Exiting The Walled Garden

Truth be told, until recently I was happy living inside Apple's walled garden. Their cute, affordable Apple TV enabled me to access Netflix, Hulu+, YouTube and first-run content from iTunes.

Like all Apple products, Apple TV was amazingly easy to set-up. Even better, it played nice with my other Apple products: iPhone and iPad, in particular. Any content I rented on iPad, for example, could be accessed via Apple TV through the magic of Apple's proprietary AirPlay feature.

AirPlay turns an Apple TV-connected television into a mirror screen for whatever is presented on my iPad or iPhone. It's not limited to just iTunes content, for example. AirPlay let me beam my iPhone photo albums onto the big screen, or stream music from my iPod (app) to my television sound system with a simple tap.

AirPlay is further proof that controlling your hardware and ecosystem, as Apple does, can deliver unique, joyful customer benefits. Giving up AirPlay was tough, no doubt. All that iTunes content - several films and television shows - all now stored on my iPad, is inaccessible with my new Roku 3 device. Still, it's been worth it. Not only do I have far more viewing options with Roku, I have already saved myself a tidy sum on iTunes "late" fees. 

No More Late Fees Ever!

For all its deserved credit for putting its users needs first, Apple nonetheless imposes a rather maddening 24-hour video rental limit on its iTunes content. If I start watching a movie, even a long one like The Hobbit, for example, I must finish it within a day or pony up another $3.99 rental fee. 

This isn't just unfair, it's likely to drive customers away - like me. After all, does Tim Cook even know why Netflix exists? Because its founder, Reed Hastings, got dinged with a $40 late fee. I've probably paid Apple more than that. 

At least Blockbuster - remember it? - had a reason for exhorbitant late fees. After all, rent a DVD from their store and it's not available to anyone else. Not so in our magical, streaming, all-digital reality. If I rent The Hobbit from Apple's iTunes, I am in no way limiting anyone else's ability to watch the film. Apple even lets Canadians have 48 hours before igniting their virtual destruct button. Yes, I checked - it's in the company's rules. 

My dismay at having to pay an additional $3.99 to catch the final - unworthy - act of The Hobbit proved serendipitous. Roku is better. 

From iTunes To Amazon

The Roku 3 is available for the same price - $99 - and is about the same size of the Apple TV. Roku, however, has far more content viewing options available - the company claims over 750 "channels," including Disney and HBO+. Roku is also easier to navigate, provides a better search function and, best of all, finally delivers Amazon Instant Video to my big screen.

Amazon Instant Video has content equivalent to iTunes, is just as easy to rent from, and, like Apple, offers a free iPhone/iPad app that makes it a snap to watch rented videos on my mobile device. Plus, for Amazon Prime members, like me, there is a great deal of video content that is available for free.

Even better: Amazon's rental rules aren't quite as restrictive as Apple's. With Amazon, rentals expire in 24-48 hours. In my case, most of what I watched allowed me the full two days. Yes, including The Hobbit. More than once - as I tested this - some movies remained alive for 72 hours. Perhaps Amazon looks the other way?

The Little Differences Add Up

For both Roku 3 and Apple TV, there are no channels, per se. Rather, content is available from within various apps. To watch Netflix, for example, you select the app and browse their content. To watch Hulu+, select its app. There are, however, a few striking differences between the two platforms:

• iTunes, to no one's surprise, is available only on Apple TV.
• YouTube, much to my surprise, is not available on Roku. At least, not in a standard, accessible app format.
• Roku has a clever "one stop" search function that scans across multiple apps. No more searching for a TV program inside each app to find out if it's available.  
• Roku's remote control app for iPhone is slightly better than Apple's - in large part because Roku offers more content to choose from.
• In my personal tests, streaming over WiFi was slightly more reliable on Apple TV. 

Despite the loss of AirPlay, and the one-touch compatibility with my iPhone and iPad, I stand by my new choice. Roku is better.

Apple has allowed itself to be handily beaten by an upstart in an area that Tim Cook claims Apple is very interested in - control of the television and delivering premium digital content.

Perhaps instead of a "grand vision," the company should focus on improving its existing offering.

Images courtesy of Apple Inc. and Roku. 

But what if owning a data center is a liability, not an asset?

Zynga's zCloud Experiment

This seems to be one lesson from Zynga's recent battering. Yes, Zynga CEO Mark Pincus was referring to head count, not server count, in a recent all-hands employee meeting when he said, "We want to get back to being a nimble company that moves quickly to innovate, iterate, and find the player heat." But he might as well have been talking about the company's big investment in its own infrastructure.

As InformationWeek's Charles Babcock reported in 2011, Zynga has long had a strategy of moving successful games from the cloud - Amazon's EC2, part of the Amazon Web Services cloud platform - to its own data center. But in mid-2012, Zynga seriously accelerated this, pushing 80% of its workloads to its own servers and off AWS to improve efficiency. Along the way, Zynga built out its own zCloud to take the load of its increasingly popular games.

But "efficiency" can be read more than one way, especially with the waning of popularity in some Zynga game titles.

The Inefficiency Of Ownership

As Netflix cloud architect Adrian Cockroft notes, commenting on Zynga's cloud strategy, there may be better ways to save money than by building a data center:

If we need to save money, we optimize usage, tune code and spend less. No lock-in to big datacenter spend. I'd rather spend $100M capex on the next original series or a new country launch than a datacenter. How much did [Zynga] spend on ZCloud, and what's  the utilization level now? Opportunity lost to spend on new product.

Zynga laying off 18% of workforce - bet they're glad they built their hugely expensive "Z-Cloud" now, rather than being on AWS.

— Jack Clark (@mappingbabel) June 3, 2013

The more you build your own infrastructure, the thinking goes, the more you're tied to the possibilities that infrastructure affords. Sometimes that may be good, as it seemed to Zynga when it was on the ascendancy. But even then, spending money on expensive data centers is money that can't then be spent on other areas of the business. And it's debateable that any one company has the money to keep up with Amazon's pace of innovation, as Cockroft has argued, and as the company encapsulates in a presentation on business and development flexibility:

The Bottom Line

All this aside, it's not clear that Netflix is right, and that Zynga is wrong to build its data center. What is clear is that Zynga doesn't seem to be getting the business flexibilty from owning its infrastructure that it needs. Perhaps the new sign of startup success will be operational excellence on someone else's infrastructure, à la Netflix, rather than the need to go buy infrastructure in bulk.

