Streaming video on tablets: Do consumers actually care?

In the next two weeks, the battle for 7" tablet supremacy begins as Amazon and Barnes & Noble both attempt to capture the lion's share of the $250 and under digital convergence device/tablet market.

In Barnes & Noble's launch of the NOOKTablet today, the company lauded its product for having "the deepest level of Netflix integration" as well as having Hulu+ as content partners on the device, citing its advantage in video content over its competitor, the Kindle Fire, which is due to ship to Amazon customers in the next week.

Both Netflix and Hulu+ are popular premium content video streaming services, and it would appear at least on the surface that the NOOKTablet has some clear advantages, at least in terms of accessible video content over its competitor, the Amazon Kindle Fire, hardware differences notwithstanding.

As of 3Q 2011, Amazon announced that with their recently closed content licensing deal with CBS (the parent company of ZDNet) that they had approximately 90,000 titles available for streaming on a pay-per-view basis as well as a selection of about 10,000 that is available for free to Prime members.

Amazon Prime is a $79 yearly subscription that includes free shipping of purchased merchandise and other perks, such as a lending library of free premium ebooks.

By comparison, Netflix's streaming video business is a $7.99 per month ($96 per year) monthly service with over 23 million subscribers. Netflix has not released formal numbers on the total amount of titles available but is generally believed to be considerably larger than Amazon's.

In the last year, Amazon has spent about a billion dollars in video content licensing in order to boost their streaming video inventory.

All of this is further complicated by the fact that Netflix's own infrastructure is dependent on Amazon, as it runs completely on the company's EC2 elastic computing and S3 storage cloud.

Amazon as of yet has not yet made a formal announcement if Netflix would be available on Kindle Fire, but according to Amazon VP David Limp, the company was one of the few that had privileged access to the Kindle Fire prior to the September 28 product launch.

[UPDATE 11/9/2011: Amazon has now confirmedthat Netflix will launch on Amazon Appstore for the Kindle Fire.]

Given Amazon and Netflix's existing infrastructure hosting arrangement it is not unforeseeable that a Netflix app could be distributed on the Kindle Fire's Amazon Appstore at a later date. In which case, Barnes & Noble's perceived content "advantage" with their NOOKTablet would be effectively nullified.

But with all of this hullabaloo about whose streaming video capabilities are superior, is streaming video of feature titles something tablet customers actually care about?

Based on market research I have looked at, the answer is a resounding "No".

In a study released in late October of 2011 byPew Research Center's Project for Excellence in Journalism in collaboration with The Economist Group, it was found that only 13 percent of all tablet users surveyed watched videos daily on their devices.

But what kind of videos is this small subset of users watching?

Well, unfortunately we don't have any good metrics on that yet. But we can infer from a similar mobile devices study done by Allot Communications released in June 2011 what they might be.

The study revealed that video usage on mobile devices (both smartphone and tablets with mobile data service) is on the rise and accounts for a large percentage of mobile carrier data traffic, specifically YouTube, which accounts for 22 percent of all global mobile bandwidth and 52 percent of all global mobile streaming.

In a Nielsen study published in late 2010, users on mobile phones were watching only about three and a half hours of video per month.

While I do not expect full-size, broadband-enabled tablet video utilization numbers to match up exactly to smartphones, the mobile data trends do provide some interesting insight.

If indeed only 13 percent of users are watching videos on their tablets daily according to the Pew study, I would expect that most of it is still going to be YouTube, which would be associated with the tablet's main role as a Web-browsing device and are embedded in web pages as lower-definition content (VGA or less).

But it gets more complicated than that. Streaming video of feature length movies or television shows is a very bandwidth intensive activity, particularly if you are talking about the HD video capability B&N is boasting about on the NOOKTablet.

And unless you have a 4G phone, and are paying for the ability to wirelessly tether it, or you stay in hotels or use public Wi-Fi access points that give you consistently good download bandwidth in excess of 3-5Mbps, you're not streaming video. Period.

It sure ain't happening using the bandwidth you typically get in Starbucks, airport lounges or even onboard a Wi-Fi equipped aircraft.

Well, you can try, but it won't look very good. Unless you've actually side-loaded your device with a purchase, such as with an iTunes rental on the iPad, you're going to be out of luck.

I admit that I am one of the very few people that does watch Netflix on my tablet when I am travelling on business trips, in hotel rooms.

But it's an activity I've only recently been able to do in the last month or two since I bought my Droid Bionic which runs on Verizon LTE, which allows me to Wi-Fi tether my iPad and my XOOM, and I'm on a grandfathered unlimited data plan.

Otherwise, it would get outrageously expensive if you were a heavy traveller and used it every day, given that many LTE subscribers have $50 per month 5GB plans which have $10 per 1GB overage.

And believe me, when I travel, I can easily consume 5GB in a week by watching 2 HD episodes of Star Trek or a feature-length HD movie from my hotel room on my iPad every night.

Also Read:

• When Netflix and iPhone meets 4G, wireless hell breaks loose(December 2010)
• Why I jumped on Droid Bionic and not on iPhone 5

So other than a grandfathered, unlimited 4G LTE plan, where are you going to find good enough bandwidth to watch streaming movies and TV that doesn't cost you an arm and a leg?

Well in your home, using Cable or FiOS, provided you are privileged enough to have broadband. And if you are a subscriber to Netflix or Amazon Video or even Hulu+, then you're most likely watching that content on a larger HD monitor or television attached to a PC/Mac or a set-top streaming device, such as a Roku, an Apple TV, a video game console or a Netflix-enabled Blu-Ray player.

I mean, why watch on a 10" screen when you can watch on a 42" one? That's why Pew's tablet video utilization numbers are so low.

Now, granted, there are some advantages to having a 7" tablet like the Kindle Fire and the NOOKTablet and watching video on it as opposed to a 10" device -- higher portability, for one.

Still, if the overall tablet video utilization numbers are particularly crappy, and iPad is the leader in the space with 10" devices, then we can infer that 7" will probably be worse, just due to the quality of the experience alone.

Sure, a subset of road warriors with LTE Wi-Fi tethering will use them, and maybe kids might mess with them occasionally in their bedrooms when they aren't watching video on the TV in the family living room, but I'm just not seeing streaming video as the primary form of media being consumed on these things based on the information in the published reports linked above.

If Barnes & Noble really thinks access to more streaming video content is going to be their prime advantage over Amazon with their 7" tablet, they'd better look a bit closer at the same studies I looked at.

Is the ability to do premium content video streaming on tablets a non-concern for the majority of end-users? Talk Back and Let Me Know.