Making sense of the online video world

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Josh Wein

Hello readers. I'm Josh Wein, FierceOnlineVideo's new editor. Each Wednesday, I'll share my thoughts on the industry and send you the week's top stories. I'm excited to bring you my take on industry news and eager to hear yours, so please be generous with your feedback and input. The more I hear from you, the better and more useful FierceOnlineVideo will be.

I come to Fierce after seven years covering the intersection of media business, technology and regulation for Communications Daily. Online video has loomed large in that territory. Many characteristics of the Internet run counter to traditional media distribution business practices, and it has been fascinating to watch as companies stake out business, legal and policy positions in this new field.

I'm also a regular consumer of online video. I use YouTube almost daily to listen to music. I own a TiVo (Nasdaq: TIVO) and a rabbit-ears antenna. I watch video from Amazon (Nasdaq: AMZN), Hulu, Netflix (Nasdaq: NFLX) and Apple (Nasdaq: AAPL). When my DVD player died last year, I did not replace it.

These options were not available a few years ago, and it's easy to forget just how young the industry still is. The companies which dominate the sector today are not assured a continued spot at the top any more than NBC was guaranteed to maintain the lead among broadcast networks that it enjoyed at the height of "Must See TV."

Netflix has a head start with a large subscriber base and a deep understanding of its viewing habits. I'm not convinced that will be enough. As competition increases, it will only become easier for subscribers to abandon Netflix for a different online video provider. Traditional pay-TV distributors are getting into the game with services like Streampix and Redbox Instant. Netflix has identified HBO as its biggest competitor among pay-TV networks. Intel and Amazon are each apparently working on new video devices that will connect directly to a TV set, and Apple has been rumored for years to have some new TV product in the pipeline. And Google (Nasdaq:GOOG), with its dominant position in ad-supported online video and $50 billion of cash on hand, cannot be ignored.

Moreover, cancelling an online video subscription is simple, and content owners know this. When I got rid of my cable subscription in Washington, D.C., I had to return my set-top box to an equipment depot on the other side of town, where I was met by a friendly worker behind a window of what looked like bullet-proof glass. When I decided to drop Hulu Plus for a few months, all it took was a few clicks from the comfort of my couch.

This is fantastic for consumers but puts distributors in a dangerous position. Without a deep library of high-quality programming, they risk losing viewers. But such libraries are expensive to license and even riskier to produce. Content owners know these new customers have little choice but to pay up. And if content owners--call them the sports leagues, studios and independent producers--really aren't happy with the deals they're getting from distributors, they can either take their ball and go home or find another way to reach their audiences.

It's a volatile time and I am looking forward to helping FierceOnlineVideo's readers make sense of it. -- Josh

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