People have been watching TV programs online at places like Hulu and Netflix for years. But until recently, most that viewing has involved programs that had previously aired on broadcast or cable TV. There have long been geek-centric webisodes of TV-esque programming online, but nothing that everyday people would watch. This year, things are changing. 

"An Inflection Point For Online Television"

For evidence of the mainstreaming of Web-first TV, look no further than the online revival of All My Children and One Life to Live. The classic TV soap operas are returning not to a broadcast network, but to Hulu and iTunes. It may sound like a distribution strategy fit for a tech video podcast or no-name Web TV series, but these are soap operas. TV doesn't get more mainstream than this.

(See also: The Internet's Assault On Traditional TV Is Working)

Citing an "inflection point for online television", the shows' backers are betting big on the notion that enough people watch TV online these days to make this a profitable endeavor. If recent history is any indication, it's a safe bet.

The first sign of Internet TV's legitimacy among mainstream audiences came earlier this year with House of Cards. We still don't know precisely how many people tuned into Netflix's TV-quality political drama, but it's clearly been popular among the service's 29 million subscribers, as well as many critics.

Most importantly, the show got people talking. Not just tech-savvy people living their lives online, but normal, everyday people. Suddenly, you could hear House of Cards being chattered about at parties as though it was the latest drama on HBO, whose U.S. subscriber count Netflix just surpassed. (Sort of, at least.)

At 4 million subscribers, Hulu is markedly smaller than Netflix, but it's growing fast. And unlike Netflix, Hulu lets non-subscribers stream shows for free from the desktop, so the potential reach of shows like the new All My Children isn't capped at 4 million, or even 29 million, for that matter. Then there's iTunes, through which viewers will be able to purchase individual episodes.

The Imperfect Science of Measuring Web TV

Even on these popular online services, these soap operas will almost certainly fall short of the kind of ratings numbers they used to see on daytime TV. It's impossible to know for sure, since each of these services has different viewership metrics and they're not particularly eager to share. Even Netflix, which proudly boasts the success of House of Cards, won't say just how many people actually watched the show. 

The measurement challenge might begin to change soon, as Nielsen moves toward measurement tools that Internet sources into account. Next month, a temporary pilot run of its Nielsen Digital Program Ratings will track online views from the networks' own websites. In time, the tracking method could become a standard utilized by an array of online video services, finally painting an accurate picture of what's getting watched. 

Nielsen has a long way to go with Internet TV measurement, but the fact that it's tinkering with a decades-old formula is a sign that online TV viewership is now too enormous for it to ignore if it wants to stay relevant.

Before the year is halfway over, we'll have another test of Internet TV's mainstream appeal when Arrested Development's fourth season lands on Netflix. Like the soap operas, Arrested Development is making the leap from TV to online, but in this case the show is backed by eight years of anticipation and the same data-driven smarts that all but ensured House of Cards would be a hit. 

Again, we won't know how many people will actually tune in to the new season of Arrested Development unless Netflix decides to share that data. In the meantime, we'll have only limited, largely anecdotal clues to go from. Perhaps the most important: Are people talking about this? I don't mean on Twitter, but at the bar. That's how we'll really know that a new era in television's history is underway. 

Despite the industry's furious efforts to starve or shut down its online rivals, the Internet is starting to carve out a respectable slice of TV's future. The good news is that while the coming transistion is likely to be rough on many established networks and providers, it's going to be great for consumers and developers. Here's how.

Netflix Bounces Back, Surpasses HBO 

Case in point: Netflix. The video subscription service has bounced back from its 2011 faux pas to not only regain members, but surpass HBO in U.S. subscribers for the first time ever. As Quartz's Zach Seward points out, Netflix now commands more daily attention than any cable channel in the United States. 

See Also: Do We Really Need Amazon TV? No, But Amazon Does

Netflix's dominance over HBO in particular makes for some pretty symbolic future-of-TV discussion fodder. It is, after all, HBO that refuses to offer its programming as a stand alone subscription service, despite growing demand for such a option. It is precisely its old media business relationships and norms that are holding HBO back from letting non-cable subscribers use its HBO Go app, a fact that seems worth recalling at this particular moment in history. It's no wonder that the company's CEO is publicly rethinking that strategy and admitting to reporters that cable-free access to HBO Go may be an inevitability.

It's also interesting to note, as Seward does, that HBO started out much like Netflix did, by first making out-of-theater movies available to subscribers, and then moving into original programming. 

The Internet Masters What Matters: Programming

For the last few years, it was the hardware, distribution and overall experience of watching TV that started to change at the hands of the Internet and mobile tech. Now, crucially, we're getting down to what matters most: the stuff that actually draws viewers. 

The trend toward original, Internet-only, TV-style programming is something we tech blogs have watched and opined about for the better part of a year. In the first half of 2013, the theoretical promise of original Internet TV has morphed into a confirmation that it is, in fact, something normal, non-techie people care about.

Netflix's Lilyhammer may not have changed the landscape, but it was an important precursor to House of Cards, which appears to be doing exactly that. Meanwhile, Hulu, Amazon and YouTube continue to make their own investments in original programming to compete with cable and network TV. 

The success of House of Cards has led to a great deal of discussion about the rise of data-driven TV programming and what it means for TV's future. Unlike the people who have traditionally made TV programming decisions, Netflix is sitting on a mountain of data about its users. That includes 30 million plays and 4 million ratings per day, in addition to details about when people watch, from which devices, which parts they rewind and more.

By looking at this trove of data, Netflix was able to place a pretty safe bet on the notion that a remake of this particular BBC show starring Kevin Spacey and directed by David Fincher would do well. 

Netflix isn't the only company tapping its users to help with video programming decisions. This weekend, Amazon asked viewers to rate the pilot episodes of 14 different Web series, which apparently resulted in quite a few views for the original programs. The company hasn't launched a stand-alone Netflix competitor, but Amazon Prime appears poised to evolve into such an offering. There's even an Amazon TV set top box rumor, hot off of the presses.

Aereo: Please Excuse This Interruption

Next month, people living in and around Boston will be able to join New York's early adopters in subscribing to Aereo, an innovative and controversial Internet TV service. Since its launch, Aereo has under assault by much of the TV industry, which claims its antenna-renting and re-broadcasting model of mobile and Web TV amounts to copyright infringement. That may or may not be true, but it's certainly threatening their business model, which is why they wasted no time in trying to sue Aereo out of existence. 

