Category Archives: netflix

Cable providers owning up to porn, but is Netflix the cause?

Well, well, well, if it isn’t porn coming out into the sunlight.

That was my thoroughly surprised reaction to seeing a recent Wall Street Journal story about how television providers are blaming lower pay-per-view revenue on the fact that fewer people are ordering porn.

According to the story, both satellite provider DirecTV and cable company Time Warner cited “lower adult buys” for shrinkage in their latest quarterly PPV revenue. People are, of course, getting their smut on the internet so they’re not buying nearly as much of it as they used to.

“There’s been a fairly steady trend over some time period now for adult to go down largely because there’s that kind of material available on the internet for free,” said Time Warner Cable’s CEO Glenn Britt on a recent conference call.

To say that TV executives talking openly about how porn affects their business would be an understatement. Porn has, of course, been a massive generator of revenue for as long as cable has been around (it’s covered in Sex, Bombs and Burgers). But for the better part of 50 years, it has also been the industry’s dirty little secret. Just like the hotel chains, who have historically also made a pile of money from porn, nobody was supposed to talk about the “goose that laid the golden egg.” My, how the times they are a-changin.’

The clue as to why TV providers are opening up about this can be found in the WSJ story. “This should be a cautionary tale for the larger content community,” one unnamed cable executive told the newspaper. “This content is devalued to our customers because of the alternative models.”

In other words: content creators better start taking steps to ensure that their shows and movies aren’t being given away too cheaply online because it will hit the cable and satellite providers, which will ultimately come back to bite the creators themselves.

That can be taken as a thoroughly veiled swipe at Netflix, which is proving to be a significant thorn in the side of the old TV guard. It’s a tune the likes of Time Warner and HBO have sung openly before, but it’s pretty incredible that porn is now being added to chorus.


Posted by on August 11, 2011 in netflix, sex


Does Shaw know or care about internet rules?

What’s going on with Shaw Communications? Of all the telecommunications companies in Canada, none seem to be more schizophrenic than western Canada’s largest cable provider, if recent actions are any indication.

The company was back in the news late last week, but likely not for the reasons it hoped. While its announcement of a rival service to Netflix - called Movie Club - was the intended headline grabber, Shaw instead took flak for what looked like a blatant net neutrality violation.

Movie Club, according to the Calgary Herald, will essentially replicate Netflix’s all-you-can-eat movie service for a monthly fee. But, as company president Peter Bissonnette said, watching stuff on Movie Club won’t count against Shaw customers’ monthly usage caps:

As well, subscribers to Movie Club — who initially can watch on their TV or computer, with phones and tablets planned to come on line later — can view content without it counting against their data plan. “There should be some advantage to you being a customer,” Bissonnette said.

To anyone familiar with net neutrality, that would of course be a violation in the first degree. Net neutrality rules in Canada require telecom and cable companies to treat all services that run over the internet equally. By not counting the hefty gigabytes that online movies chew up, Shaw’s Movie Club would inevitably be cheaper and more desirable to use than Netflix.

Not surprisingly, Shaw took heat for the move. Michael Geist said a complaint under the Telecommunications Act to the CRTC would be inevitable while Open Media said it was a clear attempt to try and turn the internet into a two-tier service. I was pretty shocked at Shaw’s blatant anti-neutrality move myself and said on Twitter that it was either incredibly bold or amazingly dumb. More on that in a minute.

A day later, on Friday, Shaw shifted into damage control mode. Through Twitter and other statements, the company clarified that the Movie Club service going through cable subscribers’ set-top TV boxes would not count against monthly data caps, but if customers used it over the internet - on their computers or tablets, for example - it would. Net neutrality concerns were therefore not necessary, since Shaw’s service will play by the rules. As the company said on Facebook:

Shaw Movie Club is intended to be watched through your set-top box. You can order your movies online through and send it to your set-top box for viewing - watching movies on your set-top box won’t affect your included Internet data. However, you can also stream your Movie Club movies online to your computer – this WILL contribute to your Internet data.

Movie Club thus sounds like two different services. The internet portion, which will count toward users’ monthly data limits, sounds very much like an “over-the-top” service such as Netflix. The TV version, however, sounds more like a repackaging of the cable provider’s existing video-on-demand service. Rather than VOD users paying per selection, they’ll simply get unlimited access for a monthly fee instead.

Open Media still has problems with this set-up, but I’m not as concerned. Bandwidth isn’t much of a problem when it comes to traditional cable, so if Shaw wants to be able to introduce a Netflix competitor that way, it shouldn’t just be allowed to - it should be encouraged to do so. It is when such a service is offered in a discriminatory manner over the internet that the problem occurs, which doesn’t appear to be the case with Movie Club.

