Friday, November 10, 2017

What Price Netflix ?

During a get together of IPTV industry techies last night the conversation turned to the quality of video delivery and a couple of people speculated that Netflix was losing money on just delivering its streams, before factoring in the cost of the content, storage and overheads. 

It’s clear that the company has successfully bought market share, and has recently put up its subscription prices. But Disney this week announced that its forthcoming OTT service, featuring Pixar, Marvel and Stark Trek content  will be significantly cheaper. 

So, what does it cost Netflix to deliver content ?

Well, if you’re watching five hours a day, every day at a reasonable data rate, the cost to Netflix is under $1 (based on the wholesale CDN pricing published by Streaming Media).Of course, the vast majority of subscribers won’t use Netflix every day - it’s still very much an ‘on top’ service.

So, Netflix is not going to be pulled under by the cost of delivering its streams (and these costs continue to fall year on year). Storage costs are also likely to be tremendous, but spread over 100 million users globally is likely to negligible on a per user basis. The cost of content production, however, is another matter...

Friday, October 13, 2017

The Tax Timebomb

A lot of people have finally woken up to the damage Big Internet is doing as it bulldozes its way to global domination: whole business categories that used to support a complex ecosystem of successful businesses is swept away in favour of one Silicon Valley monster with endless funding.

There have been issues around workers’ rights (Uber, Deliveroo (which, OK, is not from the Valley)), residents’ rights (Airbnb), monopolies (Google with search and advertising), high street decimation (Amazon). The list goes on and on as politicians and ordinary people alike realise what chumps they have been in regarding these aggressive businesses as some kind of social saviours.

But the real problem with these companies is that they are putting companies that pay tax out of business.

Amazon’s last corporation tax bill in the UK was £11.9m on sales of £5,300m. To be fair, Tesco claimed back £54m in the same period. But what you have to do is to offset agains this the rates paid in every high street in Britain by small and large companies, and the corporation tax paid by all those retailers. 

Similarly, the rates and tax payed by hotel groups far outweighs the £188k paid by Airbnb on £657m of bookings.

The same picture extends to broadcasting, where the likes of Netflix and Amazon (again) do not have to pay the broadcast licences demanded of ITV. Netflix paid £300k on revenues of around £400m in the UK. ITV paid £71m on similar revenue.

Do you begin to see the problem ?

The Tories are promising an end to austerity, the Labour party has massive, massive spending plans, and the only people left to pay for these are you or I, since there will be no tax revenues for our health service, education or transport system from Big Internet, and there will be no competitors to oay the tax either.

Just the smug smiling billionaires who we seem to admire so much.

Tuesday, September 12, 2017

Back To The Future

So, here we go again. Another new iPhone which has a few features that rival phones have had for years.

Still, it is enough to keep the world's most valuable company in the margins to which they are accustomed since there are enough of us schmucks out there and a total lack of real competition in the cellphone market.

Meantime, in Frankfurt car manufacturers are still launching 'concept cars' which basically reflect what Tesla did five years ago, and in Amsterdam a bunch of big TV vendors are flogging half baked cloud solutions which we reinvented at TVE a decade ago.

Welcome to 2010.

Wednesday, September 06, 2017

All Change For Video Formats

It's happening again.

Every few years a new wave of technologies hits the video industry and everyone gets very excited and confused.

As a rule, evolution wins out over revolution, but in the world of video delivery things are getting complicated.

First of all it's probably explaining a little about the technology.

In order to get video from a server to a viewer of Netflix or iPlayer you usually have to encode it using an audio codec (e.g. AIF or MP3), a video codec (such as H.264) and then place it in a wrapper (e.g. FLV or MP4). Finally you have to deliver it using a transport stream such as RTMP or HLS.

And this is where the major changes seem to be coming.

There are two main drivers for the changes ahead.

First of all there's copyright - many of the codecs such as AIF and H.264 and its update, H.265 (or HEVC) are proprietary, meaning that licence fees potentially need to be paid every time you use them.

The second driver is efficiency. Ten per cent improved compression with no quality loss means tens of millions of pounds to the likes of Google and Netflix.

