IHS forecasts online viewings will more than double to 3.4 billion this year, up from 1.4 billion in 2011. The number of viewings from DVD and Blu-ray will fall from 2.6 billion to 2.4 billion. According to IHS, while digital purchases only accounted for 1.3 percent of all movie consumption in 2011, Netflix, Hulu, and Amazon Prime accounted for a combined 94 percent.

Since Hulu and Amazon Prime are much smaller, Netflix owns most of that market. If Netflix can hold on to market share — with a streaming-video library filled with little known or dated titles — what would that say about the strength of the service?

IHS’ report is unlikely to be welcomed news in Hollywood.

US cable internet subs are about to become Canadian…

Time Warner Cable Inc. (TWC) and U.S. pay- TV companies, weighing how to profit from surging Internet demand spurred by Netflix Inc. (NFLX) and Hulu, are on the verge of instituting new fees on Web-access customers who use the most.

At least one major cable operator will institute so-called usage-based billing next year, predicts Craig Moffett, an analyst with Sanford C. Bernstein & Co. in New York. He said Cox Communications Inc.,Charter Communications Inc. (CHTR) or Time Warner Cable may be first to charge Web-access customers for the amount of data they consume, not just transmission speed.

“As more video shifts to the Web, the cable operators will inevitably align their pricing models,” Moffett said in an interview. “With the right usage-based pricing plan, they can embrace the transition instead of resisting it.”

The other dirty little secret is that no one in the “traditional” media industry wanted to face the fact that the switch from analog to digital was destined to upend their business models. Reed Hastings, like Steve Jobs and Jeff Bezos, understood that superior service, smart packaging and details (the red envelope) breed customer loyalty. 

In fact, the dirty little secret of the media industry is that content aggregators, not content creators, have long been the overwhelming source of value creation. Well before Netflix was founded in 1997, cable channels that did little more than aggregate old movies, cartoons, or television shows boasted profit margins many times greater than those of the movie studios that had produced the creative content. It is no coincidence that although, say, 90 percent of the public discourse surrounding Comcast’s recent $30 billion acquisition of NBC Universal involved the Conan O’Brien drama or the shifting fortunes of Universal Pictures, in reality, 82 percent of the new company’s profits come in through the cable channels.

But just as more and more American consumers are joining the streaming-video party, and using more bandwidth because of that, their internet service providers – many of which, by no coincidence, also run large cable TV operations — are getting set to cap the fun.

With companies like Netflix and Hulu threatening their subscription-cable business, companies including AT&T, Comcast and Charter no longer want to aid the competition by offering consumers all-you-can-eat broaband.

The message: Think twice before you cut that cord, America.

This month, AT&T joined competing ISPs Comcast and Charter in putting a limit on the amount of data its customers can use each month. After its customers pipe 150 gigabytes of data through their modems — 250 gigabytes for subscribers to its UVerse cable service — AT&T will start charging them for each extra byte.

Comcast is a little more harsh. Instead of charging a fee for exceeding limits, the company — which now owns NBC Universal, in addition to its own cable system — kicks off from its network customers who go over the 250 gigabyte limit more than twice in six months.

The real point of the caps, analysts say, is to prevent people from ditching expensive cable service the way many have gotten rid of their wired telephone lines.

“Given the way in which internet service providers across the country have tried to structure their data caps, they’ve done so in a way that threatens not just Netflix, but all types of independent online video distribution,” Joel Kelsey, a political adviser to Free Press, a national nonprofit that works exclusively with media and technology policy, told TheWrap.

House of Cards

Lots of attention was paid to our decision to license the exclusive rights to premiere Media Rights Capital’s “House of Cards” series, planned for late 2012.

Rather than a shift in strategy towards original programming, our decision was driven by a desire to test a new licensing model using a small portion of our content budget. Serialized dramas, like the original BBC series on which “House of Cards” is based, have been big favorites on Netflix and we want to confirm our theory that because we are click-and-watch rather than appointment viewing, we can efficiently build a big audience for a well-produced serialized show.  This represents slightly greater creative risk than we’ve taken in the past, but we think it’s reasonable given the popularity of the original BBC show on Netflix and the modest percentage of our content budget it represents. If “House of Cards” is popular enough on Netflix so that the fee we’ve paid is in line with that of other equally popular content on Netflix at the time, we’ll consider it a success. 

Ideally, we’ll license two or three similar, but smaller, deals so we can gain confidence that whatever results we achieve are repeatable.

AT&T will soon cap its DSL bandwidth at 150 GB per month, the company confirmed yesterday. Customers who use more data during at least three months will have to pay $10 for each additional 50 GB bucket of data. That’s bad news for Netflix and its users, who could get dangerously close to the cap.

How much Netflix video does 150 GB get you? Not that much, actually: If you watch a movie like Moulin Rouge in HD, you’re going to use around 3.5 GB of data. A single episode of Weeds equals about 800 MB when watched in HD. If you were going to use all your 150 GB of AT&T bandwidth to watch HD video from Netflix, you’d only be able to watch about three hours per day — and that’s without doing anything else.

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