Very few animated shows have made a bigger name for themselves in the field of satirical comedy than South Park. South Park, created by Matt Stone and Trey Parker, is an animated comedy show that airs on Comedy Central, a cable network owned by mass media conglomerate Paramount Global.
South Park is no stranger to controversy. From being investigated by the Church of Scientology, to its criticisms of organized religion, South Park is well-known for its forthright social critiques. The show’s latest controversy stems not from its jokes, but from the streaming service that hosts it.
Rival media company, Warner Bros. Discovery, is suing Paramount Global for violating their agreement with Warner Bros. Warner Bros paid Paramount Global for the exclusive right to stream new episodes of South Park on its platform, HBO Max. According to the complaint, Paramount Global breached this agreement by putting new episodes on its own streaming platform, Paramount+.
Exclusive licensing agreements are powerful tools in the ever-growing streaming market, where giants like Netflix and Hulu are facing new competition against an increasingly diverse set of streaming services. Exclusive licensing agreements allow streaming services to secure the rights to stream tv shows and movies straight from producers, while preventing rival streaming platforms from streaming the same shows. Such agreements enhance a platform’s ability to stand out and compete in the marketplace by curating the best selection of shows and movies.
However, some media producers have taken this a step further, and chosen to pull the rights to stream their shows from other platforms—making these shows accessible only on their own platforms. For example, Comcast, which owns NBCUniversal, pulled its popular comedy show ‘The Office’ from Netflix and now hosts it on Peacock, their own streaming service. This move reduces transaction costs for Comcast and integrates their different stages of media production into one enterprise.
From production to streaming, and cable to satellite, one corporation can control every step of this process. Vertical integration, or the process by which corporations acquire other parts of the distribution chain, is a long-practiced business strategy in cable television. It has now expanded to the online streaming industry, incentivizing media companies to keep their media in-house.
The strategy is clear: media companies create their own streaming platforms to increase profits. These companies reap benefits from this strategy, cutting down on transaction costs and more efficiently transmit content that they produce. Streaming services like Netflix can attract subscribers by creating original shows which become popular via marketing and word of mouth, like BoJack Horseman. For shows like Game of Thrones or South Park, with an already widely recognized IP, media companies can pull content from other platforms to attract new subscribers to their own streaming services. As this creates value, shareholders benefit from greater profits, and regulators benefit by collecting greater tax revenue. In theory, consumers should benefit too, because prices will likely decrease as market efficiencies get passed down to consumers.
This is not the case. Previously, consumers could access a greater library of shows and movies by only paying for one streaming service. Now, the spread of exclusive licensing agreements and vertical integration means that consumers will pay for more streaming services to access the same library they used to. However, this may be a return to cable television, where subscribers to the largest streaming platforms will pay an equivalent amount to a cable subscription.
As the dispute over South Park demonstrates, the streaming industry is a competitive field and media companies are right to be protective over their shows and movies. While this is likely to increase economic value for companies who navigate this new competitive field successfully, the effect it has on consumers remains to be seen.