Most broadband providers today view streaming video content like a redheaded stepchild. They don’t really know how to approach it, and they’re not sure about how it fits into their current business. But they sure can’t ignore it.
Streaming video is in demand and is quickly rising in popularity.
In fact, a new study indicates that streaming video accounts for as much as 70 percent of downstream traffic in the U.S. This number should only increase over the next few years, as businesses and residential consumers alike use streaming services like YouTube and Netflix more than ever due to the convenience and affordability of the model.
So, why are U.S. broadband operators vexed about how to approach content? They’re concerned that broadband content is stealing customers away from their traditional television services. This is the crux of the “cord cutting” issue. What’s more, operators are contractually precluded from streaming their linear content, as they are required to use the streaming services and applications of the content providers who supply it. Operators are forbidden from charging anything for application access. Because of this, streaming content can only serve as added value to operators’ existing video lineups.
The good news for operators, however, is that while it’s not possible to profit from streaming video, it is possible to profit from the extra bandwidth that customers need to access it. Streaming video, after all, requires a fast and efficient network. This is where broadband operators have the upper hand. Want proof? Just try to watch Netflix with a poor Internet connection. Nothing will cause a consumer to reach for his or her television remote faster than a slow buffer rate.
With this in mind, the best thing that broadband providers can do moving forward is to accept the fact that streaming video isn’t going anywhere, yet they can still stay relevant to consumers and profitable. Broadband operators are encouraged to pump as much money into their networks as possible to ensure optimal performance. These providers should also consider offering tiered pricing models, and rewarding customers who use less Internet bandwidth and charging a premium rate for customers who use a heavy amount of it.
At the same time, operators must continue to offer the old standby traditional cable service at an affordable rate. Streaming video may be popular but it shows no sign of replacing cable television anytime soon.