Wednesday, January 16, 2008

Begun, the Bandwidth Wars Has

When pseudo watching Steve Jobs' MacWorld keynote yesterday, I was struck by the impending clash of business models in digital content distribution. With studios embracing the long revenue tail by moving from theatrical distribution and broadcast to DVD/Blu Ray as their primary revenue generators, Apple and (presumably) Microsoft and others looking to replicate the iTunes model by bringing video and game content into their own digital "networks", it is a great time to be a consumer (unless you purchased an HD-DVD player, but that is an other post).

For all the geopolitical maneuverings, what blew me away yesterday was when Jobs announced that they would be renting DVD-quality and HD movies on iTunes, streaming over the network to the little Apple TV boxes. My immediate reaction was "Damn, it sucks to be Comcast"

When Apple charges $5 for that HD movie rental, they are imposing a massive load on the last mile internet link to that little box under your fancy TV. I can't imagine an HD movie with 5.1 sound being less than a 5Gb download, at least while maintaining any level of quality. That is a HUGE download for a single view movie rental.

Not only does Comcast (and other broadband providers) have to support 1/2 the distribution burden, they get no rev share from that $5 and potentially lose revenue in their premium pay per view or on demand services.

In the clash between IP creators and owners, net neutrality, digitization, portability between multiple devices (phone, TV, computer, iPod), and limited/aging physical infrastructure, something will break and something will give. When that happens, look for folks like Google to step into the breach. This one will be fun to watch, esp. as all the *ahem* alternative distribution and sharing folks exploiting content and infrastructure at the edges.

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