The battle between IPTV and cable providers is about to begin as this Wired article intones. —
The stage is set for a showdown between television networks and cable/satellite TV services, thanks to the internet. It won’t happen overnight, but your monthly cable or satellite bill could eventually be replaced by a monthly bill from Hulu, an online service that streams TV shows on demand.
For $10 a month, viewers will reportedly have access to a wider selection of shows than the free, ad-supported version Hulu currently offers. The service would work on PCs and specialized devices such as the iPad, videogame consoles and set-top boxes. The company plans to test a version of this “Hulu Plus” subscription, an expected development, with select users as early as this month to find out whether they’ll will bite, according to sources cited by the Wall Street Journal and All Things Digital.
In order for consumers to pay for a video service like that, it will need to be reasonably comprehensive. So it’s no accident that the same week Hulu’s subscription plans came to light, a Bloomberg report surfaced that the company is talking with CBS, Viacom and Time Warner’s television studio divisions to add their shows. That would be on top of a line-up that already includes “Fox, NBC Universal, ABC, ABC Family, Biography, Lionsgate, Endemol, MGM, MTV Networks, National Geographic, Digital Rights Group, Paramount, PBS, Sony Pictures Television, Warner Bros. and more,” including Wired.com.
There is one piece that I believe will not bode well —
Cable and satellite are classic middlemen. When the internet meets the middleman, the middleman tends to disappear — or at least be replaced by a thinner middleman. We’ve seen it with record stores, classified ad-dependent newspapers, video-rental stores, bookstores and any other business that delivers something that the internet can deliver more efficiently.
If you look at the Supply Chain Collapse that have gone before, in industries like retail, trucking, warehousing, etc, there is no such thing as a thinner middleman. There were only dead middlemen. There is a twist to this scenario however. For IPTV to work one has to have a fat pipe. That means Cable, FIOS, or WISP as a provider. So the carriers may not be dead but they certainly will be wounded. So how does this all play out –
The content choices are going to explode here very quickly. The beauty is you may only pay for what you want. Out of a million choices you may only subscribe to 40 channels for $15-30/mo or less. I can’t wait.
It also makes Verizon’s choice to go with a Cable-like pricing model the wrong move. They should have derived the FIOS pricing on the cost to deliver the pipe as a data only service. Just like they have done for the last 150 years. Like the knight in ‘Indiana Jones’ related — “He chose poorly.” Indeed they did.
This leads duopoly providers to the dreaded dumb pipe. As long as we have a last mile duopoly heavily invested in closed content distribution, the dumb pipe will remain small, with constant attempts to impose limits. Something’s got to give!
If someone like Clear or any other WISP is capable of handling the demand of a Hulu like service for less than what cable internet costs then their fate is sealed. They will have to bust out of the closed pipe model or see their market shares dwindle. Especially in this economy where people are pinching pennies.
Unfortunately, the cable guys bought up enough of Clear to control how much it will compete with their networks. The telcos control most of the rest of the wireless bandwidth. Content owners will eventually break ranks, but it’s going to be very slow in the US because to the bandwidth cartel the feds have created.
My two cents, and I really do hope I’m wrong.
The last mile authority (both fixed and wireless) really needs to go back to the states where it will be a little more difficult for K street to control.