Even though over-the-top services for providing movies on-demand have existed in the Norwegian market for a couple of years, the development of these services have come a lot further in for example the US. Netflix and Hulu are two such services.
Netflix started out in 1997 as a DVD-rental company who served their customers through sending them movies by mail. After many years of significant increases in their subscription base Netflix launched their online service for streaming movies over the Internet to the consumer’s computer in 2007. Their revenue model for the online service is based on mem- bers paying a low monthly subscription fee for access to an unlimited amount of movies (Netflix 2011). Soon after the initial introduction of the streaming service Netflix set their aim beyond the computer, namely
the living room TV-set. During 2008 Netflix teamed up with several large hardware manufacturers of TVs and TV specific devices and soon after the first TVs and devices with an Internet connection and Netflix software emerged in the market place. This move has ensured a Netflix a position on the main screen con- sumers utilize for TV consumption, and they are now in direct competition with distributors’ own movie rental solutions. Today the Netflix movie service can be accessed from a myriad of Internet-enabled devices such as the Nintendo Wii, Sony PS3, Xbox 360, Apple iPad, and TVs from LG, Panasonic, Toshiba, and Sharp. In 2010 Netflix’s consumer base increased with 63 percent from the previous year, passing 23 million subscribers (Netflix 2010). Recent news bulletins also suggest that Netflix is looking to move into TV- programming (TechCrunch 2011).
Hulu was announced in 2007 and launched as a website offering free streaming of TV shows and movies in early 2008 (Hulu 2011a). Among the initiators of Hulu one can find NBCUniversal Media, a media and entertainment company that owns and operates both American television networks and a number of cable channels. We believe that this move was purely experimental for this TV-industry incumbent, but it has proven to be very successful. Through Hulu.com consumers can stream video directly to the web browser from a wide range of premium content producers. The content has often recently been aired on broadcast TV, but the web site also offers backlog videos. Hulu.com is free to use but advertisement is played intermittently. After a successful incubation period providing a free to use service, Hulu launched the Hulu Plus subscrip- tion service towards the end of 2010. While the free service only covers a limited amount of recently broad- casted content – in addition to older seasons – the Plus
service gives the consumer access to all of the current season episodes from a wider array of shows. Some of the shows are even shown in HD quality. Despite the short time period since its launch, the Plus service is already looking at hitting one million subscribers in 2011. In the same way as Netflix, Hulu have also moved from a computer centric service to providing the service directly to the TV-screen. This has been done through extensive partnering and Hulu Plus is now available on Sony and Samsung TV’s, connected set-top-boxes, gaming consoles, and mobile devices like the Apple iPad (Hulu 2011b).
These services provide strong evidence as to in which direction the TV-industry is moving abroad. The fact that both companies have been able to part-
ner with large industry players and that one even was initiated by a company that it potentially could be in competition with, underscores the belief the industry has in that on-demand consumption will be a promi- nent feature going forward.
4.3. Networks and infrastructure
as technological enablers
What we are seeing in the TV-industry today are two categories of networks that are used for distribution of TV-signals. These are end-to-end controlled networks and best-effort IP-networks. Each category can be deployed using several different underlying network infrastructures (Table 3).
The nature of the different infrastructures being used differentiates them with regards to what types of services that can be delivered over them. This is primar- ily due to the fact that some infrastructures support only one-way communication, while others support two-way communication. A defining characteristic of two-way communication infrastructures is that
Network type DTT DTH Cable FTTH xDSL Quality-of-service
End-to-end controlled networks Yes Yes Yes Yes Yes Guaranteed
Best-effort IP networks (Internet) – – Yes Yes Yes Not guaranteed Table 3: Comparison of end-to-end controlled and best-effort networks and related infrastructure
32 they support IP-traffic, but only when the IP-traffic is managed in an end-to-end environment, quality-of- service can be guaranteed. Two-way communication is essential when the customer is to be able to interact with his TV and take more control over the content he is consuming, i. e. through opting for on-demand consumption.
Several of the infrastructures use fiber in their backbone. When fiber is not extended all the way to the user’s premises, the signal is re-code at some node in the network from IP to a suitable signal for the infrastructure which is used to connect consumers. An example of this is modern cable networks, which are a hybrid between fiber and coaxial networks (HFC). Fiber is used for a transporting the signal part of the way to the end consumer before it is turned into a signal for end distribution to consumers over coaxial cables.