Published on September 17th, 2014 | by ryankapsar0
Policy and Games: Net Neutrality, Twitch and The Future of Gaming
Policy and Games is a look at tech policy and the gaming world. The views expressed in these articles are those of the author and do not necessarily reflect the views of KBMOD or any of its contributors.
Last week there was a wildly successful campaign, called Internet Slowdown, which raised a great deal of awareness for the Net Neutrality situation: 2M took action, 300k calls, 2.3M emails to congress, 777k comments to FCC. That is a great thing to see! Unfortunately, it’s not going to really sway the FCC a whole lot. Most of those comments are going to be thrown out by the FCC as they are form letters. If volume counted, then it’d be good, but really the FCC really counts quality over quantity. It’s not a popularity vote, which is why for change to happen, it’ll likely need to come from Congress.
In last week’s article, I discussed some of the technical details of net neutrality. I wrote it at a very high level and glossed over all the really tricky issues about sending data, dealing with noise, and so on. I think I should note that some of those details are important. Latency issues, bit rates and bandwidth does matter and impacts how services perform for end users. For example, with true net neutrality, it could very severely impact the ability to watch video or Skype, because the bits will arrive whenever they arrive. This can lead to buffering and other performance issues, that the end user notices.
This is where the battle around Net Neutrality is really waged, in the experiences of the end users, the customers, the people paying for all the great content. In most cases, content isn’t being delivered by the same person that actually owns the content. This creates an opportunity to make money. Let’s take a look at Netflix. They pay for bandwidth from a service provider, which eventually connects to your ISP so you can watch your anime. You pay your ISP to access content, you pay Netflix for access to their content, Netflix pays their provider, and there’s a free connection between the two providers because everyone is already getting paid. However, since ISPs know where the data is coming from and that it’s Netflix, they can “shape their data” and change the priority of the bits that are passing through their systems. Thus creating artificial bottlenecks for some content providers. In the case of Comcast this can be a triple benefit, they control the connection, have their own streaming platform, and own the content. Comcast already allows users to stream from their services without impacting any data caps.
Netflix is fighting for Net Neutrality because it will help keep them profitable. Comcast, Verizon, and Time Warner are fighting against Net Neutrality, because killing Net Neutrality will once again help that bottom line. This is about wildly varying business models and sources of revenue. Netflix makes money by increasing the number of subscribers and reducing costs – they have rarely increased rates. The ISPs make money by increase subscriber, increasing rates, they have a key metric – Average Revenue Per User – and they are trying to drive that up. If they can get more money from a Netflix subscriber they will try to.
This is worrisome, as Twitch will definitely be a target of this, as it’s now part of the Amazon family of companies. In fact, I’m surprised Comcast, et al haven’t gone after them with these practices yet. My guess is that they may not fully understand what Twitch is and what sort of threat it is to their business models. Once they do, Twitch may be in for a fight or at least a Netflix like arrangement.
The other way that these business models are troubling is that gaming is poised to be cloud based soon. Regardless if you want it or not, the way forward is going to be streaming games to your phone, console, or PC. Both PS4 and Xbox One have streaming plans for games, and apparently Microsoft is experimenting with streaming XBox games through your web browser. The experience while playing these games will be as dependent, if not more dependent, on consistent traffic and bandwidth for an enjoyable experience. The question in the end will be: will it be profitable for everyone involved?
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