Wall Street analysts are predicting the end of free video streaming in the near-term as media and cable companies regain control over online content for themselves.

Cable companies are partnering with content producers to move a growing amount of streamed video content behind paywalls in an effort to protect their core business profits.

The trend is evolving so rapidly, analysts like Laura Martin with Needham & Co. predict the end of free streaming is imminent.  Either customers will pay upfront or use TV Everywhere “authentication platforms” that require evidence of a pay television subscription before being able to watch.

Craig Moffett, an analyst with Sanford Bernstein, perennially sees cable operators as the most likely winners in the billion-dollar entertainment battle.

“They’re winning the broadband wars,” Moffett says of the cable industry. “Broadband is increasingly the flagship product, not the video distribution business.”

Cable networks and program producers are growing increasingly alarmed at the impact video streaming services like Hulu and Netflix are having on their bottom lines.

Case in point: the fall of Nickelodeon, a popular children’s cable network that used to guarantee high ratings and lucrative ad revenue.  Recently the network has fallen off the ratings cliff.  Some careful analysis found the reason why: Netflix.  Nickelodeon, along with many other cable networks, licensed a number of their series to Netflix for on-demand viewing. In households with young children, parents increasingly choose the on-demand Netflix experience for family viewing over the traditional cable channel.

Moffett

That’s a major problem for content producers and networks, and Moffett quotes industry insiders who predict licensing deals for Netflix streaming will increasingly not be renewed (perhaps at any price) as networks retrench to protect their core business.  What is left will soon be behind paywalls, limited to customers who already subscribe to a pay television service.

That line of thinking is already apparent at Time Warner (Entertainment), Inc., where CEO Jeff Bewkes rarely has a good thing to say about Netflix.  His company refuses to license a significant amount of their content for online streaming because it erodes more profitable viewing elsewhere.

Time Warner only licenses older content and certain “serialized dramas” that have proven difficult to syndicate on traditional broadcast television or cable outlets.  But the company keeps kid shows to itself and its own distribution platforms, like Cartoon Network.

When it does let shows go online, it wants them behind paywalls.

Bewkes applauded Hulu’s recently announced plans to move its service away from free viewing.  Authenticating viewers as pay TV subscribers before they can watch “makes sense” to Bewkes.

“Hulu is moving in the right direction now,” Bewkes said.

Big media companies do not want significant changes to the viewing landscape, where major networks front the costs for the most expensive series, and cable networks commission lower budget programs and repurpose off-network content.  Pay television providers bundle the entire lineup into an enormous package consumers pay to receive. That is the way it will stay if they have their say.

“Just because consumers would rather get individual channels a-la-carte, on-demand, and streamed — only what they want to pay for — [if they think] that is inevitably the way the world if going to evolve, not so fast,” Moffett said. “It may be the way consumers want it and it may be the way technologists want it, but the media companies have a say here.”

“There is no way they are going to voluntarily unbundle themselves,” Moffett said.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Moffett on Cable Operators 4-30-12.mp4[/flv]

Craig Moffett talks about the current state of the media business on Bloomberg News.  He sees trouble ahead for online video streaming, as powerful media and entertainment content distribution companies reposition themselves to better control their content… and the revenue it earns.  The big winners: Cable operators, Hollywood, and major cable networks.  The losers: Consumers, Netflix, Hulu, and free video streaming. (11 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Martin Sees End of Free Streaming TV Content 5-4-12.mp4[/flv]

Laura Martin with Needham & Co. predicts the imminent demise of free video streaming. Media companies can’t handle the loss of control over their programming, and the erosion of viewers (and ad revenue) it brings.  Martin tells Bloomberg News she sees a future of paywalls blocking access to an increasing amount of online video content.  (5 minutes)

Google's prototype

Google’s plan to revolutionize eyewear by turning it into a virtual Internet appliance could be tempered considerably by the Internet Overcharging schemes enforced by most of North America’s wireless phone companies that would provide the connectivity.

Google’s Project Glass reportedly will produce the first set of Google glasses, which provide eye-activated online content, before the end of the year.  Without any vision correction, the glasses are anticipated to retail for $250-600, not including your wireless Internet plan.

Chris Green, principal analyst at Davies Murphy Group Europe, told the BBC Google may have bit off more than they can chew, and that other companies have considered similar techwear but abandoned prototypes because technology was insufficient to adequately power the devices.

I see a data cap.

