Here’s the bad news for consumers: There’s no such thing as a free lunch, and Internet video won’t cost nothing forever.
As an analyst from Cowen and Company points out in his coverage of Netflix (link via EngadgetHD), “the more customers stream, the more Netflix (and other streamers) will have to pay studios for the content.” And that equation doesn’t even include the cost of maintaining a broadband infrastructure that can handle mass volumes of content. Ergo, free streaming isn’t a forever deal.
There is good news, though, for both consumers and service providers: The greater the popularity of Internet video, the faster the market will sort out how to deliver converged content (Internet video and traditional broadcast TV) with new revenue models that work. I know, I know, as a consumer that proposition doesn’t sound as good as free, but the reality is that something’s got to cover the costs of studio production and video delivery. What we as consumers trade in fees and/or advertising, we’ll get back in content choice and flexibility – the ability to watch what we want, when and where we want it.
Meanwhile, this all equates to a huge opportunity for service providers, as Comcast clearly realized when it created an Internet beachhead with the Fancast portal. TV providers not only own the broadband pipes, they have the expertise and partnerships in place to merge the best aspects of broadcast and Internet television – high-quality video and raw distribution power with a flexible, customizable TV watching experience. It’s a television holy grail.