Will devices be the next victim in the net neutrality debate?

According to the story, KT cut off Samsung’s Smart TVs Friday morning after a dispute over how much data those TVs consume. From the story:

The dispute has been festering for a while as KT insists smart TVs share the costs of quality maintenance of the internet as they tend to hog the networks, while TV makers argue they have no obligation to do so.

The argument is familiar. Remember this quote from Ed Whitacre when he was the CEO of AT&T?

“How do you think they’re going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it. So there’s going to have to be some mechanism for these people who use these pipes to pay for the portion they’re using. Why should they be allowed to use my pipes?”

Or what about this quote from John Petter, managing director of BT Retail’s consumer business?

“We can’t give the content providers a completely free ride and continue to give customers the [service] they want at the price they expect.”

But this angle of attacking a device seems new and troublesome. It’s unclear if this is a problem in Korea because Samsung is based there and KT feels like it might have less success going after a content provider like Netflix or Google. However, if other ISPs follow suit, would Roku, Boxee or even Smart TV makers such as LG or Vizio be next in line for some form of blocking?

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The iPlayer is the dominant force in Britain’s streaming TV landscape, available everywhere from the PC to cable to mobile, and responsible for nearly two billion viewings in 2011 alone.

No surprise, then, that today Roku is announcing that it’s launching an iPlayer channel for its British customers, allowing them to access the service’s library of popular television programs through their devices.

The moves adds a real backbone to the service — which already boasts a lineup including UFC, Fox News, and Netflix, which launched last month in the U.K and Ireland.

“This is among the first of many significant content partnerships for Roku in Europe and we look forward to making additional announcements in the coming weeks,” said the company’s European boss, Clive Hudson.

Rumors continue to circulate that will soon add Netflix competitor Lovefilm, but the deal with the BBC makes a big difference for anyone purchasing a Roku box, which are priced locally at £49.99 and £99.99 ($79 and $158).

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“We’re not ready to discuss our future product roadmap . . . but it was a useful tool to demonstrate to the FCC where innovation is headed in the TV space for both over the top and over the air/QAM,” we were told by Boxee VP of Marketing Andrew Kippen. The filing itself also states that “both the Boxee Box with Live TV and the products under development provide consumers with competitive alternatives to traditional pay cable delivered via rented set top boxes.” Of course, one could argue that any over-the-top offering with access to online sources like Netflix can be an alternative to your cable box — but that is already true for the existing Boxee Box. The need to black out two entire paragraphs in the filing leads me to believe that Boxee is instead working on additional ways to access and consume over-the-air broadcast and cable TV.

So what does it have in store for us? Here are some possibilities:

• DVR functionality. This has been the most-requested feature ever since the Boxee Live TV tuner came out earlier this year. The tuner currently only displays what’s airing at any given time, but a software update and an attached hard disc could turn the combination of Boxee Box and Live TV tuner into a full-fledged DVR.
• A Boxee TV. Viewsonic was supposed to release a TV set powered by Boxee last year, but it scrapped its plan when consumer demand for smart TVs didn’t materialize. Of course, that doesn’t mean that another TV manufacturer couldn’t fill the gap. A TV with a built-in tuner would obviously also have access to Boxee Live TV and as such be impacted by any attempt to encrypt basic cable.
• A revamped Boxee Box with internal storage. This would go well with any DVR offering, in part because not every consumer wants to have an external hard drive and a USB dongle dangling from their Boxee Box. Of course, it would also be possible to directly add the TV tuner to the Box. But this could bring costs up even further, so I would expect this to be sold separately for the foreseeable future. Iomega is already selling a Boxee device with a hard drive in Europe, but the company told us it doesn’t have any plans to bring the device to the U.S.
• A cable set-top box. Yes, you read that correctly. Boxee has been big on cord cutting rhetoric lately, but the company is reportedly also talking to smaller cable operators about using Boxee’s platform as an alternative to the traditional cable box. This could be done with the existing Boxee Box and a Live TV tuner, but one could also imagine slightly revamped hardware that could offer subscribers online video, basic cable channels and a DVR for a small monthly fee, much like Sezmi used to offer. But instead of selling it directly to consumers, Boxee would offer the device through a regional cable company.

