THE MOVE TO THEINTERNET OF ENTERTAINMENT

The technology drivers of media change are the rapid advances in microelectronics and photonics. They raise performance and lower the cost of creating, processing and storing information, and distributing it to and among users.

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The Internet is both the result and the accelerator of these technology trends, becom­ing the central institution of the new media environment. It changes many aspects of society and the economy. And it is subject to change itself. Originally, it was a text-based system serving the needs of engineers and scientists. As it became cheaper and more convenient to transmit and store information, the Internet became a consumer-based platform for communications and transactions. Prices kept dropping while performance rose, with the result that media uses beyond text became possible and affordable, first for photos and music and then for video. In this phase of the evolution of the Internet, entertainment is the demand driver.

Entertainment includes music, games, and text-based media.

Early dial-up Internet speeds started at a few hundred bits per second and eventually rose to about 56 thousand (kilo) bits per second. At that speed one could download a film for subsequent viewing but it would have taken several years to download an uncompressed HD quality film of 90 minutes duration. This was impractical for a mass medium.

The constraints were whittled away in several ways:

• By reducing the required data stream with compression algorithms that eliminate unneeded bits. This cut the speed requirements by a factor of up to 100 (currently H.265/MPEG-4).

• By building more powerful transmission networks reaching the user. Consumer- affordable broadband data communications connectivity rose in speed from kilobits to megabits and even reached gigabits. The main approaches were digital subscriber lines (DSL) on telecom copper networks, coax cable, fiber-optical lines, and combinations of all. These technologies enabled speeds a thousand times faster than dial-up. Another transmission medium that increased in speed and reach were wireless mobile networks. The fourth generation of mobile services (LTE - long­term evolution) enables megabit speeds, and added geographic ubiquity to user connectivity.

• Viewers’ acceptance of a picture quality that is lower in resolution than the high- definition video of cable TV.

• Faster signal processing at the user end of incoming video transmission and its transformation into moving images on various devices, including TV sets, PCs, tablets, and smartphones.

• Cheaper storage of video bits on the consumer end, enabling user-based buffering and archiving, as well as the placement of servers closer to users.

Taking these factors together, video could be transmitted about 200 000 times “faster” than in the days of dial-up. This meant that the downloading of video became readily possible. It was accomplished in four ways:

• File-sharing of users with each other, facilitated after the year 2000 by sites such as Kazaa, Gnutella, and BitTorrent, which enabled peer-to-peer video transfers without license from the copyright holder.

• Licensed transactions through direct sales by retailers such as Apple’s iTunes Store after 2005.

• More interesting, perhaps, were two other approaches. The first was streaming. The higher video transfer rate made it possible to move to a low-latency (live or near-live) system. This enabled convenient and spontaneous use of on-demand libraries on distant servers, without time-consuming advance downloads. It also enabled lower transaction prices since the owner of the content could grant a one-time viewing license rather than a permanent one. And it also made possible the transmission of live content. In 1993, the garage band Severe Tire Damage - whose drummer happened to be the Chief Scientist of Xerox PARC - claimed to have been the first live video performance on the Internet. The first sports transmission was reputedly the New York Yankees playing the Seattle Mariners, in 1995. Similarly, websites offering independent films, music videos, and events emerged during the dot-com bubble years. AtomFilm, DEN, and Pseudo.com drew users and created buzz but mostly went under in the ‘Black September’ of 2000, because the number of users with fast enough broadband connectivity was insufficient at the time.

• The second innovation was the emergence of user-based video content storage sites. Of these, YouTube, founded by three former PayPal employees in 2005 and taken over by Google in 2006, became dominant.

As the streaming model emerged, a period of intense rivalry followed among the developers of the required video player software - Microsoft, Apple, RealNetworks, and MacromediaZAdobe whose Flash developed into the leading platform.

Another rivalry involved devices enabling users to connect their TV sets and other video devices to the Internet in order to access content. This included Echostar Slingbox (after 2005), Apple TV (2007), Roku (2008), Boxee (2010) and Amazon FireTV (2014) - all of which offer a controlled (‘walled garden’) set of reachable content originations. In contrast, Google Chromecast (2013) has a browser and allows accessing most sites. Boxee incorporated social media connectivity, but was phased out after 2015.

