Like everyone else on the planet, I have become a big fan of watching streaming video online. For the most part, as new sources became available, they were connected to a service that had something to gain from the offering, and the ones that didn’t gain anything soon went away. The new one that fits that description is XFinity TV from my cable provider, Comcast. It is a bit of a surprise for two reasons: first, they aren’t asking me for more money for the service, it is just there as part of the package I am already paying for. Second, it has a lot of video my TV set top box doesn’t have, and is missing a lot of the things my cable box delivers. Both of these things make sense once I looked into the reasons for them.
On the first point, I suspect I am not the only person that noticed the economy got a bit rough around the edges over the last few years. Lots of folks have cut back on expenses, and if you are Power or Water you have no worries, because those are live or die items. If you are TV, Telephone, or the Internet, people will actually survive if they don’t pay for you, hard though that may be to believe. Except for that occasional 911 call, of course. So every TV, Telephone, and Internet provider is busy building VARs into their service (Value Added Resources) to make their service too valuable per dollar spent for you to want to give it up. Which makes it obvious why my cable company is giving me a very valuable additional resource without charging me extra for it.
The second point stems from the fact that each network and program production team have their own deals with various distribution outlets. A good example of this is from the Big 4 (or so) Commercial Broadcast Networks; ABC, NBC, CBS, and Fox/CW. Both NBC and CBS are on my cable set top box Video On Demand service, with lots of the current programs. ABC is not there, nor is Fox/CW. So I can watch Chuck on NBC or Medium on CBS, but I have no access to No Ordinary Family on ABC, Smallville on CW/UPN or Fringe on Fox/WB. Or was it CW/WB and UPN/Fox? But when I log into XFinity, I have ABC and just watched the Pilot for No Ordinary Family, followed by this past weeks episode of Smallville, and tonight I just may rewatch Fringe. This combination works for me; I can watch everything I am looking for now, each through its assigned delivery system. And the streaming stuff goes with me, anywhere I have Wi-Fi access.
I first played with streaming online video in the mid 1980s, using the Multicast Backbone (MBONE) people were just beginning to develop. It could actually deliver low bandwidth audio in a two way environment at a reasonable rate, so even with a 3600 BAUD dial up modem you could do voice chat with people on another part of the planet. As long, that is, as you were both on one of the internet gateways like Q-Net, Compuserve, or AOL, rather than the much more common BBS systems. Video back then was a postage stamp sized picture at 16 colors refreshing at one frame a second if you had a good connection, and if you are interested in the basics of how it worked in olden days this thread is a good place to start.
It still pretty much works the same way today, except computers are much faster and more powerful, the ones on your desk, in your pockets, inside your TVs and DVD players, and most importantly the ones delivering the internet to you. So my Blue-Ray DVD player has its built in Netflix, YouTube, and Pandora widgets that pipe the output to my TV. On my computer, I have a premium paid account with Crunchyroll to watch Japanese, Chinese, and Korean TV programs an hour after they air in their respective countries, and another one with The Anime Network that gives me access to a completely different set of programming from those same countries. Similar fee-based arrangements are soon to be available in the US from sources such as BBC TV and Sky TV for areas outside the UK, and a whole lot of other programming suppliers from many other countries. In each case, you can watch the programs live (or near live, with a one hour delay being most common), which gives the license holder for that programming two instant advantages:
1) They get a regular payment from X number of online subscribers, without incurring any additional cost beyond building their server farm to handle the additional load. That load is minimal in a Multicast environment, and if you realized they have to pay their program suppliers for the additional people watching their show, you should also have realized they can see how many people are watching which shows based on the number of streams requested for each. So if I log into the BBC service, and only watch Doctor Who and Misfits episodes, all of the money they pass on go to the producers of those shows. That increases the odds that the programs I want to watch will be funded and renewed for another season; I know, because I helped fund them.
2) Both the Network/Service as a whole and those specific programs that pull in the subscription viewers get a spike in their ratings. In a commercial network environment, this means being able to charge more per 30 second spot. But even for non-commercial (in the sense of not running advertisements, NOT in the sense of not making money) networks like HBO or the BBC, ratings are king and are at the heart of increasing revenues.