So far, Aereo has prevailed. That is, early court rulings have sided with the startup's claims of fair use and thus declined to shut it down before the lawsuit goes to trial, which will undoubtedly be an interesting affair to follow. 

If Aereo survives this litigious onslaught, it's poised to be one of the most disruptive forces the industry has seen in awhile. And while that would be bad news for network executives, it's actually pretty great for consumers, who will be able to tune into broadcast TV online without dealing with rabbit ears or a cable provider. It would also be a huge win for the Internet in the battle for TV's future.

The Original Web Programming Revolution Continues

The next big test for Internet-only TV will be the return of cult classic Arrested Development, a new season of which will land on Netflix next month, eight years after Fox dropped the original. If the show's enduring popularity and House of Cards' recent success are any indication, May will be a good month for Netflix. 

We won't actually know how well Arrested Development does, though. That's because like House of Cards and everything else on Netflix, it isn't tracked by the same TV ratings system that has measured TV viewership in the U.S. for six decades. The only numbers we get from Netflix are the ones it chooses to share. The company isn't typically generous with that data, which is somewhat ironic considering how much its users willingly hand over.

That all might be about to change, as Nielsen gets ready to update its TV audience measuring methodology to include Internet sources. It's not clear whether the long-overdue update will track views on Netflix when it gets rolled out this fall, but the normalization of TV measurement should help paint a clearer picture of what's getting watched, regardless of the distribution channel. 

If nothing else, the Nielsen update further illustrates the extent to which TV is changing in the age of streaming services and mobile devices. 

First, the upside: It's great that Netflix was able to get an outdated law changed to remove an illogical stumbling block to innovation. If only it was always so easy. And in theory, I see why showing me my friends' recently-viewed movies could have some value. On a basic level, this feature makes sense.

(See also: Thanks Congress, But We Need Privacy Laws, Not More Social Sharing)

Netflix also deserves some credit for limiting the integration so that it doesn't barf my entire viewing history onto Facebook by default. I have to explicitly tell Netflix that I'd like to be that obnoxious. Instead, it uses Facebook's social graph to help recommend shows and movies within Netflix itself.

But do we need more frictionless sharing? 

Here's something nobody ever says: "I really love the way I can see everything my friends are listening to on Spotify via Facebook." They might say, "My friend posted a YouTube video of this awesome new song" or "I noticed everybody was posting about this new album, so I checked it out."  There are a few problems with this model.

I Don't Want To Share Everything

Not every detail is worthy of sharing, because not every detail is important. If I watch five minutes of a movie to see if I like it, it shouldn't get the same social vote as my all-time favorites. 

Netflix has much more valuable data than simply "John Paul watched Arrested Development." It knows about my historical viewing habits, informed in part by ratings and preferences I've explicitly declared. That's much more insightful than whether or not I clicked the play button. Hopefully these signals will find their way into Netflix's social integration in time (if they're not lurking under the hood already). 

Sometimes we like to indulge in things that we wouldn't necessarily tell the world about, just like I might occasionally blast "This is How We Do It" by Montell Jordan on Spotify in the middle of my workday when nobody's around. (Now you know). On Netflix, you'll be able to opt out of sharing on a video-by-video basis, which is smart. 

But I still think sharing should be an opt-in experience, not an opt-out one. Something should be important enough for me to *want* to share it and then willingly expend the effort required to do so. I shouldn't have to stop before playing each video and think, "Wait, do I want to *not* share this?"  If we have to think a thought like that, we're probably sharing way too much. 

I'm Not The Only One Who Uses My Netflix Account

Chances are, you're not the only person watching TV shows and movies on your Netflix account. I know I'm not. If my roommate is binging on Keeping Up With the Kardashians, do you really want me to auto-recommend shows to you? 

A roommate is one thing, but what about an entire family? As Techcrunch's Sarah Perez writes, anybody who connected to her via Facebook and Netflix is going to see a lot of Dora the Explorer, Tinker Bell and Sesame Street, because that's what her young daughter likes to watch. The more crowded your household is, the less useful this data becomes. 

Thankfully, Netflix is working on personalized profiles to help solve this problem, but they're not ready yet. Until that feature launches, this one is going to be decidedly imperfect. 

I Already Know What My Friends Like, Because We Talk To Each Other

With or without Facebook, television and movies are already an inherently social type of content: We watch them with friends and family and we talk about them in social gatherings. I already know what my friends like, because we're human beings who, despite heroin-grade addictions to technology, still talk to each other face-to-face.  

Seriously, I feel like I have a pretty good idea of the shows and movies that people I know like, with or without an algorithm. It's entirely possible Netflix could dig up some gem via Facebook's social graph, but if it's worth watching, I'm sure I'll come across it eventually. Besides, I don't know about your queue, but mine is perpetually overloaded. 

Doesn't Facebook Already Know Enough About Us? 

Companies like Facebook already know so much about us. Do we really need to funnel more data about our lives onto their servers? 

I realize this is just an inevitable feature of our digital world and that I should suck it up. And usually, I do. Google knows even more about me than Facebook. I willingly hand over all that data, but it's getting to the point where if divulging a new set of data about myself to some company isn't going to add a significant and obvious value to my life, I'm going to skip it.

Of course, I'm already surrendering this information to Netflix by using their service in the first place. But my relationship with them is clear: I pay $8 per month and I get to stream whatever content they're offering. They use data about me to improve the experience, and I happily keep shelling out that money.  

With Facebook, it's less clear. I joined without much thought eight years ago, am vaguely addicted to it and constantly wonder how much value I'm really getting out of the service. It weirds me out sometimes. I think about quitting.

It's also still forging its business model. It won't rely on subscription fees, but instead will find a way to turn that data about me into dollars.  That's fine, in theory, but I don't know exactly how they'll do it or if I trust them in general. 

Meanwhile, in the real world, the Netflix global index is really nothing of the sort. For one thing, Google Fiber, which offers service to a fraction of exactly one U.S. city, isn't exactly representative of the nation's Internet as a whole. For another, the Netflix index doesn't even include powerhouses like Korea and Japan, which routinely kick ass in global Internet-speed comparisons.

Of course, Netflix doesn't offer service in Asia, and that's your first clue that its Internet speed index has been assembled for reasons that have little to do with straightforward comparisons of global Internet speeds.

Netflix itself is relatively open about this. It describes its data as a way to "give you monthly insight into which ISPs deliver the best Netflix experience." And that's your second clue as to what Netflix is really up to here.

