The march to video distribution over the Internet that rivals traditional subscription pay television continues. TiVo announced an agreement with YouTube that will bring YouTube content directly to the television through a TiVo DVR Series 3 set-top-box or better. In addition to viewing YouTube content, YouTube users will also be able to log on to their account through a TiVo box. The YouTube agreement expands TiVo’s Internet video content strategy, which also includes Amazon Unbox movie downloads and a variety of other content from various sources. TiVo is trying to position its solution as a gateway to web based content, in addition to a leading DVR solution for traditional linear television content. “Being able to make available YouTube videos to the TiVo subscriber base using one device, one remote and one user interface is another major step in our commitment to combine all of your television and web video viewing options in one easy to use service,” said Tara Maitra, Vice President and GM of Content Services at TiVo Inc.

One trend that is worth observing over the coming months and years is applying the “cut the chord” mentality to cable or IPTV services, where consumers decide they don’t need cable anymore because web distributed content is enough. As more and more compelling web based content makes it to the TV in acceptable formats and viewing experiences, many consumers will surely decide that their monthly video subscription bill may not be worth it. It’s definitely having an impact on the roll out of IPTV. I’ve personally spoken with several telephone company executives who have decided to stand on the sideline and observe these trends a little more closely before deciding to pull the trigger on IPTV and triple play. This is a complicated issue, and a variety of factors come into play that will impact these decisions, including HDTV availability, sports programming, etc. It's hard to imagine Internet video distribution completely replacing the subscription pay TV model. But it is pretty clear that any converged entertainment strategy needs to address web based video. In my humble opinion, “the genie is out of the bottle” with web based video and service providers and the vendors who serve them need to find a way to weave web video options into their entertainment packages. The experience that ultimately wins will probably offer a compelling mix of both traditional and Internet delivered content. At least until the day when it will be impossible to tell the difference. That day is coming too, we just don't know how far off it is. Any guesses?

Hulu, the online video joint effort between NBC and Fox, has exited beta and is now open to the public. Hulu is an ad supported online video play and allows free viewing of over 250 TV series and 100 full-length feature films. Hulu entered beta in October 2007. Hulu claims over 5 million users through its site or through its distribution partners which include AOL, Fancast.com, MSN, MySpace and Yahoo.

Embarq announced the availability of a new online video store, available through their myembarq.com web portal. The broadband video on demand store will offer more than 5,000 movies, 5,000 music videos and 2,000 TV shows that can be rented on a pay-per-view basis, download to own, or downloaded to burn onto a DVD. The cost to rent titles on a pay-per-view basis is $1.99 to $3.99 each, and each title will be available for a single 24 hour viewing window within 30 days after rental. Purchase prices for new videos are expected to be for $19.99, with older titles for less. Embarq’s broadband video store is powered through Cinemanow. Embarq joins fellow independent telco, CenturyTel, with a recently launched Internet video product. Qwest has also stated they intend to pursue a broadband Internet strategy, and will forgo an IPTV powered subscription video model.

BroadbandTV will deliver the a la carte programming nirvana that consumer’s desire, and it will do so at the subscription pay TV model’s peril. That’s according to this recent BusinessWeek article, Winning the Broadband TV Game. The authors postulate several theories which suggest that consumers will adopt broadbandTV to gain access to the content model of "give-me-what-I-want-when-I-want-it,” and reject the current model of “take-what-we-offer-you.” They also suggest that 40% of U.S. consumers will have some way of connecting their TV displays directly or indirectly to the Internet within 3 years. By five years, that number will grow to 70% and represent a true mass market. The tipping point is well on its way because televisions are now shipping with Ethernet ports and broadbandTV enabled gaming consoles will be in one third of all U.S. TV households by 2010. The implications suggest that cable, DBS, and telcoTV providers are in trouble. “The barriers that have long inhibited Internet-based TV are beginning to crumble. The TV manufacturers will win; the gaming companies will win; the best new platforms blending personalized and branded content will win; Hollywood will win; and consumers will win. And, unless they find ways to adapt very quickly, telecoms and cable companies will lose.”