“Monetization opportunities would be enormous, but there are still big issues involved with shrinking the technology and making the computer that receives and processes the data truly portable,” Green said.

The glasses project icons and images within the wearer’s field of vision and allow voice-activated control and communication.

The constant connectivity could provide a major new revenue source for usage-capping wireless providers, especially if the wearer decides to pass the time watching something other than what is directly within the field of view. While short messages and updates would have almost no impact on wireless data allowances, streamed content, especially video, could.

That may make the initial price tag for the glasses the least expensive part of owning them.

A two-year contract for wireless data can run more than $720 with companies like AT&T.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Google eyeglasses can surf internet 4-3-12.flv[/flv]

Google’s prototype eyeglasses can surf the Internet in this Google-produced video envisioning potential uses.  (2 minutes)

Phillip Dampier

Sometimes you have to wonder if some people have no shame.  Former Sen. Chris Dodd, who now collects a fat paycheck as chairman of the Motion Picture Association of America, has his fur in quite the ruffle this morning, upset to learn thousands of websites have voluntarily gone offline in a one day protest against proposed copyright legislation bought and paid for by the industry he now represents.

“Some technology business interests are resorting to stunts that punish their users or turn them into their corporate pawns, rather than coming to the table to find solutions to a problem that all now seem to agree is very real and damaging,” Dodd said in a statement.

Corporate pawns?  The irony of Dodd’s use of the revolving door between his public office and the special interests he used to oversee (and now earns a living from), was lost on him.  So was the fact the MPAA and its recording industry cohort the RIAA have spent the past several years alienating consumers extorting settlements out of those presumed guilty, under threat of being sued for much more.  With years of overreach and customer alienation under their belts, pardon America if they suspect Hollywood’s latest anti-piracy plan is more of the same.

Dodd served the people of Connecticut when the music and movie industry began a series of crackdowns on content theft that did more harm than good.  This is the industry that fought the right of consumers to record TV shows on home VCR’s for later viewing, wanted to tax blank media, raised prices on CD’s and DVD’s to the point it fueled piracy, for years refused to license legal online content in ways that would have undercut piracy, imposed “digital rights management” technology that effectively curtailed fair use of content consumers purchased for themselves, and sued customers it suspected of stealing — innocent or otherwise.

Dodd

But Chris Dodd doesn’t work for the American people any longer.  He works for giant corporate studios and now represents their interests.

Dodd is especially upset because the Stop SOTA protests may actually be effective at shutting down the railroading of the so-called “Stop Online Piracy Act” through Congress.

“It is an irresponsible response and a disservice to people who rely on them for information… A so-called ‘blackout’ is yet another gimmick, albeit a dangerous one, designed to punish elected and administration officials who are working diligently to protect American jobs from foreign criminals,” said Dodd.

The industry has spent millions trying to position their legislation as a solution to shady offshore counterfeiters and content thieves, but the bill’s most significant provisions hit much closer to home.

The proposed legislation would allow the Department of Justice and content owners to seek court orders against any site accused of “enabling or facilitating” piracy.  Since America’s long arm of justice can reach only between the states of Hawaii and Maine, this most important provision of the proposed bill would do little to curtail those “foreign criminals.”

SOPA also demands that search engines censor themselves to remove anything Hollywood suspects of infringing copyright from search listings.  As the Electronic Frontier Foundation has documented for years on its Chilling Effects project website, such powers have already been used within the scope of the Digital Millennium Copyright Act to wipe out listings that just reference copyrighted works, occasionally even by third parties that have no real standing to file the complaint.  At least websites responding affirmatively to DMCA complaints are protected from unknowingly violating copyright law.  Under SOPA, those protections are bypassed, potentially making even innocent infringement liable for civil action and search engine blocking.

Much of the enforcement, likely encouraged by companies Dodd now represents, will be done at the behest of Hollywood studios and other deep pocketed content producers.  Ultimately, most of the impact will be felt by consumers suspected of “infringing,” many who effectively lack the financial resources to prove their innocence.

Any web publisher would need to think twice about publishing anything online, if only because the financial risks of defending oneself against alleged copyright infringement would be onerous.

Since most of the criminal element Dodd claims to be concerned with is in it for the money, the most obvious solution is simple: remove the financial incentive.  A victim of copyright infringement need only seek a court order that bars financial transactions between theft-oriented websites and the online payment processors that supply the money.  Barring credit card companies, online payment services like PayPal, and other payment services from accepting money for copyright infringement puts the criminals out of business fast.  Existing provisions in the DMCA already force search engines to remove infringing content.