Netflix has long been prodding ISPs to join its Open Connect content delivery system, which it describes as a dedicated, low-cost video-file distribution system. Many big ISPs in the U.S., however, have resisted Open Connect, even when Netflix began making streams of 3D and high-definition video available only to customers of Open Connect ISPs. Of course, many ISPs offer their own video-on-demand services that effectively compete with Netflix, too.

Coincidentally or not, broadband providers Google Fiber, Cablevision and Suddenlink, all three of which have signed on to Open Connect, happen to top Netflix’s U.S. Speed Index. So it's not hard to imagine that Netflix's newfound interest in providing consumer information about ISP speeds just might have something to do with pushing its content delivery network to as many companies as possible. Especially since Netflix has been known to enlist its customers to call their ISPs for this very purpose.

Without Fiber, The U.S. Is Near The Bottom

While the speeds posted on Netflix's index are far lower than the ISPs themselves would normally claim, the streaming service explains it this way:

The average is well below the peak performance due to many factors including home Wi-Fi, the variety of devices our members use, and the variety of encodes we use to deliver the TV shows and movies we carry. Those factors cancel out when comparing across ISPs, so these relative rankings are a good indicator of the consistent performance typically experienced across all users on an ISP network.

While the U.S. does have a whopping ten ISPs that clear the 2 Mbps threshold, it still has seven providers that fall below that, with Clearwire at the bottom coming in 0.5 Mbps slower than Mexico's Axtel, which clocked in at 1.30Mbps. With 17 ISPs on Netflix's list (and a slew of smaller companies scattered all across the country), that gives us one of the most competitive ISP markets on the planet, making it a shame that we can't all get the speeds of Google Fiber, or at least in the 2 Mbps range. 

Take Google Fiber out of the equation, however, and average U.S. speeds drop to 1.8 Mbps from a reasonably strong 2.3 Mbps. That's only 0.1 Mbps faster than Ireland, and 0.2 Mbps speedier than Mexico, which is last on the list. Finland and Sweden, by contrast, blow away the non-Fiber U.S. with respective speeds of 2.57 Mbps and 2.51 Mbps. Which gives you a sense of just how weak most U.S. ISPs are, even in a not-quite-global comparison.

Image courtesy of Shutterstock

By the time the 2013 fall season begins, the 23,000 homes Nielsen uses to sample TV viewership will be equipped with a new system that takes Internet content into consideration, according to a scoop by the Hollywood Reporter. 

Piecing Together Fractured Viewing Habits

The report was short on details, but from the looks of it, Nielsen is going to start tracking select online video sources like Amazon, Netflix and Hulu as well as streaming devices like Xbox 360 and other gaming consoles. By the end of the year, TV viewership from iPads will be counted as well. That's good, considering the rising popularity of iPad apps like YouTube, Netflix and Hulu Plus and the ongoing push by cable operators and networks to make shows available on tablets. 

It's not clear which online content sources will be tracked at launch, since participating in Nielsen's ratings measurement system will require opt-in technical changes to the way those videos are encoded and streamed. 

"On the path to capturing all viewing in all homes, this foundational change addresses the lion’s share of viewing, in effect including any home with a TV that can receive video via an external source," Pat McDonough, Nielsen's SVP of Insights and Analysis told ReadWrite via email. "In collaboration with clients, we will continue to expand the reach of television audience measurement."

This isn't the first Internet-inspired change Nielsen has made to its methodology. In December, it announced a partnership with Twitter to launch a new social TV metric that will take into account the social chatter about popular shows. 

It's all part of Nielsen's larger plan to more accurately track media consumption habits that are increasingly fractured across time, devices and sources. Since the advent of TV, there's never been a change this dramatic in how people consume it. The seismic shift that's happening now calls for an equally significant retooling of how various aspects of the industry function. In a business fueled in large part by advertising, there are few moving parts more crucial than accurate audience metrics.  

Perfect Timing: Internet TV Is Growing Up 

The ratings updates come at a pivotal time for Internet TV. Online video has more than 182 million unique viewers watching 38.7 billion videos, according to ComScore's U.S. Digital Future in Focus 2013 report. The most popular video service remains YouTube, followed by Hulu, Vevo, Yahoo and AOL, in that order.

And we're not just talking about Justin Bieber songs and viral kitten videos anymore, either. In the last few years, YouTube, Netflix and Hulu have all been investing heavily in the production of their own TV-quality content. 

2012 saw a few Web original shows amass a notable amount of buzz online. This year, shows like Netflix's House of Cards are finally starting to grab the attention of everyday, non-cord-cutting viewers and generating almost as much discussion as popular shows airing on A&E or HBO. In May, Netflix will exclusively stream the fourth season of Arrested Development, a cult classic show whose low ratings got it booted from Fox a decade ago. Like House of Cards, the show is expected to draw plenty of attention, not to mention more new media pundits pontificating about the future of TV.

Online TV Ratings Could Help Fuel The Future

How many people will watch Arrested Development? We won't know, unless Netflix decides to tell us. And if it doesn't perform as well as hoped, why would it bother? The company declined to release viewership numbers for House of Cards, saying it had "no motivation" as a non-advertising based business to do so. 

That's true, but without an integrated, cross-platform method for tracking viewership, nobody inside or outside the industry has any way of knowing how popular a given show truly is. That's chiefly useful for advertisers, but such insight is valuable to plenty of others. 

There could hardly be an example more illustrative of the need for such a system than Arrested Development. The show got its start on broadcast television. As a Netflix exclusive, season four will be different only in how the episodes are released - all at once, rather than sequentially. Other than that, it will be very much the same show: Same dysfunctional family played by the same actors, presumably picking up the story line (or at least general premise) of the original. It's still a TV show, so why not measure it like one? 

As a journalist, I would love to know how well the new season does compared to the original three. Hell, I'd be curious to see how many views those first few seasons have racked up on Netflix since they've been available to stream. 

It's not just reporters, researchers and media nerds who could benefit from those insights. This is the first time a television show has made the transition to an online-only service. Will it work? Plenty of other content producers and streaming providers would love to know, and sharing such data could help inform future decisions about premium video content, potentially helping to shape TV's future.

When Amazon Web Services crashed on Christmas Eve (which brought down Netflix among other high-profile sites), Amazon offered this explanation: its elastic load balancers failed. Load balancers, as the name implies, distribute the network's workload. Among their most important functions is protecting the system's components from becoming overburdened and shutting down. 

