Netflix’s ‘Watch Instantly’ streaming service is available on so many devices now it’s probably easier to list those that don’t carry it. The PS3 is the latest to join the ranks. And ‘Watch Instantly’ is now such a huge part of the service that it’s surely here to stay, and inevitably grow in the future.

From Mail To The Web

In the 12 years since Netflix launched as a purely by-mail DVD rental company, the world has changed considerably, particularly with the Internet becoming the distribution method of choice for all kinds of media, including of course television and movies.

So it’s no wonder that the company decided to introduce a streaming video service as part of its subscription package a few years ago. And the way things are going, it’s that part of the business which provides the future direction for Netflix.

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Epix has upped its commitment to online content by promising 3,000 movies available to subscribers through its Epix Megaplex and EpixHD option. But while this is cause for celebration, is it enough to deter piracy?

Epix

When Epix was first announced back in June, I described it as a ‘Hulu for movies’ and an indication that Hollywood and the movie industry was finally waking up to the need for free or cheap, easily-accessible Web destinations to consume content legally.

After all, the music industry failed to do this for years and it lead to the situation we are in now where despite Apple iTunes and a wealth of other places to stream or buy music (my favorite being Spotify), piracy is still a huge problem.

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If Google started streaming movies on YouTube for a fee, could it make money, serious money at that? A financial analyst thinks so, and said as much this morning while urging people to buy Google shares. This may be a little premature seeing as the move hasn’t even been confirmed as yet.

YouTube Revenue Streams

YouTube is a hugely popular site, one responsible for turning millions of people on to online video. But its 400 million-plus worldwide user base so far gets the full run of the site for free, with only adverts occasionally passing in front of their eyes.

Whether a purely advertising-based business model is enough for the site has long been the subject of debate. Regardless, I’m sure Google would like to see higher returns on the $1.65 billion it paid to acquire the site a few years ago.

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Online video is becoming a very mainstream, must-have part of daily life for millions of people. Especially in the U.K. Which means Web TV is becoming a driving force behind the take up of fast Broadband services.

Terrestrial Online Offerings

Here at Web TV Wire, we’ve recently been looking at how the online video sector in the U.K. has started to heat up. The BBC iPlayer is already here and doing very well, with ITV Player and 4oD backing it up to give British viewers a VOD catch-up TV service for the major terrestrial channels.

Just Like Buses…

Then there is the MSN Video Player, which although only older archived shows is another option for British viewers of Web TV. I reviewed Microsoft’s offering a few days ago, deciding that while the content was excellent, the video quality let it down. My view on that hasn’t changed since.

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ISPs have been showing concern for the amount of bandwidth used by online video for some time now. However, the first salvo now seems to have been launched in a war that is likely to get very bloody over the next few years.

Net Neutrality Vs. Costs

Net Neutrality is the idea that all Internet traffic should be treated the same, no matter where it’s coming from, or what it’s being used for. It’s an important tenet for the future of online video because here is a medium that, by its very nature, requires more bandwidth than any other.

Cisco recently estimated that, by 2013, 90 percent of total Web traffic will be from video. This is down to the fact that video uses more data than Web pages, images, or text files. As well as the fact that online video is growing ever more popular, with new services being launched and new viewers discovering the joy of video on demand.

ISPs are not happy with the way things are going. Most, at least in the UK, now offer services with unlimited bandwidth and downloads. More fool them, maybe, but while offering customers these kinds of deals, they are starting to complain about being burdened with the costs of delivering online video.

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As the Internet grows, and more and more people get online and connected, traffic looks set to grow exponentially. And at the center of that huge explosion of Web usage is video. Already a big part of the Internet, it’s set to be dominant by 2013, at least according to Cisco.

Explosion In Internet Traffic

Cisco, a company that designs and sells networking and communication technology, today released an updated version of its Visual Networking Index. This study looks at how the Internet is likely to grow between now and 2013, and what sectors will be responsible for driving traffic and bandwidth usage.

The research predicts that total IP traffic is set to hit 56 exabytes of data per month by 2013, up from just 9 exabytes of data per month during 2008. This means that annual global IP traffic will exceed two thirds of a zettabyte (1 trillion gigabytes) by that time. Which is going to put a hell of a strain on the system.

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Hulu is currently in a fantastic position, gaining viewers every month, and bringing in enough money to just about get by. But is that ever going to be enough? Or are the paymasters and networks providing the content going to want more?

Hulu is…

Hulu is, by any measure you care to you wish to look at, a success. Its branding is strong, the content is great, viewer number are steadily growing, and it’s even making money. Not as much as it would like, obviously, but then which of the numerous online video companies is achieving the turnover it wants? Even YouTube is struggling despite getting enormous traffic and being known the world over.

Revenue Options

All online video services, barring maybe the BBC iPlayer which is paid for by British license fee payers (sort-of), rely on advertising to pay their bills. Hulu is no exception. Unfortunately, advertising rates, especially online, has dropped considerably over the past year or so. And that has hit online video companies, as well as blogs, Web versions of newspapers and other sites.

There is, obviously, an alternative method of raising money, and it’s one that News Corp has used often, most notably with The Wall Street Journal. News Corp is an equal partner in Hulu, along with NBC Universal and recent buy-in Disney. So, could Hulu soon charge for content, or shift over from the free, advertising-based model to a subscription-based model?

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