All observers would agree that online video dramatically changes bandwidth consumption, by a factor of 10 to 100 times. That leads some observers to worry that increasing video consumption will crash the networks.
But assuming markets are simply allowed to work, higher spending by end users to watch video online, whenever they want, as much as they want, will be tempered by their own rational decisions about how to consume video so as to optimize their own spending.
If a user today wants to watch programs delivered by multichannel video services on a TV screen, whenever they want, they can pay for digital video recroder services that allow them to do so, at one price point.
If they want to do roughly the same thing online, with less choice, viewing on their PCs or paying for services or equipment to sent that video to TV screens, they will pay different or additional amounts of money.
The point is that consumers will make rational choices about "what I want, when I want" viewing. If the price of viewing online climbs, as a rational observer would assume it must, over time. then the attractiveness of a linear format with DVD storage becomes quite obvious.
People will decide the value of a multichannel video service with DVD capabilities offers quite a value, compared to an online alternative. that offers only some of the content.
That's the part of the online versus offline versus linear delivery discussion that does not typically get factored in. Consumers will make different and rational choices when the cost of viewing on demand using various channels becomes explicit.
2 comments:
You think that the cost of consuming video online relative to cable/DVD/DVR will RISE over time and that that indicates a functioning market? I agree that markets should be allowed to work, but I think the outcome over time will be a DECLINE in the price of streaming, not an increase.
Actually, both declining prices-per-bit, and consumption of more bits will happen. It clearly will cost a content provider less, per-bit to stream. But it might well cost an end user more to use those apps, if there is both a 10 times to 100 times increase in consumption per event, as well as more events.
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