With cable and satellite subs flat and the telcos struggling to grow a pay TV business, online video is thriving - even the pay subscription kind. The cable guys and telcos can blame the recession, but there’s still business to be had if you give people what they want: a movie anywhere there is an internet connection for $9 a month. The combination of online viewing with a DVD in the mail, Netflix managed to grow its customer base by more than 1 million in the last quarter. If the movie studios would allow, the DVD could be done away with all together.

The results reflect the growing popularity of Netflix plans that bundle DVD rentals with unlimited video streaming over the Internet for as little as $9 per month. Netflix’s success contrasts sharply with more traditional home video options such as Blockbuster Inc. and Movie Gallery, which are closing hundreds of their stores and struggling to attract traffic to the locations still open.

Netflix added more than 1.1 million customers during the quarter — the most in any three-month period in its history. It took Netflix four years to attract its first 1 million subscribers after launching its rental service in 1999. (Yahoo)

We keep hearing Apple wants to add a subscriber model to its iTunes walled garden with the video content as its main feature. Apparently, network TV suits aren’t buying the idea. With an open internet to peddle shows  on as well as free to air, what do the networks need with what amounts to a cable operator delivering content via the very same Internet? If Apple can conjure up yet another cute device like the iPhone, the idea could be viable. Having said that, I have to wonder how long the most devoted Apple fanboys  will accept being limited to the iTunes ghetto for their content.

Apple is courting owners of US television networks, including CBS and Walt Disney, in the hope of launching a subscription television service over the internet next year, people familiar with the discussions said.  (FT)

The service is expected to be offered over Apple’s iTunes digital entertainment store, which sells movies and TV shows, but does not offer them for a recurring monthly fee.

Roku had been doing a brisk business with it’s  little $99 set top box when it had Netflix, MLB and Amazon on board as content providers. Recently it’s been adding channels at a brisk pace, and most of the new ones are free. They include Revison3, Blip.tv, Motionbox, Mediafly, Twit.tv,  Facebook Photos, Flickr, and Mobiletribe.

While these content channels are all of the new media variety, I don’t think it will take long for the other shoe to drop with old media getting into the act too as the exodux from cable TV gains steam.

More info is available on Roku’s site.

Disclaimer: Third Pipe is a Ruku affiliate, however we received no compensation for publishing this post from Roku or any other source. Third Pipe receives a small referral fee when a reader buys a Roku product via our links.

Google appears to be betting big on the growth of online video. With RJ jacks becoming almost as common as dirt on larger consumer TV’s it’s probably a good bet. Online video will continue to grow exponentially, with available bandwidth becoming the most limiting factor.

Google and On2 Technologies jointly announced today that they have entered into a definitive agreement under which Google will acquire On2, a developer of video compression technology. The acquisition is expected to close later this year. On2 markets video compression technologies that power high-quality video in both desktop and mobile applications and devices and also holds a number of interesting patents.

Some of its codec designs are known as VP3, VP4, VP5, TrueMotion VP6, TrueMotion VP7 and VP8. Its customers include Adobe, Skype, Nokia, Infineon, Sun Microsystems, Mediatek, Sony, Brightcove, and Move Networks. On2, formerly known as The Duck Corporation, is headquartered in Clifton Park, NY.

Under the terms of the agreement, each outstanding share of On2 common stock will be converted into $0.60 worth of Google class A common stock in a stock-for-stock transaction. The transaction is valued at approximately $106.5 million. (Tech Crunch)

Making the most of available bandwidth is a good defensive move for anyone distributing content online. Never the less, lack of available last mile bandwidth will continue to keep a choke hold on how much content can be delivered to consumers.  I have to wonder how long Google and other content producers and distributors will tolerate the duopoly limiting the potential to  grow their businesses going forward.

It’s all about open source. Wikipedia is an open source true believer and the first with real muscle to get behind open standards in online video. Are Flash and Silverlight in trouble? No way. Never the less an open platform being deployed on a portal as significant as Wikipedia is bound to keep them from becoming too closed.

The current IPTV champ has already inked deals for international content from Indian and Britain. The interesting bit is they may return the favor and take their show/services on the ‘Road to Morocco’. –

Of course, the idea is to change this. Speaking with The Financial Times, Andy Forssell - Hulu senior vice president of content acquisition and distribution - said that the company is in the midst of discussions to launch the site in “six to eight” of the leading broadcast markets.

We’re not sure why he’s confused about numbers seven and eight. But there you have it. And the company’s new British and Indian deals are at least a small step towards the site’s internationalization.

Hulu also argues that these deals deliver content that most Americans haven’t seen. But knowing Americans - a race of people who are interested in themselves - they aren’t likely to see it now either. Ex-pats? Sure. Forssell also told The FT that the company has been in talks with The Beeb and ITV about pacts involving their shows as well.

If I were them I would do it. There are some international markets far less regulated and mind controlled by the ISP’s than here in the US.

linky.

