Roku, Netflix, Start Behaving More Like The Annoying Cable Giants They Once Disrupted

It's always interesting to watch one-time disruptors shift toward turf protection, apparently remembering none of the annoyances that drove their passion for disruption (and ultimate success) in the first place.

Once Netflix was as powerful as the telecom sector, it shifted its tone on issues like net neutrality. And as the now-dominant company has increasingly faced competitors, it has taken to nickel-and-diming its subscribers (see the recent rate hikes followed by fees for those who share passwords, a practice it once heralded as little more than free advertising).

Roku has also gone from pesky market disruptor to one of the biggest streaming hardware companies in the world. And their behavior has also, as you might have expected, started to resemble a lot of the cable companies that it once disrupted.

In the last year or two, Roku has been mired in contract standoffs with Google and AT&T as it tries to leverage its market share to take greater control of profitable streaming user viewing, CDN, and behavior data. That's resulted in a growing number of instances where users have lost access to certain streaming content on certain devices (something you're going to see a whole lot more of).

As Janko Roettgers at Protocol notes, many of Roku's contemporaries feel like the company may be getting a bit to big for its britches as it pushes for a bigger cut and more control:

Under the new terms, Roku keeps 45% of net advertising revenues. That's still less than the cut some competing platforms take, according to industry insiders. However, given Roku's size, the change has significant impact on the business of these channel providers, with one of the affected publishers calling it a bit of a money grab" in a conversation with Protocol.

As we noted last year, the future of streaming TV is looking more and more like traditional cable. Especially with the rise of free, ad-supported streaming TV channels (aka FAST") popping up on a lot of hardware. Roku wants to take advantage of the company's massive fifty percent streaming hardware market share to bend other sector companies to its will.

In a book forward in 2016, Netflix CEO Reed Hastings warned about the hubris of successful disruption:

Throughout my business career, I have often observed powerful incumbents, once lauded for their business acumen, failing to adjust to a new competitive reality," Hastings writes. The result is always a stunning fall from grace."

Like most executives, Hastings hasn't heeded his own warnings. Once you've achieved success and face the kind of young, hungry competitors you used to be, panic often sets in, and you forget what brought you to the top of the mountain in the first place. Especially under the thumb of Wall Street's demand for improved quarterly returns at any cost. And the cycle continues...