So, just as Flash video and RTMP delivery breathed their dying breath (largely thanks to the late Steve Jobs' aversion to Flash), with HLS and MP4 becoming an industry norm, two new battles are developing.

For video codecs it's between the proprietary HEVC and the 'open' standard AV1  The former is an evolution of the ubiquitous H.264, whilst the later is an amalgamation of Google's VP9 codec (acquired with On2) with codec fragments from other companies such as Cisco, and is surprisingly backed by the likes of Microsoft. The AV1 still doesn't have a streaming format, but Netflix are rumoured to be already using it for their download files.

Meanwhile, the battle of the transport layer is between the currently dominant HLS (HTTP Live Streaming) and the newer MPEG- DASH.  

Here there is less controversy - HLS is a very poor protocol developed by Apple to get around using proprietary competing methods for streaming video.

Both work in similar ways, but MPEG-DASH has substantial advantages and is already widely deployed by major streamers such as the BBC. 

So, it looks like the future is AV1 over MPEG-DASH. Or is it ? Google, Microsoft, Itel, AMD, Netflix, Hulu and many others are on one side. Apple is on the other. Place your bets...

Wednesday, August 23, 2017

Where Does All The Sports Go ?

Today I was off work. There were no interesting sports on any of the UK networks (yes, you can pay Sky a huge amount to watch nothing...).

So, I thought, why not either catch up or watch some on demand games.

But there aren't any.

Of the roughly 50,000 hours of top class rugby played in the past year, only a few highlights are available.

The same goes for pretty much every other sports. Yet the likes of Netflix and Amazon have built massive businesses with on demand. Why don't they just buy these rights for next to nothing since they're unused...?

Thursday, August 17, 2017

The Last Picture Show ?

The summer of 17 may well be remembered as the beginning of the end for the cinema industry.

Reports of its demise have, of course, been heard before. Television was going to be responsible for its downfall and there was a marked decline with the advent of VHS and the rental market.


Since then innovation, franchise releases and aggressive marketing has seen box office takings increase year on year. The the rise of luxury niche cinemas such as the Everyman chain in London have changed the theatre going experience even more, with comfy sofas and drinks services.

But as domestic TV screens grew in size, box sets arrived and food delivery has become mainstream, the threats to cinema going are manifold. Perhaps greatest of all is the behaviour of teenagers, who are expected to forego social media in a dark room for two hours or more.

Meantime, the talent has been following the money, with even Julia Roberts partaking in TV series in lieu of making feature films.

The New Studios have experimented with simultaneous releases online and in theatre (often to qualify for film awards), but the results have been patchy.

In the meantime, in the US MoviePass has reduced its membership to just $9.95 allowing members to view a film a day at any cinema, although the US' largest chain, AMC is demurring and may pull out from the scheme.

Of course, cinemas make money in other ways. Popcorn has the greatest gross profit margins of almost any product on sale anywhere. But theatrical cinemas need critical mass to sell enough popcorn to thrive.

Tuesday, August 15, 2017

Lovefilm, Hate Broadband

The British DVD by post rental business bought by Amazon is being closed down.

Commerically, this makes sense, but it does throw up a couple of issues for movie buffs across the country.

The first one is that of broadband. iPlayer, let alone Amazon Prime, is a pipe dream in the village where I live in Wales (despite paying the same licence fee as everyone else). Fibre was promised in September 2015 after the Welsh Assembly Government paid vast sums to BT. But nothing has happened, and now the latest estimate is some time in 2018. I'll believe it when I see it. There are plenty of other places in the UK suffering similarly through government and Ofcom incompetence and timidity.

Even the local shop has stopped stocking DVDs for rental, thanks largely to the likes of Lovefilm. So the only option is to buy DVDs from, oh, you guessed it, Amazon, for the same price each as a monthly subscription. A huge financial penalty on those already struggling to send and receive email.

The second issue is broader. The actual choice of movies, even that can be paid for, is pretty variable across all the online services. The focus has been on box sets, with studios still hoping to preserve their theatrical release windows for feature films. 

Finding cult, niche and international movies is even more difficult still and often involves trawling across multiple services using one search function after the next. (How about a meta search service, Roku ?)