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This week, my son and I watched the entire Season Two of Modern Family on my computer. Last summer, my wife watched the entire Season Two of Weeds online, and TWO seasons of True Bloodin a single daywhile lying in bed.
Me: "Honey, get out of bed. It’s three in the afternoon."
Her: "Ten minutes, OK? Sookie is about to kill a succubus."
So to say we are an over-the-top (OTT) family is an understatement. The ease of finding great programming on the web has become exciting, and frankly, fun for the family as we search the net for suggestions on new series to check out. This year we've dug into Psych, Modern Family, Lie to Me, Sons of Anarchy, Mad Men and our favorites, Burn Notice and Bones. Seriously, we watch TV series with as much intensity as my Oprah-sized dog watches a piece of Kung Pao chicken stuck behind the fridge. Being a family that is close-knit, we like to jump into a series and watch a few episodes a night. So last week when we finished Season Four of Psych, I realized that we hadn't seen a single commercial.
All that content streams over my high-speed broadband connection (which I pay dearly and happily for) through our wireless router, to Netflix on the Wii, which we then watch on the big TV. As a result, my local cable provider is getting a happy chunk of my monthly telecom budget. But Netflix is getting a little now too. However, had I used my VOD channel to capture/watch these shows (if available) on my TV, my monthly bill would have been much higher, I'm sure. And if I'd used TiVo, at least I'd see the commercials the local and national reps sold on those programs unless I was aware enough to fast-forward -- but who really remembers every time? So instead of more revenue for my local operator, they were left with only a fraction of the revenue they could have captured.
And it's all because of bandwidth. Yes, the tortoise has caught the hare.
The first shots HAVE been fired ... somewhat. A few ops have put the hammer down and decided to charge overage fees per gigabyte used. (Much of the recent buzz around this kind of usage policy has been revolving around a couple operators in Canada.) In that kind of overage setup, it potentially wouldn’t be long before a series-junkie like me got a bill approaching four figures, and that would change the game quickly.
Can operators do anything else to manage OTT programming? Sure, they can work deals to add advertising (like Hulu does, but my guess is that the op does not see a penny), only show last years' dated programs (like Netflix does) and compete by offering first-run movies and shows on VOD like they do now. They can also – um -- block specific sites. But that is dangerously close to specific Constitutional issues, shall we say, and not looking like a real option.
The network is now fast enough to stream live content anywhere, any time, any place and to any device. Unheard of 15 years ago. (Side note: Some flack told me a few months ago the word "broadband" was "dated" and "nobody used it anymore." Might want to retract that statement, flack-boy. Tell that to every op who uses "broadband" in their marketing materials.)
So, how will the operators -- the owners of the "big pipe" -- monetize this phenomenon? The easy answer is to jack up the rates on the Internet side of the triple play. But there's gotta be more. I Iove the fact that I can grab Redskins highlights at the local Quiznos on my iPhone during lunch break, watch Mad Men through my son's Wii, and see my idiot friends on YouTube without ever looking at network or tiered programming. However, if the ops put the bandwidth clamp down, like Verizon does with their MiFi card, my viewership would change. Last summer I spent several weeks away and downloaded dozens of TV shows on my MiFi card. Very cool until I got the bill, which, shall we say, invoked spasms. It definitely changed MY behavior.
So, a grand experiment has started. Meanwhile, those of us fortunate enough to have some downtime have the largest choice of entertainment the world has ever seen -- and the largest choice of where to see it. Three-screen video is a reality. So let's take advantage of it now. I have a feeling it ain't gonna last. At least at this price.
P.S.: Thanks to those of you who wrote in last week to say that I got my months too early or too late when it comes to MSO equipment budget planning. Turns out some systems do it in May/June, some in June/July and some even later. After checking with my respected Village Elders, I'm just gonna say "summer."
Tim Hermes is CEO at BGR. Email him at firstname.lastname@example.org.