Friday, November 14, 2008, 9:40 AM ET|Posted by Will Richmond
Yesterday I had my own positive broadband video experience, remotely watching portions of the NewTeeVee Live conference held in SF from the comfort of my office. Om Malik and crew put together a packed agenda and I had wanted to go, but a personal conflict kept me in Boston.
I caught most of Netflix CEO Reed Hastings' keynote (until the UStream feed froze up, arghh...) and thought he offered some interesting tidbits about how he sees the broadband video market unfolding. VideoNuze readers know I've been avidly following Netflix's recent moves with Watch Instantly and I've come to think of the company as one of three key aggregators best-positioned to disrupt the cable model (the other two being YouTube and Apple).
Three noteworthy points that Hastings made:
Standards needed to interface broadband to the TV - Hastings catalogued the efforts Netflix is making to integrate with various devices like Roku, LG, TiVo, Xbox, etc, but concluded by saying that these one-off, ad hoc integrations are not scalable and are really slowing the market's evolution. Most of us would agree with this assessment. Still, he was quite pessimistic about a standards setting process's ability to move quickly enough - saying this could be a 10-30 year endeavor. Instead, if I understood him correctly, he thinks the TV approach should just be browser- based, and also that today's remotes should be scrapped in favor of pointer-driven (i.e. mouse-like) navigation.Cable should evolve to focus on broadband delivery and de-emphasize multichannel packaging - Of course this is incredibly self-serving from Netflix's standpoint, but Hastings made the case that broadband margins for cable operators are nearly 100%, because they have no content costs, whereas on the cable side, they have high and ever-increasing programming costs. He cited Comcast's recent announcement of 50 Mbps service as evidence that cable operators should focus on winning the broadband war, and eventually letting go of the multichannel model. Nice try Reed, but I don't see that happening anytime soon. However, as I recently wrote in "Comcast: A Company Transformed," there's no question that broadband is becoming an ever greater part of its revenue and cash flow mix.(Reed emailed to clarify the above point. He didn't say cable should focus on broadband delivery over the current multichannel model; rather that cable - and satellite/telco - should focus more on web-like viewing experiences through improved navigation and VOD/DVR to be more on-demand, personalized and browser-friendly. And he added that with the shift to heavier broadband consumption, cable is a winner either way. Note - I thought I interpreted him correctly, but between UStream choking and my own scribble, it seems I was a bit off here. Thanks for correcting Reed.)
Game consoles in leading position to bridge broadband to the TV - Hastings made a pretty strong case for the Wii - and to a lesser extent the PlayStation and Xbox - as the leading bridge devices. The Wii in particular could be a real broadband winner if it could support HD and Flash. As I've been thinking about broadband to the TV, I've concluded - barring anything from left field - that game devices, IP-enabled TVs and IP-enabled Blu-ray players are where the action will be concentrated for the next 3-4 years (this doesn't take account of forklift substitutes like a Sezmi or others sure to come).
NewTeeVee has a good wrap-up of Hastings' talk as well, here. The video replay isn't up yet, but when I see it, I'll post an update.
What do you think? Post a comment now!