After Amazon's outage, the Web became a virtual fount of suggestions for avoiding more such glitches. Some said Amazon's cloud customers should write their own load balancers. Others said service providers like Netflix should deploy multiple data centers as insurance against another PaaS failure.

(See also: Why Netflix's Christmas Eve Crash Was Its Own Fault)

Failure Is An Option

A month later, it seems clear to me: Cloud outages, while rare, will continue to be a fact of life.

Here's why: Perfection is simply too expensive. To achieve uptime of more than 99.99% requires an investment of  money, machine and human resources that - given the rarity of failures - just isn't worth it. The extra cost inevitably would be passed along to customers, all but negating the cloud's cost advantage. 

Instead, customers should expect PaaS providers to provide them with a well-reasoned plan for handling any disruptions.

PaaS providers should be the first to know when an outage has occurred:

• They should be able to estimate when service will be restored.
• They should know and be willing to report who was impacted, and whether data was irrevocably lost.
• After an outage has been reported and until service is restored, PaaS providers should supply customers with regular status updates.
• Once service has been restored, they should offer a detailed post-mortem as well as a plan for avoiding future interruptions.

Here's where it gets tricky: PaaS providers are understandably reluctant to offer gory details for fear that they will lose current or prospective customers. If the PaaS company in question is publicly traded, those fears will be compounded by the worry that its stock price will tumble.

The real reason to sign onto a PaaS has nothing to do with whether it claims to offer 100% uptime. You choose a PaaS provider because it offers scalability and elasticity, and the same efficiency and user experience regardless of the level of system usage. Applications can be built and delivered on a PaaS an order of magnitude faster when compared with non-cloud-based systems.

Using a PaaS not only reduces a customer's total cost of ownership - they operate on a pay-per-use model - it allows them to delegate tedious and time-consuming IT chores like system monitoring and maintenance. With that stuff out of the way, PaaS customers can focus their resources on truly adding value for their constituencies.

Even after the well-publicized outages, the reason so many high-profile companies - including Netflix - still use Amazon as their PaaS provider is because it does a great job of providing ready-to-use features. AWS isn't 100% reliable, but it can be used with very little up-front investment and scaled as needed. And that is an enormous improvement over the Information technology systems of the past.

Image courtesy of Shutterstock.

According to the new law, companies have to ask only once. You can opt out, but if you don't, say goodbye to the rights to your video data for two full years. As per the change, Netflix will introduce new social features that basically link users' Netflix and Facebook accounts and share their viewing history with friends. Netflix was previously unable to do this in the U.S. by the 25-year-old Video Privacy Protection Act (VPPA), which banned the sharing of personal data for anything but law enforcement purposes (even now, Hulu remains in court for previously sharing viewers' info). 

On the surface, sharing viewing history may not seem like a big deal, but the law undermines the privacy of Internet users, and takes away user control over significant amounts of potentially sensitive personal data. 

Looking back, it's ironic this new law even passed, as the VPPA was originally enacted in the 1980s in response to a local Washington newspaper publishing a list of Supreme Court nominee Robert Bork's rented videotapes during his nomination process. At that time, Congress was up in arms over this privacy breach, which helped scuttle Bork's appointment and led to the phrase "borked" entering the language. But less than a month after Bork's passing on December 19, 2012, it seems that Netflix investment of roughly half a million dollars in lobbying Congress to update the law was enough to do the trick. 

The Privacy Issue

Almost one year ago to the day, Marc Rotenberg, the executive director and president of the Electronic Privacy Information Center (EPIC), testified in Congress against the bill, citing his organization's interest in "supporting the rights of Internet users to control the disclosure of their data held by private companies."

"The debate over online privacy and Netflix does not exist in a vacuum," Rotenberg stated at the hearing. "It is becoming increasingly clear that only privacy laws actually safeguard the privacy rights of Internet users."

In an interview with ReadWrite, Rotenberg said he urged the Senate Judiciary Committee to update the law with new safeguards. His warnings were not heeded. "Senator Franken (D-Minn.) and Senator Feinstein (D-Calif.) made some improvements to the House bill but it was still a step backward for online privacy," Rotenberg said. 

So...is sharing bad for online privacy? The experts ReadWrite talked to seemed to think so.

Jules Polonetsky, the director and co-chair of the Future of Privacy Forum, said the the real issue is that people don't know they're sharing. When that sharing is done without user consent and system settings are unclear, it's bad for the public. "This is about the sharing of your records of video rental history, as opposed to on a clear, permission basis, enabling people to key-in sharing mode," he said. "Sharing should be in a clear opt-in basis."

Polonetsky compares the risk to what social video sites Viddy and Socialcam did when they first launched, gaming the Facebook system so anyone playing those companies' videos automatically alerted their Facebook friends to what they were watching. That accidental sharing is a major problem, Polonetsky warned.

"I saw a rabbi I know sharing a fairly raunchy video about girls on bikes, falling off bikes... a conservative, corporate lawyer sharing a somewhat offensive video, none of them clearly understanding that by clicking on some filthy link shared by their friends, to see what the attraction was, they'd be letting hundreds of their friends know and sullying their reputation."  

Rainey Reitman, the Electronic Frontier Foundation's activism director agreed. She said the move is bad for the public because unclear sharing undermines the "strong legal protections put in place to protect video watchers... A major concern is that individuals will enable the function and not realize that it is continuing to broadcast their video watching habits to social networks - for years."

Selling Your Video History?

Another potential problem stemming from the law, Reitman said, is whether video companies will use that information as a commodity and sell it. "Once data is combined with our social media profiles, it can be part of the data used by the online advertising industry for advertising purposes and we'll be forced to rely on the often confusing privacy settings on social networks to protect our video watching history."

Polonetsky said that turning on this stream of sharing data on a service like Facebook would likely increase targeted ads. He added that although this change tot he law has been pushed by Netflix, not Facebook, social sharing is a huge business driver, and ultimately a win for that site. 

"Generally [Facebook's] motto has been, we want a lot of data so advertisers can reach you," he said. "Facebook can and will make available what you're doing, what you're watching, what you're reading, to be used to tailor ads to you on Facebook - and increasingly off of Facebook."

Not All Bad?

The new law is not all bad, said Polonetsky. When it comes to sharing information people do want known, like live Television, sports and films while they tweet or post, it can be a boon for both users and entertainment companies. But it's only positive if people have an on-off switch, and awareness of what they're sharing.

