Understanding Broadband Video

Why is broadband video the single most disruptive influence on the video market?

We believe that broadband video is the single most disruptive influence on the video distribution value chain. This is due to the fact that broadband is the first open delivery platform, allowing video producers to reach their intended audiences without any third-party intermediary involved. Since the video business has depended on well-understood formulas and refinements to its models, broadband disrupts all the key players' market positions and strengths.

The graphic below depicts broadband's openness. In it, video producers as diverse as Yahoo, Major League Baseball, NYTimes.com, YouTube, CNET and Budweiser are able to deliver their video through the Internet and a local broadband Internet access provider (such as a cable operator or telco) and finally into the home.

This open delivery model contrasts with the traditional video distribution value chain which has been controlled by a relatively small number of broadcast and cable TV networks, local TV stations and distributors such as cable TV and satellite operators. For consumers, broadband means virtually unrestricted access to new forms of video programming.

Today broadband video is delivered to computers, which are also the primary place the video is consumed. The two question marks in the graphic denote key unresolved issues in the new world of broadband delivery, namely: how will broadband video ultimately reach the TV, the device most comfortable for consuming long-form video? Will this be accomplished by devices that bridge the worlds of broadband and TV such as the Microsoft Xbox, AppleTV or Slingcatcher? Or will this be accomplished by broadband ISPs' providing set top boxes that have integrated capabilities of delivering broadband video? Or will all of these devices co-exist? The answers to these questions will play out over the next couple of years.

Regardless, as an open delivery model, broadband is creating a range of new opportunities and challenges for all market participants.



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