The alternative is turning the Internet over to the Hollywood copyright police, who along with the movie industry have demonstrated a long history of broad brush enforcement that cares little about the presumed innocence of the accused.

MediaMall this week introduced PlayLater, a new software DVR for online video, allowing users to record online streamed content from Hulu, Netflix, or from almost any other website, storing unlimited content on your personal computer for later viewing.

PlayLater is being marketed as a companion to the company’s first product — PlayOn, which streams virtually any video format to television sets and portable devices like smartphones and tablet computers.

MediaMall’s products directly target pay television “cord-cutters.”  By serving up unlimited video content from web video providers — recorded or live — to television sets and portable devices, there may be more than enough to watch without paying for hundreds of cable networks you don’t care about.

PlayLater works easiest with its built-in online program guide, listing programming from the various “channels” the service supports.  Already “built-in” is listings for online content from Hulu, Netflix, Amazon’s Video On Demand, Pandora, YouTube, CNN, Fox News, TNT, and at least a dozen other networks.  Third party “plug-ins” extend the number of “channels” to other video content websites.

Viewers simply find the show or shows they want to record through the guide and press the “record” button to begin the capturing process.  Shows are quietly recorded in the background, and small pop-ups alert you when various recordings are completed.  The resulting files, recorded in a secure DRM Windows Media format, reside on your hard drive for later viewing.  You can record as much as your hard drive can accommodate, and beta testers quickly found they often amassed hundreds of recordings over a month — providing more content that most cable DVRs can handle.

When combined with MediaMall’s PlayOn, PlayLater viewers can take the show on the road, watching their stored shows over a television set in the next room or in another state, remotely streamed over your broadband connection.  You can also watch on Android or iPhone smartphones, or on tablet computers like Apple’s iPad.

MediaMall products come with a 14-day free trial, but after that you have to pay to keep watching.  The company intends to sell the packaged suite of PlayOn and PlayLater for $7.99 a month, or $69.99 per year.

Stop the Cap! has been using PlayOn at our headquarters for a few months now, and we’ve been very impressed with the results.  PlayOn effectively streams virtually any video file format we throw at it over to our Roku box.  It has largely replaced our first generation Apple TV running Boxee software, which has gotten progressively more troublesome with age.  The picture quality over our wireless N network has been excellent, and the accompanying Android app has also worked well streaming shows over Verizon Wireless’ 4G LTE network or Wi-Fi.  With Time Warner Cable’s 30/5Mbps DOCSIS 3 broadband service, PlayOn’s picture quality remains excellent even when streamed to remote televisions.

PlayLater is an interesting concept, but we’re not as impressed with MediaMall’s newest endeavor, for these reasons:

Android Phone PlayOn Media Player

MediaMall has no official partnerships with any of the content producers supported by the product.  After covering other product innovations that offer consumers increased viewing convenience, we’re certain content producers will adopt the same hostile response to PlayLater they have with other recording software that allows viewers to store a digital copy on their home computer.  That response could come in lawsuits or through technical adjustments to try and block access to PlayLater.  The company says the legality of their software DVR should not be an issue, considering consumers can already record shows on cable company DVRs and home video recording units.  The biggest “risk” for MediaMall is the fact it allows users to record and save shows from services like Hulu, even after their “online viewing window” expires (typically after a month).  You could theoretically build a season-long collection of shows with PlayLater, a concept that violates Hulu’s terms and conditions.

While the concept of a DVR for online viewing allows for convenient time-shifting, most of the shows available to record are already available “on-demand.”  It makes little sense to record a show you can launch and watch anytime you want.  MediaMall says their product will appeal most to travelers who find themselves without an Internet connection, either because they are flying, driving, or visiting relatives without Internet access.  In these cases, watching pre-recorded shows may make sense. We think the concept of automatically recording shows from live video streams (or from Slingbox, cable or satellite TV) would be more helpful.  Those of us who would like to keep cable but dispense with overpriced DVR rental fees would thank you.

The PlayLater application currently works only on Windows-based computers.  A Mac version is reportedly in development.

Remote viewing requires the PlayOn companion application, which means leaving two software programs running continuously.

