Streaming Platforms’ Exclusive Grip on Shows Is One of Modern Life’s Great Annoyances, But Things Could Be Worse

Absent these deals, smaller studios and streamers would suffer, TV might be less entertaining — and costlier

The video streaming world’s reliance on exclusive deals that lock shows and movies into a single platform requires a household with varied entertainment tastes to pay an increasingly high price. To watch Bridgerton (Netflix), The Mandalorian (Disney+) and Severance (Apple TV) requires three separate subscriptions. A Deloitte survey finds the typical household has four video streaming subscriptions at a combined monthly cost of $69. 

And keeping track of a family’s TV subscriptions has become a designated chore; every article on household budgeting, it seems, recommends canceling unused subscriptions.

UCLA Anderson’s Yihao Yuan, in a working paper, wades into this morass to sort winners from losers and warn that, without exclusive streaming contracts, we could, over time, end up with a market dominated by a few giants with greater control over content and pricing. He notes that it’s true, today, that exclusive contracts raise overall costs for households.

Yuan built a dataset of subscriber behavior and pricing from March 2021 to February 2022 — covering Netflix, Amazon Prime Video, Disney+ and Hulu. (Disney+ and Hulu operated as separate platforms during this period, though Disney was in the process of acquiring full ownership of Hulu; Max and Apple TV were not included.)

Exclusivity’s Current Tax: $24 a Year

Yuan estimates that under the exclusivity-heavy system — 87% of the titles in his database are exclusive to one platform — households get about $204 per year of perceived value: the difference between what households would be willing to pay for their streaming access and what they actually pay in subscription fees. This measure, known as consumer surplus in economic terms, would rise to $229 per household if exclusivity disappears, a modest 11% value add.

Yuan’s analysis suggests the roughly $24 cost of exclusivity is a function of households needing multiple subscriptions to sate their entertainment appetite and platforms being able to charge higher prices in this walled-off environment.

Yuan also documents that the consumer impact from exclusivity contracts is regressive and also hits large households differently than small ones. Lower-income households lose value because they must choose between paying for multiple services, which hits their budget, or going without desired content. Bigger households also can suffer economically because, despite the cost burden, they often subscribe to multiple services to satisfy the preferences of their numerous members. Wealthy households may load up on streaming, its cost exceeding the paper’s measure of received value, but they feel it less, of course.

Careful What You Wish for 

These assessments are based on the current marketplace. In today’s streaming ecosystem there are big and small studios producing content, and big and small streamers. Yuan posits that exclusivity is extremely important to the business viability of the smaller players. 

Small studios come out ahead, earning about 8% more under exclusivity than they would in a fully open, nonexclusive market, Yuan calculates. Because they lack the market power of the major studios, exclusivity lets them ignite bidding wars — playing large streamers against one another for limited content. Big studios, by contrast, earn roughly 6% less than they would without exclusivity. They already command strong bargaining power, so today’s exclusivity-driven market mainly limits how widely they can license their content.

The story for streaming platforms is even starker. Exclusivity gives smaller streamers a way to differentiate themselves. A must-have show (e.g,. The Handmaid’s Tale on Hulu) becomes their ticket to survival in a market otherwise ruled by size and scale. This is why, even though exclusive contracts are often expensive, they can still be worthwhile for small platforms. They don’t need a lot of exclusive hits — just a few can lead to their survival and success. In Yuan’s analysis, Hulu’s profit more than doubles in a world where exclusivity exists. 

With exclusivity, Netflix and Amazon Prime Video face intensive competition from Hulu, which limits their profitability. Netflix, by contrast, sees only a 1.6% increase, while Amazon actually loses about 5% under exclusivity, in Yuan’s calculations. 

By improving the fortunes of smaller studios and especially smaller streaming platforms, exclusivity effectively creates a market that invites entrepreneurs to give it a go, where it’s feasible for startups to enter and potentially become viable. Without exclusivity, that dynamic might gradually weaken — eventually leaving the industry dominated by just a few giants. For consumers that might be a world where we don’t necessarily need to subscribe to multiple platforms, but the shows are less varied, and without competition, the remaining streamers would have more opportunity to raise subscription prices.