Real Time Entertainment on Internet renders TV Obsolete

Since the inception of the TV business, the rules have been very clear: If you want to sell TV services, you need something in short supply – Broadcast Spectrum, vast sums of capital to run every home with coaxial cable and the last one in the evolution was DTH/DBS orbital slot and a geosynchronous satellite. Today, to sell video services, you need a web server. Real time entertainment (RTE) is the most significant source of fixed-line data traffic in every region of the world. It makes up 62% of traffic in North America, 46% in Asia and 36% in Europe

We’re in the midst of two revolutions: the rise of broadband and the proliferation of apps. These two revolutions will meet. And, that meeting will likely occur in your living room. In effect, TV will migrate from the push-based delivery of linear channels over closed TV systems, to a pull-based delivery of specific shows via an app over an open system.

In the US, Australia and Canada, 16-19% of all video consumption occurs on the web today. This includes real-time entertainment (RTE) and file sharing services. In some market like Netherlands, Sweden and perhaps Germany have high pay TV penetration rates, high broadband speeds and adoption augmented with robust free-to-air TV stations that can complement free web based videos. RTE traffic comes in three groups: 1) actual RTE sites like YouTube, 2) RTE peer casting services like PPStream and QVOD and 3) RTE that uses a specific protocol like Flash Video or MPEG (that is typically embedded within web browsing sites).

China has emerged as a leap frog market. Today, partly due to the highly regulated nature of TV offerings, online video represents about 58% of total video consumption. China is a global outlier in this regard. Many of the
salient metrics that typically drive heavy on-line consumption are low. Internet penetration is just 43%. Average broadband speeds are just 2.8Mbps. And pay TV adoption is also relatively low at 47%.

The Answer to these questions – Is the Internet capable of delivering robust video content inexpensively? and Is the existing TV market ripe for web-based substitution? will determine the success of Real Time Entertainment in any geography across the globe.