We will likely have to wait a while until we know what the company has up its sleeve. However, the success of the Live TV tuner — the device is currently sold out and on back order — shows that the company is clearly on to something here. And while the list of possible products above is admittedly pure speculation, it goes to show that there is a lot of potential for Boxee to innovate in this space.

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Today, access to its streaming video service comes bundled with Amazon Prime. But some rumors have emerged lately, suggesting that Amazon could unbundle the service and offer it as a standalone competitor to Netflix or Hulu Plus. That includes a mention from Netflix CEO Reed Hastings, who wrote in a letter to shareholders that he expects Amazon to introduce the service and price it below Netflix’s own offering.

But Brad Beale, Head of Digital Video Content Acquisition at Amazon, said in an interview Wednesday that the company is unlikely to break out the video subscription offering anytime soon. “The bundle of benefits that come with Amazon Prime make perfect sense to offer to customers,” Beale said. “The way that Prime Instant Video is offered today — we’re going to continue that approach at least into the near future.”

Even before adding the video component, Beale said that Prime was an incredible value. The offering provides free, two-day shipping to customers who pay an annual $79 subscription. We’ve believed for a while that adding video could entice some customers to sign up for Amazon Prime who might otherwise not have — and once they’ve paid the annual subscription fee, they’re likely to take advantage of the free shipping. In that sense, video could be seen as a loss leader for driving more physical retail sales.

There’s also the fact that having a free subscription service could help boost transactional sales through Amazon’s VOD and electronic sell-through offering. While Prime Instant Video has 15,000 titles for free viewing, it doesn’t have many of the latest new release films or in-season TV episodes. For newer content, Amazon offers more than 100,000 titles for rental or purchase. So an Amazon user who got hooked on older seasons of Downton Abbey or Sons of Anarchy on the free service might convert to being a paid user to watch the current seasons of those shows.

As Amazon adds content, it’s also looking to boost awareness of what’s available on the service. That includes placement of a letter from Amazon CEO Jeff Bezos on the site’s homepage, letting the millions of users who stop by every day know what new content is available from Amazon Prime. That kind of promotion is driving awareness and usage, Beale told me. As more customers learn what’s available, and as Amazon continues to improve the offering with even more content, he expects customer adoption to grow even more.

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A few weeks ago when Paul Walborsky, CEO of GigaOM, came to the board and suggested that we should try and acquire paidContent, my fellow board members — Jon Callaghan (True Ventures), Ammar Hanafi (Alloy Ventures) and Kevin Brown (Reed Elsevier Ventures) — didn’t hesitate for a minute. The ethos of paidContent and our company are in sync. GigaOM’s core belief is that as connectivity becomes ubiquitous, it changes everything from society to business to we the people. paidContent from the very beginning has been built on the idea that connectedness is and will change media. It makes perfect sense for us to team up. Since then, Paul and his team worked tirelessly to make it happen.

OK, now you know what. Let me tell you why.

Now, why are we doing this deal, clearly the biggest of our five-and-a-half-year history? Two simple but equally powerful reasons — the first and perhaps most important reason: people. I have been an admirer of paidContent’s editorial team from the very beginning of its journey. Rafat Ali and Staci Kramer were two of my favorite writers in the early days of professional blogging. And while Rafat (who is on our board of advisers) has moved on to new things, I am glad to have Staci join us. She has been instrumental in building ContentNext from the ground up, and in addition to writing, she has been building the company’s event business. I am thrilled to announce that she will remain the editor of paidContent.

Ernie Sander who spearheads the ContentNext editorial operations is the kind of veteran everyone on our team, including me, can learn from. And for that precise reason, Ernie is going to become the executive editor of our sprawling online editorial operations. Our managing editor, Nicole Solis, is being promoted to VP of Editorial Operations. And then there is the most awesome team of journalists — Robert Andrews, Tom Krazit, Daniel Frankel, Laura Hazard Owen, Jeff Roberts and Amanda Natividad. In addition there are a wonderful group of technology, business and sales people who are joining our company. I welcome them all to our growing family and can’t wait to break bread with them in weeks to come.

Location, location, location

These fine folks are actually going to help bolster our presence in New York and help increase our footprint in Europe, a region of key strategic focus for GigaOM. (We will be hosting Structure:Europe in Amsterdam, October 16-17.) With this deal, we are really pleased that one of the most forward-looking media outlets around, Guardian News & Media, will become a shareholder in our business.

