7 Business Battles That Bruised Consumers in 2012
Dec 14th 2012 1:00PM
Updated Dec 14th 2012 2:06PM
To some extent, these disputes are part and parcel of a healthy, competitive business environment. But when these fights escalate, it's often consumers who are left in the line of fire.
That was certainly the case in 2012, which saw protracted contract negotiations between cables companies and TV networks, labor disputes at major sports leagues, and rising tensions between tech giants. When it comes to business battles that caused pain to customers, here's our list of some of the year's worst.
Netflix vs. Starz
In September 2011, Netflix (NFLX) and Starz announced that they'd failed to renew the licensing agreement that gave Netflix the rights to stream Starz's movies and original series. Starz reportedly wanted Netflix to implement a tiered subscription system that would have required subscribers to pay a premium to access Starz's content; Netflix, having already faced a backlash for one price hike, refused.
Consumer Impact: The result was that at the end of February, series like "Party Down" and "Spartacus: Blood and Sand," not to mention more than a thousand movies, were removed from Netflix streaming. And because Starz controlled the rights to Disney movies, that also meant a lot of disappointed children as "Tangled" and the rest of the catalog vanished from the watch instantly catalog.
The good news for Netflix subscribers is that the company didn't take the defeat lying down: Earlier this month, it went directly to Disney to get the streaming rights to Disney's theatrical releases, regaining some of the content it lost when things went south with Starz.
NFL vs. Refs
The NFL was able to resolve its dispute with the Players Association prior to the 2011 season, but it just couldn't move the ball when it came to the labor dispute with its referees this year. As a result, the preseason and the first three weeks of the 2012 regular season were refereed by replacement officials who lacked pro football experience.
Consumer impact: Whether through tickets or cable subscriptions, NFL fans pay a lot for the product on the field. And most agreed that the product suffered significantly in the hands of the inexperienced replacement refs. Even President Obama publicly pushed for an end to the lockout as glaring mistakes by replacement officials began to pile up. The last straw came in a week 3 game between the Green Bay Packers and Seattle Seahawks, when, by blowing a last-second call, the officials gave the Seahawks an unearned victory in a nationally televised Monday Night Football game.
The resulting outcry prompted the NFL to hammer out a deal in time for week 4, but don't be surprised to hear fans griping at the end of the regular season if those early missteps wind up impacting playoff spots.
NHL vs. Players
Football fans should count their lucky stars: At least they're getting a full season of games. Hockey fans are currently suffering through an NHL player lockout that has already seen games cancelled through Dec. 30, and which threatens to wipe out the entire 2012-2013 season.
Consumer impact: Hockey isn't as popular as football in the U.S., but the impact of a full-blown player lockout on the sport's loyal fans far eclipses a few poorly officiated football games. (And they are loyal, too: As NPR sports commentator Frank DeFord noted this week, hockey fans tend to be athletically monogamous -- they don't much flirt with other team sports.)
Small businesses are suffering as well: In hockey-crazy Minnesota, restaurants and bars near the Minnesota Wild's Xcel Energy Center have seen revenue plummet and have been forced to lay off workers. With no end to the lockout in sight, fans and fan-supported businesses alike will continue to be caught in the crossfire.
Cable Companies vs. Networks
2012 also saw contract disputes between big cable providers and their TV networks. On New Year's Day, Time Warner Cable in New York began a blackout of MSG, the local sports network that carries the New York Knicks and New York Rangers, over a fee dispute. And later in the year, Dish Network subscribers stopped getting AMC after failing to agree on a new contract.
Consumer impact: The MSG/TWC spat came at the worst possible time for New York sports fans, as Harvard grad Jeremy Lin was taking the NBA by storm and reviving interest in the Knicks. Time Warner subscribers who wanted to watch Knicks or Rangers games had to watch at their local sports bars until the companies finally inked an agreement in mid-February.
The spat between Dish and AMC, meanwhile, stretched from June to October before a deal was struck. During that time, Dish subscribers missed out on the premiere of season 3 of "The Walking Dead," not to mention many episodes of "Breaking Bad." Customers also had to endure annoying PR efforts from both sides, with AMC encouraging viewers to call Dish with complaints and Dish CEO Charles Ergen petulantly insisting that no one actually watched AMC.
Google vs. Apple (The Maps Fiasco)
In September, Apple (AAPL) released iOS 6, its latest operating system for iPhones, iPads and iPod Touches. The most notable difference was that Google Maps was dropped as the default navigation app in favor of the new Apple Maps service.
Consumer impact: The new maps introduced turn-by-turn directions, but they also lacked both street view and transit directions, the latter especially crucial for urban iPhone owners. And there have been widespread complaints of significantly diminished accuracy, which led Apple CEO Tim Cook to apologize for the fiasco.
It's easy to see the map switch as an indirect result of the increasingly heated rivalry between Google and Apple. We think Google (GOOG) CEO Larry Page put it best in a recent interview with Fortune: "I think it would be nice if everybody would get along better and the users didn't suffer as a result of other people's activities," he said.
Fortunately, Google just released a third-party version of Google Maps in the app store, ending three months of suffering by iPhone owners.
Twitter vs. Instagram
In September, Facebook (FB) purchased popular photo-sharing service Instagram. Twitter, Facebook's biggest rival in the social space, responded by disabling a feature allowing Instagram users to import their Twitter contacts into the service. This month, Facebook and Instagram fired back by preventing Instagram photos from displaying within Tweets. Twitter founder Biz Stone responded with a snarky tweet directed at Instagram CEO Kevin Systrom.
Consumer Impact: The impact on users is fairly minimal, and if you don't use either service, you might not even understand what that last paragraph even means. In a nutshell, it makes it harder to share friends between the two popular services, and also makes it slightly more difficult for your friends to see the pictures you tweet using Instagram.
Compared with a lockout of an entire sports league or the disappearance of your favorite shows, that's a relatively small burden on consumers. But it's a good example of how even normal competition can make consumers' lives difficult. As The Economist points out, both services have a vested interest in keeping users on their respective sites as long as possible, and both moves certainly help in that regard. It's just unfortunate that this means making each service more closed off for users who would prefer to have a seamless social networking experience.
Hostess Management vs. the Bakers Union
Twinkies-maker Hostess closed its doors last month after struggling for years to regain its footing. While various management missteps have been blamed for its demise, it certainly didn't help that it failed to avert a strike by a bakers union comprising 30% of its workforce.
Consumer Impact: It's unlikely that Hostess's most popular treats will disappear for good, as there are more than 100 potential bidders interested in buying its brands. Twinkie the Kid will likely ride again, and Ding-Dongs will probably ding-dong again. But it will take a while to sort out the bids, and unless one bidder swallows the whole tasty operation, expect it to take even longer to divvy up the brands and resume production. In the meantime, there's been a run on Hostess treats at stores across the country, so if you've got a Ho-Ho craving, it might be a while before you can satisfy it.
Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.