"If you can actually draw together the eyes now watching this video, this game, and comment, I think there's a real positive," he said. Still, he warned that the way the new systems get set up will be critical to the law's long term effects. Again, the key is that people have to know the settings in order for the sharing to benefit them and not inadvertently spread information they'd rather keep to themselves. "It's got to be cut in a way that very affirmatively makes clear that you are in sharing mode so there's no cause for accidents. That's UI design."

Polonetsky isn't the only one who sees the glass half full. Privacy expert and attorney Alan Chapell of Chapell & Associates thinks the old VPPA law was out of date. He pointed to the fact that the law treated the video differently from other content, such as music services like Spotify, which are able to share. 

"The VPPA created a rule set that treated movie consumption differently from book and music consumption," he said. "Drawing that type of distinction in a digital world doesn't make sense. If a consumer wants to be able to tell friends, via Facebook or some other platform, which movies he's streamed via Netflix he should be able to do so."

Chapell is right, people should have the right to share when they want to do so. But the underlying issue is that this new law creates a system where the public could easily end up sharing personal data without their informed consent. 

Photo courtesy of Shutterstock.

The Web is very good at delivering text and static images, but when it comes to TV-quality video content, it turns out that cable providers are still much better at that. Internet TV has two serious handicaps: content and the user interface. In 2012, the status quo crept forward in both areas, albeit slowly. Next year, TV will continue its gradual evolution toward something completely different from what we grew up with. 

Social TV Grows Up 

The term "social TV" has bounced around tech blogs and media conference halls for a few years now. Next year, the intersection between TV and social media will mature beyond stats and fads and evolve into something that makes a real impact on viewers and show producers alike. 

The most telling sign that social TV is coming of age arrived just before the close of 2012, when Nielsen announced the first official Twitter-based rating system. It's not every day a technological force comes along that causes Nielsen to change what it's been doing since the 1950s. But research has shown that social chatter about TV shows actually correlates with ratings and Twitter itself has been taking its role in television more seriously through media partnerships and launching promotional campaigns for new shows. 

The concept of the second screen, where additional content can be viewed on a tablet or smartphone, will also evolve in 2013. Nearly 90% of tablet owners use them while they watch TV, but content companies and app developers have had a hard time figuring out exactly how to capitalize on this. Apps like Zeebox and iTV are well-positioned to serve as digital companions to TV viewers, while services like GetGlue and Miso will evolve past the social check-in and move toward content discovery. 

Meanwhile, we'll see more social media-fueled content discovery. Personalized "Flipboard-for-video" apps like Showyou, Frequency and Vodio are already changing the way early adopters find and consume Web video and technologies like Apple's AirPlay puts those socially-curated, lean-back video experiences on the TV. Expect to see this category mature in 2013 as new users flock to these apps. 

Apple Advances The Internet TV Interface 

Whether you're an Apple fan or not, it's hard to deny the sizable impact they tend to have on most markets they enter. Next year, television will go from being the "hobby" Steve Jobs talked about to an "area of intense interest" for Tim Cook and Apple's executive team. 

Apple's HDTV won't sell at a rate comparable to the iPad's explosion. Any expectation to the contrary would be silly, considering Apple is entering a well-established market, not inventing a new one. Whatever they come up with, it will set a new standard for how Internet-based video content is displayed on a TV screen and crucially, how that content integrates with tried-and-true TV programming from traditional providers. 

Internet TV's Original Programming Revolution

Original, Web-first TV programming from Internet companies was a big trend in 2012. Hulu, Netflix and YouTube all made major investments in original content, with each one experimenting with Web-only TV shows. Google has already begun weeding out the weakest offerings in an effort to fine-tune its TV-style content offering. 

The biggest test for the viability of Internet-only TV content will come next year when Arrested Development returns not to the Fox network on which it originally aired, but exclusively to Netflix. This will be the first time a popular show makes the transition from broadcast to Internet-only distribution. Will the new season live up to months of eager hype? How well will the one-season-at-a-time release schedule of Netflix work compared to the staggered airing of a real TV show? Will Netflix see a bump in sign-ups? 

The success of Arrested Development's new season will influence future decisions about Internet TV content, especially when it comes to beloved but off-the-air shows. If Netflix scores a big hit with the Bluth family, expect Hulu and YouTube to try and emulate its success. 

Remote 2.0: The Evolution of User Controls 

As imperfect as the user interface is for Internet TV, traditional television and cable set-ups aren't exactly known for their ease-of-use. Just ask my mother when she's faced with a coffee table full of remote controls. 

Apple will likely lead the charge here, but either way, expect the way we interact with TV content to get simplified. Fewer buttons and a more intuitive design are coming to a remote control near you, while on-screen menus get some polish of their own. One company experimenting with simplified remote control design is Bose, whose VideoWave entertainment system has a remote that sports a touch pad and six buttons, shifting most of the commonly-used buttons to the TV screen itself. The remote works with just about any external device, from Blu Ray players and XBox 360 to Roku and Apple TV. 

TV interface controls will also expand beyond pointing a remote control at the screen. In the future, we'll interact with TV content using our voices and gesture-based controls. We're already seeing a glimpse of how this will work thanks to the Kinect on XBox, the iPad and the various Siri hacks developers have created. Indeed, the inclusion of Siri is one of the most frequently-mentioned features of the rumored Apple HDTV. Meanwhile, Google has been baking its ever-more-effective voice search into more of its mobile apps. 

The Convergence of Mobile and Television

In 2013, expect your TV to look more like your smartphone. The convergence of television and mobile platforms will continue next year, as TV software designers rethink the user interface and AirPlay-style functionality grows more mainstream. 

As mobile video apps mature and consumers get used to the idea of wirelessly beaming their tablets to their TVs, the line between mobile and TV will blur. Ease-of-use is key here. Hassle-free connectivity of the sort offered by Apple's AirPlay will enable even the least tech-savvy consumers to connect their tablets to their TVs. 

The couch is already where tablets get used the most, according to research conducted by Google. And watching video is already one of the most popular activities for which people use their tablets, according to Google, the Online Publishers Association and just about everybody else who's studied tablet usage behavior. The only missing link was the wireless beaming technology now provided by Apple's AirPlay and an eventual Google equivalent. Adoption of that feature is dependent on the growth of set-top streaming boxes or, better yet, connected TVs.

Top image courtesy of Shutterstock. 

Reports of Netflix crashing again on Christmas Eve day started trickling in about an hour after my youngest daughter, stuck inside on a bitter cold Minnesota day, complained that the service wasn't working on my iPad. That problem was alleviated by slapping a password on the device and sending her into the kitchen to help the rest of the family prep for dinner like she should have been doing in the first place. But the inconvenient timing of the outage was enough to cause a bump of coverage on the national news.