To be fair, the BusinessWeek article is authored by Herve Utheza and Gary Morgenthaler, both of whom are heavily invested in the broadbandTV space. But they bring up some interesting issues. The reality of broadbandTV today is it’s simply too complicated for average consumers to install, find, and watch content consistently. Should those barriers be lowered through things like broadbandTV enabled set-top-boxes, game consoles, and even the televisions themselves, the story could change. If broadbandTV does truly become plug and play, we may very well see some Utheza and Morganthaler broadbandTV predictions come true. Cable and telcoTV providers may be challenged to adapt their business and revenue models to ensure they don’t concede their subscription TV business to the burgeoning broadbandTV ecosystem. DBS may feel the broadbandTV pinch more, because they don't have broadband connections to the home, making a broadbandTV strategy somewhat more complicated for them.

Netflix and LG announced a partnership to develop and market a set top box that downloads content direct to the TV. This solution removes the need for a PC and joins similar efforts from Amazon/TiVo. The service is expected to be available this fall. The set top box solution will be HDTV compatible, but the announcement was not clear as to whether the downloads will be in HD. Netflix currently has 7 million subscribers, most of whom rent from Netflix’s 90,000 DVD titles via the U.S. mail. In addition, Netflix reports about 1 million members take advantage of their existing PC download service which offers about 6,000 titles. There have also been recent rumors that Apple will announce a similar strategy later this month.

Direct to TV downloads is a growing phenomenon – one that may have serious competitive implications for triple play providers. The jury is still out on whether consumers will adopt the service en masse. There are considerable challenges to overcome, including adding yet another set top box (and remote control) to the equation. Some analysts argue that video downloads will only work if the service gets integrated into an existing STB/DVR, or the existing STB is replaced with an “all in one” STB which includes video download capability. Service providers including cable and telco are studying how/whether to incorporate video downloading. Some like AT&T (through their AT&T Homezone service) already do so. It would seem that existing providers have the upper hand if they incorporate video downloads into their existing subscription TV model. Solutions like the announced Netflix/LG partnership may be able to build a niche following, but I think they would have a very difficult time supplanting large numbers of cable and telco video subscribers. Time will tell of course and predicting consumer behavior is an inexact science to say the least.

Charter is bragging a little, claiming their cable modem service is faster than their telco competitors. Their claim is backed by research conducted by comScore, a Reston, Va based research firm. comScore conducted a study comparing Charter cable modem service with DSL services offered by AT&T, Qwest, and Verizon in Charter markets. The study results “ranked Charter's high-speed Internet offerings to be faster, with more reliable speeds, than the combined Internet offerings provided by national phone companies in those areas where Charter provides service.” The fine print of this research should be read to understand how comScore arrives at these conclusions.

As I read these types of announcements, I can’t help but think, "ok", or maybe even, “so what.” It’s pretty well documented that cable modem speeds are faster than telco DSL offerings. So I guess I wonder where the real news here is. I guess it somewhat speaks to the level of competition and the accompanying stakes. When you publicly state the obvious, it reveals that something has you worried. Charter currently offers high-speed Internet tiers of speeds up to 5 Mbps, 10 Mbps, and 16 Mbps in select markets. No widespread DSL offering can match those speeds. At least not yet. AT&T, Verizon, and Qwest have either announced their intention to or are currently building networks that match or exceed these speeds (certainly not universally though). Verizon is taking an FTTH strategy, while Qwest and AT&T are doing FTTC/DSL hybrids. The day is coming when neither side will be able to easily make “faster speed” claims. They'll then have to compete on other merits.

Comcast will launch Gemstar-TV Guide’s broadband TV guide on Comcast’s portal site. The online guide allows subscribers to search for online video content from 55 broadcast, cable network and other major entertainment-focused Web sites, as well as from “professional grade” user generated videos. Gemstar says they have indexed over 110K user generated content clips. Each distribution partner, which in addition to Comcast includes YouTube, AOL Video, Yahoo, Brightcove, and others, creates a customized broadbandTV portal, powered by Gemstar-TV Guide’s technology.