Recordings are DRM-protected and technically rely on a “screen-recording” approach, albeit one that takes place in the background.  Recordings occur in real time, and the video quality suffers slightly from the transcoding between the original media format and the DRM-protected video file eventually produced and saved on your computer.  Tests showed some occasional screen glitches when busy websites suffered from traffic congestion.  We also found very slight audio sync problems from time to time, but were barely noticeable.

You can’t currently move the video files and watch them on another computer or device — they either have to be watched on the original computer, or streamed with PlayOn to another device.

The package may be too expensive for some viewers’ tastes.  Without PlayOn, PlayLater sells for $4.99 a month or $49.99 a year, but that ties your viewing options down.

Overall, PlayLater will probably be most attractive to those who find themselves uncomfortably without their Internet connection and looking for something to watch.  If you install the software on a portable laptop (left on to handle recordings), watching on the computer itself may prove to be the most convenient way to watch.  But we’re not impressed with the restrictive DRM making it impossible to simply transfer recordings between devices without streaming, and the concept of recording on-demand programming that can be watched whenever one wants anyway is not going to convince a number of people to pay $50 a year for the software.  PlayOn has proved far more useful to us than PlayLater probably ever will.  But one benefit we did appreciate with PlayLater — the ability to easily skip the increasing commercial load found on Hulu.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/PlayLater.flv[/flv]

An introduction to PlayLater.  (1 minute)

Sharing your Netflix account with your spouse or your son at college? Under a new Tennessee law, both you and the other party could spend up to a year in jail for “theft of entertainment services” if Netflix, or any other entertainment service says that is not okay.

Eyebrows were raised in Tennessee this week as Republican Gov. Bill Haslam admitted he signed the new copyright protection bill into law while telling reporters “he wasn’t familiar with the details of the legislation.”

Rep. Gerald McCormick (R-Chattanooga), who worked last summer to completely deregulate AT&T’s phone service in Tennessee spent this spring pushing for adoption of a bill sponsored by Nashville record labels to up-end state copyright law in favor of content producers.

The entertainment industry, having failed to win wholesale support of its copyright protection agenda in Congress has now taken to lobbying individual statehouses for new state copyright laws.  Tennessee is the first among 50 states to extend its long-standing cable-TV theft statute to include content over the Internet.

Under the law, anyone other than the account owner who uses their account name and password, even with permission, is a violator and subject to a criminal misdemeanor charge punishable by up to a year in jail and a fine of $2,500. If the username and password opens access to content collectively worth more than $500, the charge becomes a felony with correspondingly harsher penalites and fines.

Some reporters questioned whether the law could mean sharing your Netflix, iTunes or Rhapsody account with an immediate family member meant you were breaking the law.  The answer is, you might, although bill supporters doubt it would be prosecuted.

“What becomes not legal is if you send your user name and password to all your friends so they can get free subscriptions,” McCormick told the Associated Press.

Currently, most online content providers don’t have a problem with immediate family members sharing accounts.  Netflix allows at least two concurrent video streams of its online content.  Music services often recognize three or more “authorized devices” on which content can be shared and accessed.

But if attitudes change, content providers can file complaints when they realize their service is being accessed by multiple parties at the same time or in multiple places.

"Gerald McCormick will support anything if you staple a big check to your cover letter."

The music industry in Nashville openly admits it strongly advocated for passage of the bill, claiming the music business loses millions from account sharing.  But critics of the new law attack it as overly broad.  One defense lawyer suggested it is so broad, it could be used to prosecute people who share magazines.

Proving a case to hard-working law enforcement officials could also present a problem says Jeff Polock, a Knoxville-based law enforcement and consumer advocate.

“We have enough trouble fighting crime on the streets,” Polock tells Stop the Cap! “While law enforcement officials appreciate the dilemma of copyright theft, many officers are not going to be technically skilled in building a case over who shared what password in the dorms at the University of Tennessee.”

Polock suspects the new law will be wielded against larger wholesale copyright offenses, if only to avoid the threat of negative publicity.

“Can you imagine what the local evening news would do if they arrested some father in Chattanooga for sharing his iTunes account with his daughter at school here in Knoxville?,” Polock wonders.  “It’s not like these people are downloading stolen copies of content they are not paying for — they are running a single iTunes account so the parents can monitor what their kids are buying, watching, or listening to while away from home.”

As for McCormick, Polock has choice words.

“Gerald McCormick will support anything if you staple a big check to your cover letter,” Polock says. “The man is never too far away from corporate interests trying to win favorable legislation in the state legislature.”