Let me break down some numbers for you that I gathered from both the Barna Group and the US Census site. As of 2005 84% of all US adults own a DVD player. About 30% of Americans own a laptop. Two-thirds of US households have Internet access. 19% owned an ipod or an mp3 player.
This was Three years ago.
Over this period of three years we’ve seen Ppods get the ability to play movies, we’ve seen the iTunes store go to an online movie purchasing portal and we’ve seen the likes of Netflix influence every single TV network and start offering streaming video directly to your computer. More college students are catching up on their shows online instead of on TV and the amount of video traffic has increased exponentially with the likes of YouTube thrown into the picture.
All this free content…who is making the money? No one…yet…
Companies are starting to notice that with folks increasing their broadband usage they may be paying (or so they imply) for the amount of data traveling through the pipe with less folk paying for the content on TV (via subscriber service or ad revenue). The more content being downloaded (like videos and mp3 purchases) the more bandwidth being used.
So some companies are becoming sort of electric companies with broadband: metered Internet aka Data Caps. (For a real life sample check out the small print on NBC’s Olympic Webcast page where they outright warn you that watching the Olympics online might not be recommended if you have metered broadband!) This might not mean anything to you just yet but think about your Cell Phone and you’ll get the connection.
See with your Cell phone you have X amount of minutes (1000, 500, whatever) and on some plans you have rollover minutes that if you don’t use them all they get carried to the next month. For most of us we don’t use up all the minutes and if we’re the type that does, we’re careful with it. Why? Well, you go over your minutes usage once and you realize that these guys strip you naked and hose you down with overage charges.
Let’s go back to high speed Internet and data caps. What these guys are in effect doing is saying each household has X amount of data bandwidth-if you want more, pay for a bigger plan…if you go over, you either get slowed down or overage charges.
“Well,” someone might say “I don’t think I’m on the Internet that much to merit this sort of thing.”
Okay, lets say that the data cap is 40Gigs of data per month. Itunes song purchases are only about 5megs. Movies, low rez are about 400 megs. And if you’re streaming an HD movie, you’re looking at about a gig of data transfer. Throw in some online video transfers throughout your day and maybe some decent downloading of major files you’re getting close to that data cap really quick. Gizmodo has a nice (and scary) breakdown.
Imagine renting a Netflix movie to watch on your Apple TV only to get hit a second charge for your data transfer?