As the postmortems came though, it appeared that - once again - Netflix's problem lay within the cloud on which the service is hosted: Amazon Web Service's Ashburn, VA, data center.

Virginia? Again?

Neither AWS or Netflix have released a detailed report on what actually happened, but reports indicated that it was the elastic load balancers at the Virginia data center that somehow dropped the ball and led to significant traffic loss for Netflix viewers trying to watch their favorite Christmas movies. The service was back up by Christmas Day, but dropping the ball on Christmas Eve didn't make Netflix many friends.

Meanwhile, as many people noted during the Netflix outage, Amazon's own Instant Video service had no reports of problems. That raised a few eyebrows for customers wondering how Amazon managed to keep its own service going while its competitor was kaput.

No one is accusing Amazon's business units of collaborating to bring down Netflix. But the very fact that Netflix relies on a competitor's infrastructure to deliver its services seems to generate a conflict of interest.

A lot of those same industry observers are also calling for Netflix to get the hell off of Amazon's cloud. This is not the first time, after all, that AWS problems have smacked around Netflix and other popular Web services, and that Virginia data center specifically seems to be cursed.

I think a service like Netflix (of which I am obviously a customer) should keep its destiny in its own hands. But if you think that moving to it's own cloud will be the sure-fire cure-all for Netflix' reliability issues, think again.

The fault for the Netflix outage, the company would like us to believe, lies solely with AWS. But does it really?

Or does the problem lie with misuse of AWS tools? If the elastic load balancers were indeed the reason for the Christmas Eve outage, who was ultimately responsible for configuring those balancers?

Winning The Blame Game?

The highway analogy applies here, too. AWS is the highway, a shimmering ribbon of concrete, on-ramps and bridges that enable cars to get from point A to point B. Most of the time, the highway's operations run smoothly. But when someone misuses the highway, chaos will most certainly ensue - no matter how good the infrastructure is. 

If you don't like the highway example, pick another brand of infrastructure, like a building or a ship or a bridge. It's all the same: Use the infrastructure the wrong way, and bad things happen.

Netflix would (and can) argue that sometimes, no matter how well you're operating within the infrastructure, that infrastructure can break. That's true. Tragically, things fall apart and people and businesses can get caught in the wreckage. Such is life in an entropic universe.

But even if AWS has a faulty infrastructure, doesn't Netflix still have ultimate responsibility to create the solution? After all, customers are "renting" their movies from Netflix, not Amazon. And as pointed out, this is not the first time there's been problems at this particular data center. Why, after getting slapped off the Internet this summer, didn't Netflix make sure such an occurrence would happen again?

Netflix shares were down slightly on Thursday (about 1% as trading drew to a close). Maybe some shareholders are asking themselves why Netflix hasn't done more to shore up te reliability of its service. I know this customer is.

Image courtesy of Shutterstock.

But there's another aspect to this news. A provision in the new law that would have required the feds to get a warrant before snooping through your Gmail account was silently yanked at the last minute. 

Meet The Video Privacy Protection Act Amendments Act

The Video Privacy Protection Act Amendments Act reverses an anachronistic side effect of the original 1988 law, which prevented Netflix from launching the same type of "frictionless sharing" feature that Spotify and other digital media companies teamed up with Facebook to enable in 2011. 

It's frustrating when laws written decades ago have unexpected effects on technology and services whose existence was inconceivable when the laws were drafted. In that sense, it's a good thing that the law was updated to enable these new companies to do this new thing that is unrelated to what the original law was trying to regulate.

But frictionless sharing is a meaningless sideshow compared to the much bigger issue of privacy - especially privacy for cloud-hosted documents and data. And Congress is getting the balance completely backwards.

What's With Gutting Those Privacy Protections?

The word "privacy" shows up right in the name of the Video Privacy Protection Act Amendments Act. But by scrapping the warrant requirement in the new amendments, Congress has dealt a very unfortunate blow to digital privacy. 

The ease with which authorities can access information about citizens via mobile providers and Internet companies is outrageous. 

There's a reason that a protection against "unreasonable searches and seizures" was baked into the founding document of our society. Back then, a search meant whatever somebody was carrying in their pockets, or whatever they kept inside their home or workplace. Today, to search my house, the government would need a warrant. But that's not necessarily the case for my email and data hosted on cloud-hosted service. If anything, privacy protections for personal documents and data stored in the cloud should be even more stringent than what is required to search your home or person. But they're not. 

Congress had a chance to fix that - but it punted. 

It's great that tech companies can get their way in Washington. Quite often, that will lead to more innovation and a more level playing field. In many cases, the benefits will trickle down to consumers, whose interests are often parallel with those of tech companies. But that's not always the case. And it's not the case here. 

Frictionless Sharing Is Useless For Consumers

In fact, even apart from the epic fail on the privacy issue, there's little benefit for real people in The Video Privacy Protection Act Amendments Act. Frictionless sharing was supposed to become a major trend after Facebook rolled out a bunch of integrations with media content providers at its F8 developers conference in 2011. Thank goodness it didn't.

This type of sharing makes total sense for the companies involved. Facebook nabs an even meatier slice of our fractured attention spans and services like Spotify and Rdio see a spike in users as millions of new people are exposed to their branding and invited to consume their content via the biggest social network on the planet. 

Facebook users, on the other hand, were not enamored with the feature, which throws up a stream of everything they listen to and read, but only from sources that partner with Facebook. It presumes that my friends give a damn if I happen to be on a Radiohead binge, compared to sharing a single song and explaining why it's meaningful to me. They don't.

The implementation of frictonlessly shared news is even more egregious. When I clicked on a headline that bubbled up via a publisher's "social reader" Facebook app, instead of being taken to the article (the way links have worked since the Internet was invented), I was instead prompted to install the publisher's Facebook app. Then Facebook redesigned the implementation and publishers saw their traffic land squarely in the toilet. On December 14, the Guardian discontinued its frictionless Facebook app. Good riddance. 

Pretty soon, this pointless functionality will work with Netflix too. Oh joy!

And meanwhile, the government can continue to read through your Web-based email without a warrant. 

Original lead image by Kevin Dooley.

Under the terms of the agreement, Netflix will become the online distribution platform for Disney's straight-to-video releases in 2013. In 2016, it will carry pay-per-view versions of Disney's new, theatricallyreleased films. Effective immediately, Netflix will also have access to a back catalog of classic Disney films for its current subscriber base.

