American broadcast networks ABC, CBS and NBC are blocking online access to their shows by Google TV devices. But any attempt to resist the tide of online video seems futile. Netflix alone now apparently represents a fifth of all peak-time internet usage in the United States, with streaming about to overtake viewing of programmes delivered on disc. Broadcast networks must face the inevitable development of broadband distribution as an opportunity.
While the broadcast networks have been open to streaming their shows online over broadband to personal computers, the idea of people watching them on a network-connected television set is apparently unacceptable to them.
It appears to be an ineffective attempt to delay the inevitable. The major broadcast networks may temporarily be able to block certain browsers from accessing their web sites, but they cannot stop the convergence of television and the internet.
Google TV simply provides the ability to browse the web on a television. As Google said in a statement, “it is ultimately the content owner’s choice to restrict their fans from accessing their content on the platform.”
Hulu, the joint venture between News Corp, NBC Universal and Disney, is also preventing access to programmes on Google TV, as it has on other similar devices. Google and Hulu are understood to be discussing access to the premium Hulu Plus service but as yet no deal has been reached.
It seems likely that the broadcast networks will also attempt to block other network devices, such as the Boxee box from D-Link, which is due in the shops in November.
The attempt to block access to particular devices is an interesting turn on the usual debate about network neutrality. The argument that broadband networks should not be able to block certain types of traffic could equally be applied to broadcast networks that wish to prevent access by certain types of device. It is hard not to see such behaviour as fundamentally anticompetitive.
The Federal Communications Commission may take an interest in this, not least as it considers how the proposed merger of NBC Universal and Comcast could affect the distribution of online video.
Apple TV meanwhile attempts to keep the networks happy with a more limited model that offers rentals of individual episodes of shows. Even then the networks seem less than delighted at the pricing model and the prospect of sharing revenues with Apple. Only two major networks have signed up so far, ABC and Fox.
Yet online video distribution continues to grow. Netflix alone now accounts for a fifth of peak internet bandwidth in the United States. Netflix is available on Google TV devices, and many others, streaming not just movies but episodic television programming.
In its latest annual report on traffic trends, network equipment company Sandvine tracked over 200 service provider customers, representing more than 300 million subscribers worldwide. It found that in North America, real-time entertainment represented 45% of all internet traffic. In peak time, Netflix consumed over 20% of all downstream traffic, only slightly less than all web browsing at 23%, twice that of YouTube at 10%, just ahead of BitTorrent at 8%.
For Netflix, the dependency for broadband access on cable carriers with whom it ultimately competes for movie business is significant. As a reminder of this precarious relationship, the Netflix service was unavailable for a period time this week due to technical problems.
Otherwise, there appears to be no stopping Netflix, which now has nearly 17 million subscribers, up over 50% from the previous year, adding 1.9 million in the last quarter. Two thirds of them have streamed programming from Netflix. In the next quarter its subscribers will watch more programming from Netflix streamed rather than delivered on disc. Reed Hastings, the co-founder and chief executive now described Netflix as “primarily a streaming company that also offers DVD-by-mail”.
With online video now coming to the television screen through diverse devices, the broadcast networks will have to accept this as technologically inevitable. They can either block it as a threat or embrace the opportunity.
Broadcasters may be understandably reluctant to see companies like Apple and Google intruding on their established business models. By blocking their own services, broadcast networks may simply drive viewers to others, like Netflix, or to find their programmes by other means.