and their users. For example, Netflix having to buy their license from different producers may restrict what content they are able to show on their platform as they may be unable to buy licenses from certain providers. This could relate to the issue of regional licencing laws that restrict access of digital media to certain countries. These laws are why Netflix is not available in countries such as Syria and North Korea, due to US government restrictions (Westbrook, 2016), meaning that Netflix also cannot purchase licenses for content made in these countries. The cost of licencing may also restrict how many TV shows and films are available on Netflix at any time, as they can’t afford to purchase new licenses and up keep old ones. Netflix revealed to its shareholders that the budget for all licencing would exceed $6 billion in 2018 (Investopedia, 2016), which would exceed their total profit in 2015.
- How Netflix affect new authors of content
Netflix will generally buy licenses for shows and films due to their popularity (Help Centre Netflix, 2016). This process results in new creators of media having almost no chance to get there TV shows or films onto Netflix without them becoming popular beforehand. This means that their art will have to be written, funded and made before it is even considered to be put onto the platform instead of pitching to Production Company to get their content made (Miller, 2016). The only other option for new authors is to get their media produced by Netflix themselves as a Netflix original series or film. However this can prove even more difficult as Netflix chooses there shows based on the type of things that are popular with their user base and what gaps there are in the market for different shows and films (Leonard, 2013). This means that new authors must create media that fits these specifications whilst trying to apply their own authorship to the product. This proves even more difficult as the budget for licenses is so high for Netflix that they can only afford to produce a limited amount of original content a year.
- Ownership and Steam
Steam works as a platform for different game developers to present their media, meaning that steam doesn’t need to purchase any licenses for the games on their platform as it is down to the developers to put their work onto the network. Publishers will choose the pricing of the game, then users will proceed to only pay for what content they want. Around 30% of the sale goes to steam, with the rest of the sale going to the developer (Brightman, 2015). This system implies that Valve does not own any of the content on their platform unless it has been stated otherwise, which results in developers having the freedom to create restrictions for the games that they own. Since the introduction of Steamworks in 2008 nearly anyone has the potential to put their work onto the platform (Chirgwin, 2016) which has opened up the market for indie games.
The way Steam operates benefits its users as it allows them to only pay for what they want and making it arguably more cost effective, depending on the content they purchase. Steam also offers refunds on faulty or unwanted products within reason (Theregister.co.uk, 2016), which creates confidence within the community. Furthermore, Steam adds to their community feelings by including social media aspects to their platform such as live chat features and online friend’s lists, enabling its users to become more connected with other users and developers. In terms of a business perspective, Valve not having to pay licencing fees makes the platform a lot cheaper to run as they only have to pay for the upkeep of the platform, like simple running costs. This also allows them to invest in new features and hardware systems, with different partnerships such as their investment with HTC to bring VR onto their gaming platform with the HTC Vive, and bringing out a controller compatible with over 1000’s of their games on the platform (Store.steampowered.com, 2016).
However Steams operation may not be beneficial to all of its users as they would potentially pay more for less content. For example, a user on Netflix can pay around £7 for a month to access 1000’s of TV shows and films, but a user on steam could pay the same amount of money but for only one game. Although this may not be entirely accurate as the user could potentially play the game for a longer amount of time then they would spend using Netflix, which would therefore arguably make Steam more cost effective. Users could also become frustrated with developers applying their own rules and regulations to their own content, leaving some users feeling they have been unjustifiably banned (Theregister.co.uk, 2016), or unable to access the content entirely. This would be due to developers not being able to put their content onto the platform if they have restrictions or contracts with other platforms, or not wanting to sell their content on the platform due to Valve taking a high percentage of the profit (Brightman, 2015).
- How Steam affects new authors of content
Steam greatly benefits the authors of new content because it encourages them to make new creative art for their platform. They do this by offering many different integrations with their platform for the developers to use, such as Vive VR, Steam controller, and live chat features which allow for live in play mechanics like voting (Store.steampowered.com, 2016). Steam also offer opportunities for first time developers with their Steam greenlight scheme, which allows developers to showcase their ideas for new games. Developers can submit their games on the platform for a onetime fee off $100, which goes to the charity Child’s Play. Users can then vote for games they wish to be made. Once this occurs Steam will help the developer to make their game and present it onto the platform (Steamcommunity.com, 2016). This has allowed confidence to grow for new developers and encourages them to create more content as there is more chance of having their games released.