By 2005, the elements for consumer-friendly video over the Internet had started to come together. Commercial applications took off, using several models that coexist and contend with each other. They are listed below. Many of the providers mentioned actu­ally operate with a mixed system that incorporates several of the approaches:

1. Video hosts: Google YouTube (2005) is the prime example, with over 6 billion hours of video consumed each month and 1.2 billion monthly visits. Other providers are Vimeo; Dailymotion (France); Youku Toudu (China, 2005); and Yahoo Flickr.

2. Video stores: Examples are Apple iTunes; Amazon Instant Video; Google Play; Sony Crackle; Walmart VUDU. Some of these players also store the buyers’ films. This reduces, in practice, the difference between downloadingZowning and streaming. The difference becomes mostly one of a pricing arrangement.

3. Video subscription services: Examples are Netflix; Amazon Instant Video (including LoveFilm in the UK and in Germany, since renamed Amazon Instant Video in the UK); Zattoo (Switzerland and Germany); Redbox Instant; EverywhereTV (sub­scriptions for re-transmissions of foreign TV broadcasters); and Alibaba Tmall Box Office (China).

4. Advertising-based content sites: Examples are Veoh and Viacom CC Studios.

5. Online sites of traditional broadcasters and channel providers: Examples are BBC iPlayer; ITV Player; Now TV (21st BSkyB); Hulu (21st Century Fox, NBC, Disney); Time Warner HBO Go/HBO Now; and Viacom Showtime Anytime.

6. Program sites of specialized content providers: Examples are the servers of profes­sional sports such as the World Wrestling Entertainment (WWE) Network and the National Basketball Association (NBA).

7. Internet distributors of broadcast TV channels: The provider Aereo supplied over-the- air TV to subscribers by way of the Internet, for a fee. While the approach was fought by broadcasters and stopped by the US Supreme Court, the technical model is sound and returned in a different licensing configuration. Examples are Sling TV and Sony PlayStation Vue.

These seven categories can be loosely described as ‘over-the-top’ (OTT) content provid­ers, in reference to being delivered over the networks of facilities-based Internet service providers (ISPs) but independent of them and hence ‘on top’ of their channel bundles. The ISPs, however, can also provide their own Internet content services, typically as an extension of their video-on-demand offerings, and this comprises an eighth category of video services:

8. Online on-demand content provision of cable channels by cable or telecom providers: Examples are Comcast Xfinity; Verizon FiOS; and AT&T U-verse. Most cable operators offer their subscribers access to cable channels.

All of these providers are jostling each other on numerous fronts - for users, subscrib­ers, advertisers, content providers, network partners, consumer electronics platforms, cloud hosts, software applications developers, marketing buzz, regulatory benevolence, and court approval. They arose first in those countries most active in Internet and video or that possess a large user base, but they are now spreading everywhere. Even greater disruptions are likely from the globalization of content distribution that is inherent to the fairly distance-insensitive Internet and its huge economies of scale. Whereas in the past video distribution was mostly a national matter through geographically defined and regulated TV broadcasters and cable providers, online video is characterized by world­wide footprints, at least on a technological/economic basis, though not necessarily on a legal/regulatory one.

In the process, the Internet is increasingly becoming a distribution pipe for entertainment content. Already at the end of 2012 during evening peak hours, entertainment video usage in the USA accounted for 67 percent of all download traffic. With 31 percent, Netflix accounted for about half of that total (Sandvine, 2013). YouTube took up another 18.7 percent. Together with other video use on the Internet, video constituted over two-thirds of all peak hour Internet traffic in 2013, up from near zero in 2005. Real-time entertainment has accelerated enormously and will likely continue on this trajectory. In terms of video usage, US viewers consume about 1.16 hours per day of video over the Internet. Since Americans watch, on average, 40.7 hours of video per week (Nielsen, 2013), this suggests a very high growth potential.

Thus, based on traffic flows, the Internet is moving away from a system prima­rily used for transactions, information, data, and person-to-person communication, and is becoming a global mass entertainment medium. This is in contrast to the perspective that has gained much currency, that of the ‘Internet of Things’, where machines exchange data with each other in a near autonomous fashion. Although such traffic is also growing rapidly, in terms of bits transmitted it pales in comparison to entertainment.

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