Why Internet Service Providers love it?
- Its the best killer application for "broad" broadband services. And marketing-wise it is "scalable" - customers get the video quality that is directly proportional to how good their Internet connection is, providing the perfect temptation to upgrade and pay for the newer broadband being rolled out. Oh and its perfectly legal with no liabilities like P2P class of applications - after all the content providers have already got the IPRs of the content worked out with the MPAA!
- The same video content can be transcoded into different qualities (bit-rates) according to the end users' Internet connection and devices. Gosh they sell $2 TV shows on iTunes for a tiny iPod screen and get away with it!
Video content++ = users++ = ad-revenue++
Why Content providers love it?
Content is like Prada bags. Expensive to create and cheap to reproduce. Every conceivable way of getting more copies of it out to a paying customer is quick easy money. More so when the distribution channel is easy to deal with and cheap. Yep: costs about $1 to stream (unicast) a movie over the Internet using a CDN infrastructure. Compare that with the hefty tab of producing and distributing a DVD to a video store. Renting on the Internet is way more profitable.
Do end customers love it?
Well, so everyone is trying to convince customers to love it but there are some significant shortfalls before it is universally "the" way to rent movies.
- Media bridge Most customers don't have the media bridge to connect their Internet content to their AV equipment (TV, home theater). And when they do connect it, the quality doesn't always work out as compared to the old fashioned DVD (and definitely not the HDTV quality blue-ray DVDs).
- Time-to-download Latency is still an issue for some situations. And most people dont have broad-broadband in their homes yet. The ballpark number of hours to download a DVD is
10/ (Broadband download speed in Mbits)
- Offcourse media codecs provide "play as you download" formats, but customers will get annoyed if the download rate doesnt keep pace with the bitrate of the video: i.e. their decoder freezes in the middle of the movie and the screen says "buffering".
- Video-store fun factor Theres always the fun factor of reading the back of a DVD cover. If I know which movie I exactly want to see, then I may just rent it online. But what if I really want to "see a movie". I haven't seen a replacement of the video store browser yet. And they still can't sell popcorn and skittles over the Internet as I wait for my turn at the register!
- Its not TV so theres no quick channel zapping Internet TV is poor at for one key factor: channel zapping. Even good IPTV solutions are noticeably slow when it comes to channel zapping. Perhaps unfortunately, most Internet TV solutions were marketed as "TV" solutions. So maybe there is a lack of expectation management in this area.