However, it’s starting to become clear that Shaw’s left hand might not know - or agree with - what the right hand is doing. Bissonnette, one of the company’s top executives, was pretty explicit in saying that Shaw customers should have some advantages in using Movie Club over non-customers, a position the Herald reporter stuck to in her follow-up story. Yet a day later, someone else at the company - it’s not clear who - either overruled or corrected him.

The company was similarly lost in the woods on the usage-based internet billing issue. Back in May, when Shaw introduced new internet plans that feature large usage caps in response to user complaints about UBB, company executives also gave people the impression that they’d have to subscribe to cable TV to get those plans. According to multiple reports from people who attended meetings with the executives, the company wasn’t planning on offering standalone super high-speed, high-usage internet plans, thereby raising the spectre of tied-selling, a practice that is illegal in Canada.

The company has since made standalone internet plans available, albeit at a $15 markup, but that particular bullet from the Competition Bureau has been dodged, for now at least.

That brings us back to the question of whether the company is incredibly bold or amazingly dumb. In both the Movie Club and UBB cases, executives have shown themselves to be oblivious to how their products may violate existing CRTC or Competition Bureau rules. In both cases, executives touted services without apparently knowing whether or not they were legal. That either means they simply don’t know about the rules, or they don’t care about them. Quite frankly, I’m not sure which is worse.


Posted by on July 19, 2011 in net neutrality, netflix, shaw


A Canada without YouTube? It could happen

Here’s an interesting if somewhat disturbing thought: can you picture a world without YouTube? Or more specifically, a country without YouTube?

It seems improbable, almost impossible, but it’s entirely conceivable if the CRTC loses its collective mind and decides to regulate such “over-the-top” internet services in Canada.

The regulator, answering to cajoling from traditional broadcasters, has now concluded its “fact-finding mission” on whether YouTube, Netflix and other OTT services should have Canadian content rules foisted on to them. At some point, it will decide on whether to proceed with a new, full hearing, or whether it will just drop the issue, at least for now.

The CanCon rules applied to traditional media generally require broadcasters to air a certain percentage of Canadian programming per day, plus pay a percentage of their revenues into funds that help create said programs.

Now imagine if those same rules were applied to the likes of Netflix and YouTube. They’d be easier for Netflix to adopt - it would probably be simple and cheap for the streaming video provider to stock up on old episodes of Beachcombers and The Friendly Giant, thereby meeting the percentage requirements. Paying into development funds would also drive up Netflix’s cost of doing business, which would mean the company would either have less money to spend on new content or it would have to raise prices, but it would be doable.

For YouTube, however, it’s a different story. Measuring and controlling the service for Canadian content would probably be next to impossible, but it’s actually the money issue that’s the bigger problem for YouTube’s owner, Google. The company has been promising for years that the video service is nearing profitability, but barring any official announcement, it hasn’t happened yet. That’s because it’s not an easy business to monetize - the tremendous popularity of the free service means rather big infrastructure costs, which advertisements haven’t seemed to counter just yet.

So what are a few extra million dollars in regulatory costs to a company the size of Google? Not much, but Canada would likely be just the first of many countries to dip their hands into Google’s pockets. Any other country that failed to enact similar regulatory requirements and costs - in the name of national cultural development, of course - would be missing out on an easy pay day. When that inevitable global bonanza gets added up, YouTube’s already questionable climb to profitability would slow down considerably.

Google is not likely to ever come out and say it would block Canadians’ access to YouTube in the event of regulation (I asked and they didn’t comment), but it would make sense if it happened and no could really blame the company. After all, sometimes it’s best to cut off a limb to spare the rest of the body from a hostile infection.

But boy would it be fun if the unlikely did happen. For one thing, given that Canadians are among the world’s biggest users of YouTube, we might not have to worry about usage-based billing anymore since our internet traffic would plunge off a cliff. The country would go back to the good old days that big internet providers seem to love so much, where all people did on the internet was send email.

More realistically, though, usage of BitTorrent file-sharing and virtual private networks would skyrocket, making Canada a veritable piracy wonderland. Yo ho ho and a bottle of rum!


Posted by on July 12, 2011 in crtc, Google, netflix


Netflix regulations will mean more really useless projects

Should Netflix be regulated? There’s a very simple answer to that question. All you have to do is look at what the effects of doing so would be.

If Netflix and other so-called “over-the-top” internet services such as YouTube do get Canadian content regulations applied to them, which is what the CRTC is currently trying to determine, they will likely have to pay money into the Canada Media Fund the same way traditional Canadian broadcasters do. The CMF then turns around and spends that dough on Canadian projects.

Reading about those efforts, it’s obvious the CMF is a complete waste of money. From a press release issued on Tuesday, the CMF is spending $16.8 million on 51 “innovative interactive projects.” Production grants are going to 22 projects including: “11 games, 5 interactive contents, 4 mobile applications, 1 interactive webseries and 1 application software.” More money is being spent on development and marketing of similar work.

