14 April 2012
There is a lot of hype surrounding the revolution that cloud services and wireless connectivity will bring about the distribution of digital content to audiences. Surfing the web, it appears as though traditional content distribution networks are about to become obsolete in the face of the financial and technical performances of the Internet.
In my opinion, this perception is not only unsound but also short-sighted since it doesn’t take into account the usage trends that are typical of people accessing Internet-related services.
If we look back only a few years to an age that in Internet terms can be defined as prehistory, we can see that bandwidth demand and access followed the same growth of other critical technology components, such as hard disk capacity, for example.
When the first PC came out the average size of a hard disk was 64MB and back then it seemed more than enough to store WordStar documents, a capacity we thought we were barely capable of exhausting. With the arrival of email, 64MB of hard disk became barely enough to hold part of the messages and attachments we were receiving or sending.
Today the average laptop hard-disk capacity is 250GB, more than 3,900 times bigger, but we still manage to fill our drives. This time it’s not mail that fills our storage devices but pictures, music, and video.
The bigger the hard disk, the greater the freedom of application developers to use it and to come up with file-types that encode more and more information, unthinkable just few years ago. No matter how large the hard disk, there will always be more content available to quickly fill it up. When hard disks were 64MB, nobody dreamed of storing a picture on them because there wasn't enough space to hold them. Now that hard-disks are capable of storing pictures, audio, and video, we are overwhelmed with applications that allow us to share, consume, and store music, movies, and pictures.
Bandwidth works in the same way. When the Internet started we were coping with connection speeds between 4 and 9 Kbps, and we were happy. Of course we weren’t even dreaming about the possibility of watching videos over the internet, but we were happy enough with sending mails and small attachments.
Today we are dealing with Internet speeds between 4 and 9 Mbps, 1,000 times bigger than a decade ago, and we’re busy capturing and sharing videos and music and don’t have to think twice about streaming or downloading a 50 GB 3D movie.
The hard truth, overlooked by many companies and investors who are frantically betting on the ability of the Internet to distribute anything, anytime, anywhere, is that the more the average household bandwidth grows, the more studios and application developers will produce bigger, more demanding and more engaging content and services, just as with the hard-disk capacity.
In the 90’s we were happy with SD and MPEG2 and we invented satellite networks to distribute such content. In the first decade of the new millennium we were able to access SD content over the Internet, and still broadcast, satellite, and cable networks thrived distributing HD content which could not fit through the Internet home pipes. Today we can easily watch an HD movie over the Internet (even if it will cost us in time to download it or in our monthly broadband bills) and broadcast, satellite, and cable begin distributing 3D since Internet pipes cannot handle such traffic.
No matter how big Internet pipes will be there will always be new content that cannot be distributed through them. The way the internet has been designed (point-to-point vs point-to-many “a la” broadcast) makes it an expensive network for the distribution of content to mass audiences, far more expensive than the broadcast network.
This trend is likely to continue for the foreseeable future which means that we have a window of opportunity of 10-15 years at the very least, in which broadcast content to mass audiences we’ll be far more cost effective than streaming or downloading it through the Internet.
What about that for a business opportunity?
VP Sales & Marketing Motive Television