What It Means For Disney 

By cutting a deal, Disney gains a pay-per-view foothold (and likely some perks to be named later) in the biggest online video distributor without giving up anything but Dumbo and Pocahontas. Its classic freebies will serve as a powerful lead-in for up-sells, and it will retain the power to charge a fee it considers fair for premium content. The deal also draws considerable leverage from cable operators that may have been less willing to negotiate a favorable revenue split.

What It Means For Netflix 

The Disney deal is a major lifeline for Netflix. First, it brings reliable, popular content into the system right now, repairing some of the actual and perceived damage caused when Disney/Starz pulled out. It also shows Wall Street and other content providers that Netflix will be around for the long haul. If the mother of all content licensing providers is willing to do a deal, other suppliers are more likely to want in as well. It remains to be seen how far Disney has locked out competitors, but Netflix will draw new interest that it really needed.

According to Ross Rubin, Principal Analyst at Reticle Research, the deal is a very good thing. "This is, as Red Hastings has observed regarding Amazon's investments, a gold rush, with many online video providers such as Google, Hulu, Amazon and Netflix looking for original and exclusive content, and Disney has an unparalleled brand in home video. Kids' movies are a great fit for Netflix as some of its heaviest users are parents who use it as broadband babysitting."

The agreement also formalizes what everyone knew was coming: Netflix is evolving beyond the buffet model. Premium content will remove the pressure from the baseline offering and allow all sorts of new opportunities that provide legitimate value.

For example, millions of Netflix users catch up on back seasons of still-running TV shows, only to find themselves stuck in the limbo between the Netflix catalog and the current season. That's a well-qualified sales opportunity sitting on the table. Now Netflix and content publishers can monetize that opportunity while consumers willing to spend a bit extra on a premium subscription or an a la carte purchase can stay up to date on their favorite shows. 

This deal puts pressure on other video distributors to follow suit. Hulu, with its close ties to NBC, Fox and yes, Disney, will probably launch a counterattack soon. 

Let's be clear. This is a win for Netflix, but Disney is in charge. Netflix's content model was getting pinched, and it needed an out. Content is still king, but the deal helps Netflix last long enough to maybe tip the scales a bit more toward distributors.

Top image courtesy of Katherine Welles / Shutterstock. Bottom image courtesy of Shutterstock.

YouTube execs said in January they would spend $100 million on premium video content, joining Hulu and Netflix in their effort to make online programming look a lot more like the stuff we turn to networks and cable channels to watch. Now, YouTube will funding only about 40% of that original raft of shows, according to AllThingsD. 

Winners And Losers

The company hasn't revealed which shows are getting the ax. That will be made clear as deals are renewed.  So how is Google, YouTube's parent, deciding? Advertisers want to see engagement, which means Google also wants to see engagement, including how long people watch.

Google's prime motivation in YouTube is attracting advertisers, just like it is with the company's mainstay search services. If it can change the TV landscape in the process, that's great. Just like a traditional network, Google is not going to wait around for shows to pay off. Unlike with the old gaurd, those that don't make the cut can keep going. Just not on Google's dime.  

The culling starts now, and the shows with the highest potential will reap further Google investment as the company grows beyond search ads. Focusing on successes helps make YouTube an alternative to traditional television, and gives a Google a more competitive position from which to negotiate with big content providers. 

The Louis C.K. Factor

For evidence of the power of the Web in video content distribution, look no further than edgy comedian Louis C.K (right). By now, most of us know how he used the Web to change how show tickets and videos are sold via the Internet, demonstrating a new model.

As it happens, C.K.'s next comedy special will air first on HBO and, a few months later, it will be sold directly to fans in a manner of his choosing. This, as Peter Kafka points out, is a major departure for HBO, which typically makes content available exclusively to its 30 million subscribers, no ifs, ands, or buts. It's interesting to see the premium cable channel loosen its grip. 

Another Big Year For Premium Web Video?

Next year should be another big one for premium Web video. There's little reason to doubt that Netflix and Hulu will join YouTube in making further investments in TV-quality content. And we already know 2013 will have an interesting case study -- and potentially a watershed moment for online TV -- when Arrested Development returns exclusively online. The cult-hit comedy was canceled by Fox in 2005, and will become the first TV show of its stature to be revived online. 

The old video model is still strong. Over 90% of American households subscribe to a traditional pay-TV service, according to ratings firm The Nielsen Co. The number of cord-cutters is growing, but not at a rate that will threaten cable soon. That may change as Web TV evolves, a process Google and others are trying to force right now. 

But don't call it a Netflix killer yet. 

Without telling anyone, Amazon started offering its Prime membership for a monthly price that will look familiar to Hulu and Netflix subscribers: $7.99. It's the first time they've offered Amazon Prime for anything other than an annual fee. Its library of streaming TV shows and movies still comes bundled with free two-day shipping on Amazon purchases and one borrowed ebook from the Kindle lending library. 

A lot of the headlines announcing this news were framed in that cautionary, "here comes the [insert popular product or company] killer" fashion the tech press is known for. Amazon is slowly positioning itself to go up against Netflix and Hulu, but it's not there yet.  For one thing, $7.99 per month works out to $95.88 per year, a 21% increase from Prime's current price tag. If you want to make your product more competitive against incumbents, raising the price usually isn't typically part of that formula. 

But the subtle shift toward a higher price tag could also be a sign that the company plans to ramp up its content deals for Amazon Prime even further and needs to better cover those steep costs. That would be a smart move, because as it stands, Amazon Prime doesn't quite have the content offering of Hulu or Netflix. 

During peak hours, Netflix commands 33% of downstream Web traffic in all of North America, AllThingsD reported today. YouTube, as enormous as it is, makes up less than half that. Netflix is huge. 

Even during the height of Netflix's PR gaffes last year, I never considered canceling my subscription. Sure, I cut off the DVD-by-mail portion of it when they increased the price, but by then the Watch Instantly streaming catalogue had grown impressive enough for me to hang onto it. That, combined with Hulu Plus makes up the bulk of my TV and movie consumption. Amazon Prime is nice, but it's still growing into something that could stand effectively on its own. 

There should be no doubt that Amazon is planning to get more aggressive in this space. New deals with content providers, combined with an expansion of the service's availability across streaming devices and smart TVs will make Amazon Prime a formidable force in the marketplace in due time. Meanwhile, Netflix isn't going anywhere.