Did Comcast Just Change Online Video Forever?

by , May 21, 2012, 12:45 PM
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Comcast’s decision to start charging users based on data usage could mark a significant turning point in the evolution of streaming media -- especially if other Internet service providers follow suit.

Last week, the cable and Internet service provider said it was scrapping the 250 GB data cap it imposes on Internet subscribers in favor of a new, usage-based pricing model, which would begin testing in certain markets. As part of the new plan, Comcast said it would increase the minimum cap for all subscribers to 300 GB.   

If usage-based pricing becomes an industry standard, the most obvious and immediate change would be that consumers can no longer stream as much content as they wish.

As TechCrunch’s Ryan Lawler points out, the idea of usage-based pricing comes at a tricky time in the evolution of online video.

For starters, online video consumption is ramping up steadily. According to comScore’s just-released online video rankings for April, Internet users consumed nearly 50 percent more video last month than they did the year before -- a total of 21.8 hours on average compared to 15. Of course, this total pales in comparison to the 150 hours of television that Nielsen reports the average person consumed per month.

Given that monthly online video consumption is still relatively low, data usage might not look like much of an issue -- at least not now. For example, Lawler says the average video on Netflix uses about 1 GB of data per hour under its normal setting, or 2 GB of data for its highest-quality setting. This means that if consumers could stream all of their TV content online on Netflix’s highest-quality setting, they would just hit Comcast’s 300 GB cap.

But what happens as video quality improves? Lawler points out that higher-quality video will result in higher bit rates and more data streamed per piece of content.

Another point of consideration is the fact that most television sets are not yet connected to the Internet. What will happen when connected TVs are in every household and consumers expect to seamlessly watch HD-quality content over the Web?

As Lawler says: “Comcast, of course, says that its new, usage-based pricing policy is pro-consumer, and to a certain extent it is. The average broadband subscriber -- those who only use up about 8 GB or 10 GB of data a month — shouldn’t necessarily pay the same as those whose usage goes above 300 GB in the same period of time.”

“But in the future, if I have to pay an additional $10 for every 50 GB of video I consume over a 300 GB limit…then I’m not so sure it’s worth it. That’s the world we’re about to enter.”

2 comments on " Did Comcast Just Change Online Video Forever? ".

  1. Chris Westerkamp from Active Youth Network
    commented on: May 21, 2012 at 2:59 p.m.
    So comcast thinks they can just set up a tollbooth on any highway and charge people - like they have done with TV. Don't they know customers can just go to another ISP provider? Perhaps they should spend their time offering an a la carte menu that provides customers what they want rather than their ridiculous packages they sell. Wake up guys
  2. Adriana Zambrano from Self Employed
    commented on: May 21, 2012 at 3:19 p.m.
    Chris Westerkamp from abc6 / WLNE-TV - that is exactly what my household did. We got rid of DirecTV bought the highest internet package from ATT (very well priced) and now we own a Roku box. We will never go back to these companies. They seem to be very disconnected from their audience. As a marketer I can't imagine marketing a higher price for the same crappy service. Comcast and other companies like them need to realize that we don't watch TV like we did 5 years ago. Follow suit from the cell phone industry they are picking up on trends- and so should TV companies. Consumer demand innovation if not the ocean of opportunities and companies is vast- they will go somewhere else. Hopefully Roku is picking up on this and positioning themselves.

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