Lessons To Learn From Failed Streaming Services

31st October, 2018 by

The internet’s short but volatile history is littered with doomed enterprises and short-lived brands. Back in the early Noughties, a world without Geocities, AOL, and Friends Reunited would have seemed inconceivable, yet all three subsequently failed.

The streaming industry is often thought of as a recent phenomenon, but its growing pains have mirrored those of the wider internet. From peer-to-peer services like Napster through to Netflix’s antecedents, these are some of the failed streaming services littering the footnotes of history. More importantly, each tale offers a salutary lesson to anyone planning to set up a new streaming service…

Kazaa. Founded: 2001. Folded: 2012.

The story: Many people were introduced to peer-to-peer file sharing through Kazaa Media Desktop. However, every user was technically an internet pirate, exchanging MP3 files, videos, and programs without permission. Kazaa’s founders always claimed their software couldn’t prevent one-to-one copyright infringement, denying responsibility for user activity. Content providers disagreed, indiscriminately suing individual users and Kazaa itself.

The lesson: Always ensure your streaming service adheres rigidly to copyright laws in every nation it’s available in. Otherwise, endless lawsuits and negative publicity will ensue.

OnLive. Founded: 2010. Folded: 2015

The story: Subscription-based cloud gaming service OnLive was a Steam-style platform, making hundreds of games available for users to stream onto web-enabled devices. Unfortunately, their hugely expensive servers couldn’t compensate for the miserable domestic connection speeds available at the time. OnLive collapsed with just 1,600 concurrent users, despite claiming to have a thousand times as many active users.

The lesson: Early adopters run a high risk of failure, especially if the domestic hardware isn’t always up to the job. Today’s 4G and broadband speeds are woefully inadequate for a 4K streaming service, for instance.

Rdio. Founded: 2010. Folded: 2015.

The story: Despite mirroring the trajectory of OnLive, Rdio didn’t push any technological boundaries. Instead, it evoked the golden age of radio, hosting ad-free music subscription services. Fatally, it failed to offer an advertising-funded free service, driving competitors into the arms of freemium rivals. Rdio was losing $2 million a month when rival Pandora Radio purchased it for $75 million. It ceased broadcasting five weeks later.

The lesson: The freemium business model is the best way to attract and retain customers. If they’re happy with the product, many will upgrade their subscriptions in exchange for an ad-free experience.

Seeso. Founded: 2016. Folded: 2017

The story: Less than a year separated the arrival and departure of American streaming service Seeso. The concept of offering unlimited access to comedy programming for $4 per month seemed reasonable on paper. Unfortunately, this failed streaming service was launched as Netflix rolled out movies, dramas, and documentaries. Crucially, Netflix also had more comedy shows (and produced more original content) than the genre-specific Seeso.

The lesson: Pigeonholing a business rarely permits scalability. Amazon Prime and Netflix broadcast most forms of pre-recorded content, rather than restricting potential subscribers to niche offerings.

PonoMusic. Founded: 2015. Folded: 2016 (though not officially)

The story: Legendary musician Neil Young was ideally placed to develop a high-definition music download service, eschewing compressed 320Kbps MP3s in favour of lossless FLAC/WAV/DSD files. His subsequent lack of interest was exposed in 2016 when Young’s latest single was exclusively released on Tidal. PonoMusic has been offline for two years, with a desultory website FAQ promising a relaunch of this failed streaming service.

The lesson: If you’re going to launch a service, wholehearted commitment is required. Duplicitous deals with rival platforms will undermine the integrity of everything you’re trying to accomplish.

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