Hulu is emerging as front runner in the online video space. With the addition of Disney programming the megaportal may be unstoppable. The carefully indexed site’s diverse offerings, good video quality and tolerable level of advertising are making it the site of choice for online viewers.

This means that TV shows from Disney-owned channels like ABC, SoapNet, and ABC Family will be coming to Hulu. Among them are “Lost,” “Grey’s Anatomy,” “Ugly Betty,” and “Scrubs.” There will also be Disney movies available on the ad-supported streaming video site, but a press release did not name any of them. Content will be available “soon,” the press release explained.

Reports started to surface about a month ago that Disney was in talks to join Hulu.

Robert Iger, president and CEO of the Walt Disney Company, will take a seat on Hulu’s board of directors, along with Anne Sweeney, co-chair of Disney Media Networks and president of the Disney/ABC Television Group, and Kevin Mayer, executive vice president of corporate strategy, business development, and technology at Disney. (Cnet)

Hulu is something any of the larger cable and telco operators could have easily done. I think the telcos will have the most explaining to do if shareholders ever grasp that. For a fraction of what thay have spent on closed IPTV systems, the telcos could have been riding the wave into the future instead of sinking  into the past.

Bucking the old media odds, the big TV networks are discovering they can find more viewers online. When broadband goes mobile, there even a bigger opportunity for content owners if the carriers don’t choke the pipes.

CBS seems to get it. The future is in both long tail archiving  and event driven streaming of content. After making a ton of money with the Final Four, CBS is hoping the get the rights to offer the next Superbowl online.

The network made $30 million off streaming the recent NCAA basketball championship and is eager to apply the model to the Super Bowl.

The NFL hasn’t agreed, but according to Business Week, organization execs were quite happy with their experiment streaming regular-season games with NBC last year. They found that online viewership didn’t detract from TV viewership, and in fact as many as 80 percent of the online viewers were also watching the game on television. The streams offered four additional camera angles not seen on-air. (Miami New Times)

If you run an old media concern, you can probably monetize every bit of content that you have the rights to by offering it online. Advertisers only pay when a program is actually viewed, making it an easy buy in tough times. Offering complimentary or enhanced content for an event will certainly add viewers and new ad space. CBS is onto something here. Other old media types who ignore this kind of opportiunity do so at their own peril.

I’m sure Time Warner wants to spin its activities as those of a great innovator. There’s the ridiculous bandwidth caps in select markets in Texas. Then there’s offering HBO online. It’s a great idea, but horribly executed.

Worried that the proliferation of free video on the Web, the distributors want to make available an online library of TV episodes, but only to customers who pay for a cable or satellite subscription. In Milwaukee, Time Warner Cable is already testing a similar service. Through the one-year-old HBO on Broadband product, cable customers who already pay for HBO are able to log in to a software program and select which TV shows and films they want to download. The Internet content mostly mirrors what HBO makes available through its cable video-on-demand platform; shows and films rotate in and out of availability, and they are automatically deleted from the computer when they expire. (New York Times)

Online programming is the future of television. The horizon for when it will overtake broadcast and cable will take the entire industry by surprise. Offering HBO online to subscribers in a limited fashion may help prop up the traditional cable business for now. When the TVoIP wave crests, look for HBO to go it alone. It will be yet another missed opportunity for the cable industry.

DirecTV is taking a baby step towards offering NFL programming via a broadband connection. Of course this puts them squarely at odds with most broadband providers. This could be the beginning of a war between ISP’’s and content providers. Increasingly, content providers are discovering an giant avenue for growth outside o pay TV’s walled garden. Broadband providers, however, operate these same walled gardens as a major profit center.

The new deal between DirecTV Group Inc. (NYSE: DTV) and the NFL for the NFL Sunday Ticket package highlights some interesting implications for network neutrality. Starting in 2012, the new deal allows DirecTV to market a broadband version of the package to non-DirecTV customers who can’t access their satellite signal for whatever reason. (As a side note: How in the world will that be enforced?) Conceivably, broadband customers can then purchase the package and have it delivered via the Internet, rather than satellite.

So here’s the rub, if I’m a telco TV (or cable) provider who competes with DirecTV, why should I be forced to carry their revenue-generating programming package via broadband? A commenter on my Telecompetitor blog compared this to CBS offering NBC programming on CBS for free, with the caveat “It’ll never happen.” OK, not an apples-to-apples comparison, but you get the point. (Light Reading)

Whether broadband providers like it or not, a la carte programming is coming via TVoIP. The smartest of them (if there are any) will recognize this and get into the game. New laws, regulations and more are irrelevant, content wants to be free to be shown with ads or sold to anyone anywhere.

While I’m on the subject of rules and regs. There’s only one way to insure net neutrality in a duopoly market. That is to require broadband providers to spin off any content businesses. Until that happens equal access for all content providers will never happen.