A full list of approved projects can be found here. Highlights include a social-networking website for Canadian artists, a dancing video game, a mobile app for motorcycle riders, an Italian cooking app, a virtual pet for social networking, plus a bunch of other mobile apps and games intended for consoles. It’s really hard to read the list without snickering at best, or getting angry at worst.

In a nutshell, broadcasters are being forced to spend millions of dollars - which are costs that are inevitably passed on to us, the consumers - to produce video games, mobile apps and web features that no one is likely to use. This, in a country that already employs more people than anyone, with the exception of the United States and Japan, in making some of the world’s best and most highly acclaimed video games. This, despite Toronto already being the mobile app development centre of the universe, according to the Wall Street Journal.

As Google’s submission to the CRTC on this issue says, things are going just fine for Canadian creators online - there’s no need for these sorts of ridiculous subsidies. The video game industry, for one, has already recieved hundreds of millions of dollars in provincial tax breaks, which has resulted in creating a vibrant and ass-kicking industry. A few extra CMF dollars here and there is like trying to tip a millionaire with a $1 bill. Indeed, that dancing video game sure sounds a lot like Michael Jackson: The Experience, which was created for Xbox Kinect by Ubisoft Montreal.

If you’re not angry about these sorts of useless regulations and how they needlessly drive up prices, check out that list of projects and you will be. If Netflix and the rest really do get pounced on by regulators, I for one won’t blame them for packing up and going home.

UPDATE: I’m told broadcasters don’t actually contribute directly to the experimental stream of the CMF, which the above projects are part of, unless they are directly related to television. Of course, with today’s vertical integration, it’s hard to find anything left that isn’t connected to TV, so that may be splitting hairs. In any event, the experimental stream gets its funding from the Department of Canadian Heritage, which is actually worse because that means taxpayers are paying for the above projects even more directly.


Posted by on July 7, 2011 in crtc, netflix


The pros and cons of cloud gaming

I’ve got a story in the new issue of Canadian Business magazine about the rise of cloud gaming - or online services that act much like Netflix do in that they sell streaming access to the same sorts of video games you’d find on your Xbox or Playstation. As the story details, game makers are quite enthused about the likes of OnLive because such services allow them to do away with physical discs, which actually cause the industry two big problems: piracy and rentals.

Alas, as is often the problem with print - particularly for those of who write blogs and books - it’s that there’s rarely enough space to tell the story how you really want. Cloud gaming is an intriguing issue and I’m not sure I did it justice in the short space I had. Fortunately, there are blogs where people like me can rattle on incessantly.

But seriously, there were a few additional aspects I wanted to get into, so consider this post a supplement to the CB article.

Why it might be good for consumers: I’ve argued the benefits of storing media in the cloud before - eliminating physical media saves space, maintenance and effort, and it provides access to the content from wherever one may and on whatever device one may be using. Aside from that, some analysts I spoke to believe there are also other benefits. Martin Rae, president of the Academy of Interactive Arts & Sciences, says the overall cost of games will go down on the cloud since it’s cheaper to produce them. Disc versions will always be available, so consumers who still want to own the media and have control of it will have that option. “If you truly want to go to the store and buy it, you’re going to pay more. There’s packaging and production and everything more, but your control over it is [greater],” he said. “They’re different products at that point. That’s not a bad thing for consumers, it just gives them more choice.”

Why console makers might want it: Several observers pointed out that the likes of Sony and Microsoft typically lose money selling consoles, at least for the first few years, because they’re so expensive to develop. “The existing business model really doesn’t work for the hardware manufacturers. That obviously means something has to change,” said David Cole, a video game analyst at DFC Intelligence. “They have to spend billions on R&D and then market it to the consumer, price it at or below cost in order to build an install base. They make it up on delivering products and services but the thing is, many of those are delivered by third parties.” Getting rid of consoles and moving right to the cloud may therefore be more profitable for Sony, Microsoft and Nintendo.

What about the 500 gigabyte gorilla in the room? Vikas Gupta, president of Transgaming - which runs GameTree TV - expressed doubts about OnLive. Such pure streaming services can use up to 5 gigabytes an hour, he said, which is precious data in a country like Canada where usage-based billing threatens to make internet subscribers miserly in their usage. GameTree works a bit differently in that games, which are typically a few hundred megabytes in size, are actually downloaded to the TV provider’s set-top box and stored there, thus avoiding big streaming usage. It’s risky to depend on the whims of ISPs for your business model, Gupta said. Albert Penello, senior director of marketing for Xbox, touched on the same subject - and hinted that cloud gaming could actually lead to higher costs for consumers. “Someone is going to say wait a minute, ‘That’s not free.’ When you get one set of pros you have to look at what the whole ecosystem has to face and those changes and make sure you’re not having an unintended consequence to the customer,” he said.


Posted by on June 10, 2011 in internet, microsoft, netflix, sony, video games


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