- How Netflix and Steam originals differ from their other content
Netflix buy the rights to exclusively show certain content on their platforms and even own produce their own content. They choose what they produce by seeing what their user base watches on a regular bases and try to match this with gaps in the market. However Netflix still doesn’t technically own any off its original exclusive content but instead pays for a licence which gives them the right to exclusively present these shows. For example Orange Is the New Black is actually owned by the production company Lionsgate TV, meaning they own the rights to all titled shows and get the revenue from DVD deals. This also means that Lionsgate TV allow for other platforms like Amazon Prime Video and Sky to be able to access the show after it has been released onto Netflix. Netflix are looking to change this, as a statement released to Bloomberg Business by CEO Reed Hastings said that Netflix would prioritize ownership of its original content within the coming years, aiming to launch 20 original series per year (Palermino, 2015). This attitude to producing new content will give more confidence to new authors as the release of more original content opens up more opportunities to sell their art to providers such as Netflix. Owning their own content will also allow for a larger revenue with DVD licencing and licencing to different providers, allowing for a larger budget for more original content.
In terms of Valve originals, it is stated on their website that all off their games and the games respective trademarks are property of the Valve Corporation under copyright laws (Store.steampowered.com, 2016). This means that any merchandise or licencing revenue created relative to their content goes directly to them. In terms of choosing their original content, Valve tend to take advantage of new technological advances and the popularity of their older games to develop similar experiences with integrations from new technology. This can be seen with the reveal of their VR experience with uses of their hit game Portal. In a podcast, Valve co-founder Gabe Newell was asked about revisiting old franchises. Newell said “If you think of it as each one of our franchises represents a tool … you just want to pick up the right tool at the right time” (McWhertor, 2016). This suggests that instead of investing into new games titles from different creators, valve will develop their successful games to integrate with their new systems such as VR. This creates issues for new developers as it proves more difficult to create new content under ownership with Valve, and suggests that they are preferred to uses systems like Steam greenlight instead.
- Case study: Five Nights at Freddy’s
Five Nights at Freddy’s is an Indie “point and click” horror game created by independent developer Scott Cawthon, which was released on 18 august 2014. Players must survive ‘five nights’ from 12AM to 6AM without being attacked by any of the animatronic characters, by watching security cameras and closing doors (Petitte, 2016). The game has been praised for creating fear with its simple mechanics, with one of the most popular youtubers markiplier, with over 15 million subscribers, stating that it was “…probably one of the scariest games I have ever played” (Markiplier, 2014). The game also proved a financial success with 4 sequels and a spinoff being released, allowing the franchise to generate over $27 million (Quora, 2016).
This example shows how Steam creates opportunities for new developers to create new content, as Scott Cawthon took advantage of the Steam Greenlight scheme to allow the game to be produced and marketed on the platform (Steamcommunity.com, 2016). With Valve also not owning the rights to the content, made through Greenlight, allowed the developers creative freedom to evolve the game into a multi-million dollar franchise with new characters and storylines. Furthermore, Valve taking a relatively high percentage of the profit generated from the game hasn’t impacted Five Nights at Freddy’s, as the product generated major profit. However this would affect less popular or less successful games, as the high percentage may result in the developer not making enough money to expand on their creative art franchise.
From this research, it can be seen that due to ownership and licencing laws the way content is distributed affects the content that is presented on these platforms. This will also affect how authors create new content. With Netflix having licenses to show content and currently not having ownership to their original shows, it could be harder for film makers to get their content onto Netflix. However Steam not needing to own licenses for content and with integrations such as Steam Greenlight, benefits can be seen for authors of new games.
When discussing the issue of Netflix restricting authors of new content, it could be said that it does, as to have work submitted onto the platform it has to be made and be successful. However Netflix are clearly trying to improve this by creating more original series, opening new opportunities for new authors. When looking at Steam, it is clear that it offers many opportunities for new authors, by allowing any level of developer to present their game on the platform and offering help and support through the community it has created.
However whether these platforms restrict authors seems to be more subjective towards individual content. Netflix seems to benefit owners more as they get payed for a set licence fee rather than relying on single sales, whereas Steam seems to be more for new authors with easy integration systems. When looking at Five Nights at Freddy’s it is clear that Steam didn’t restrict the author, but it could be argued that many other games go through the same processes and are not successful, suggesting that the success of authors is down to the quality of the product rather than down to the platforms themselves.
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