Canada a test bed for online consumption
January 11, 2011
The results of a video-streaming study dubbed Project Canada show, not surprisingly, that online movie and TV streaming services can boost broadband data usage.
One surprise finding is that consumers make decisions about balancing their media consumption habits – and bills – among over-the-air (OTA), cable and over-the-top (OTT) services.
The online media study was conducted at the New York branch of investment bank Credit Suisse, with analysis provided by media analyst Spencer Wang and his team. It was conducted to assess the affect of broadband consumption based pricing (CBP) on Internet-delivered video from non-cable or telco services such as Netflix, which recently launched in online service in Canada.
The US does not have consumption-based pricing, in which consumers pay more as they use more, but it has been at play in Canada for two years or more, so customers here have been exposed to the ‘pay-as-you-go’ scheme. Several US companies are looking at CBP plans, but have not implemented any as yet.
Credit Suisse wanted, therefore, to use Canada as a test bed to see what kind of impact such online services will have on both broadband usage (and of course, pricing) as well as TV billing.
The investment firm tested Netflix Canada streaming service for one month over a Rogers Communications connection.
As Wang reports in the study summary, “Not surprisingly, our case study finds that an OTT service like Netflix can lead to a material increase in broadband data usage – in this case, ~20 GBs of data for the month, or ~1GB per hour of standard definition online viewing.
“In turn, based on Rogers Communications’ data pricing structure, this would have resulted in a $12 per month increase in broadband for our test home.
“To offset this, the household would need to trade down to a lower subscription video package, at the expense of fewer linear channels.”
Content distributors and creators, as well as consumer advocacy groups, have warned or worried about the impact of non-traditional distribution services in the market. Increased ‘cutting the cord’ and ‘sticker shock’ was predicted in some cases, but also anticipated is more movement to pay as you go data, be it online or wireless.
Also anticipated is continued international expansion by companies like Netflix. Content providers or ‘pipe owners’ that have assets across all distribution platforms are well positioned and benefiting from increase cash flow, the report noted.