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Apple's New Mountain Lion Has Over-the-Top Video Implications

February 17, 2012

Apple's New Mountain Lion Has Over-the-Top Video Implications

By Gary Kim
Contributing Editor
AirPlay (News - Alert), a feature of Apple's new “Mountain Lion” operating system, allows users to wirelessly beam what's on the screen of your iPhone, iPad, or Mac to your TV, if you have an AppleTV.

That means suitably-equipped users can send “webpages, YouTube (News - Alert) videos, iTunes rentals or anything else you can think of onto an AppleTV unit without wires,” says Jason Snell at MacWorld.

To be sure, the ability to do so does not automatically mean all the content people prefer is available. That is a matter of content licensing. But the capability will mean it is much easier to view any web content directly on a TV, which means the user experience for any over the top TV viewing is vastly better.

Some might say the issue, going forward, is how long it takes for “piracy” to become a big enough issue that content owners will have different incentives to permit lawful viewing of movies and licensed TV content without having to do so illegally.

Hulu (News - Alert), for example, apparently blocks display of its content on a TV, even though it obviously allows such viewing on a web device. ABC, CBS and NBC also do so.

AirPlay on the Mac doesn't materially change the economics of entertainment video, at least for the moment. But it is one more building block for the eventual infrastructure that will pressure the existing economics of the video entertainment business.

And there is a substantial distance to be traveled. The vast majority (90.4 percent) of U.S. TV households pay for a TV subscription of some type (cable, telephone company or satellite), while 75.3 percent buy broadband Internet.

Changes are brewing, however, as consumers seek out the subscription service that makes the most sense for them, Nielsen says.

Some of the changes involve simple shifts of market share. The number of homes subscribing to wired cable has decreased 4.1 percent in the past year at the same time that telephone company-provided and satellite TV have seen increases of 21.1 percent and 2.1 percent, respectively.

But nearly a million more homes are subscribing to broadband while skipping a traditional paid TV subscription, a fact that might lead some to argue that users are using their broadband connections to watch streaming video as an alternative to buying a TV subscription.

There are also are 5.1 million broadcast-TV-only homes that buy broadband, another potential sign that people are substituting streaming video for a subscription.

But most of the market buys both video and broadband. Some 80.8 million homes are in that category, while 22.3 million homes subscribe to cable TV but do not buy broadband.

Though broadcast only, but broadband-buying homes comprise the smallest subscriber group, the number of these homes has increased by 22.8 percent since the third quarter of  2010.

The increase in broadcast-only/broadband homes is not necessarily an indication of downgrading subscription video services, though. Those households might simply never have bought subscription video, but now find broadband access an essential service.

Technology alone will not drive a change in the ways people are able to consume professional video. Though not sufficient, such changes are necessary preconditions for a major change. Fast connections, ubiquitous smart devices, Wi-Fi and user-friendly applications are necessary. But content owners also will have to be willing to license their content for consumption in new ways. 

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Jennifer Russell

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