As you all know, I am (and will always be) a displaced New Yorker; New York City is my spiritual home. By increasing our footprint in the capital of the world, I would get a chance to go back more often. But it’s not an emotional tug that is driving us to this decision. New York is fast becoming a major technology hub, as Ryan Kim outlined in his recent post. And we want to expand our coverage to Boston — thanks to Barb Darrow who joined us several months ago — and the Washington DC corridor as well. paidContent’s New York City offices are now GigaOM East.

Media is the new Wild West

We are quite strategic about our acquisitions — we acquire media entities only if we love the people and believe that we are at the starting phase of a trend. In 2008, we acquired jkOnTheRun as our tip of the hat to the growing demand for mobile devices and the changes it would bring into society. Later that year, we brought in The Apple Blog because we knew the best was yet to come for Apple. Both of those acquisitions have helped GigaOM cover the issues that matter most to our ultimate customers — you, the reader — in a smart, sensible fashion.

“The question that mass amateurization poses to traditional media is ‘What happens when the costs of reproduction and distribution go away? What happens when there is nothing unique about publishing anymore because users can do it for themselves?’ We are now starting to see that question being answered.”— Clay Shirky

Shirky’s observation means that we are in a time of chaos where the very idea of media is being questioned. And as a Chinese proverb says, from chaos emerges opportunity. I believe the best is yet to come for media.

Over the past few years we have started to see the transformation of media by new technologies, new methods of distribution and newer ways to consume information. Mathew Ingram has been writing about these disruptions on a regular basis, and now we are going to double down on what we think is a great new chapter in the media industry.

I have always believed that we’ve got to stop thinking of media as what it was and focus on more of what it could be. In the world of plenty, the only currency is attention and attention is what defines “media.” Zynga is fighting Hollywood for attention (and winning). Instagram is taking moments away from other media. They have attention. There are old companies that are dying and new ones that are being invented. We’re eager to expand our coverage of social and digital media editorially, in our research and at our events. paidContent is the best chronicler of the media industry, and by blending their coverage with ours, we hope to watch this fast-changing industry ever more closely.

Please join me in welcoming the ContentNext team!

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To set up, Nowbox asks users to specify categories of entertainment that are of interest to them, then to link their YouTube, Facebook and Twitter accounts. Once that’s done, they’ll be shown a TV guide-like navigation pane that will look familiar to anyone who’s ever seen a cable channel guide. All of which is the point — Nowbox demystifies the online video experience by serving up channels in the same way most viewers are already used to seeing them.

It has a few other perks as well: for one thing, users are served up a continuous stream of videos, making online video viewing more akin to the type of non-stop stream they’re used to seeing when watching regular TV. Users can swipe back and forth through videos on a particular channel, and since Nowbox pre-caches those videos, they play pretty much instantaneously. Users can star videos as favorites, save them for later or share with friends and followers on social networks.

With more than half a million video views under its belt in less than two months since launch, Nowbox is expanding the app’s feature set to make it even easier to discover new content. For one thing, Nowbox has added a channel of video recommendations based on the categories of content that users signed up for. It’s also added an indicator to highlight new videos as they appear in a user’s channel lineup.

Nowbox is just one of many apps focused on improving discovery of streaming video on the iPad. Other competitors include apps like Showyou, Squrl and the Boxee iPad app. The hope is that Nowbox’s unique channel guide approach, as well as its new features, will extend the play time that users spend with the app. Those users are already showing pretty strong engagement, however: Nowbox founder Thomas Pun told me that users spend 18 minutes with the app per session on average.

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We’ve included a list of the programming Amazon picked up below from Viacom networks such as Comedy Central, MTV and Nickelodeon. Perhaps most interesting in the list are MTV hit Jersey Shore and a wide range of Nickelodeon programming, which could help Amazon enamor itself to subscribers with children.

But the one thing that’s missing from the service is the ability to subscribe without linking the service to Amazon Prime, which gives customers free two-day shipping. While it’s a nice perk, especially to Amazon Prime subscribers like me who overuse the free shipping, not everyone is as interested in that part of the offering. That’s rumored to change, as Amazon could unbundle the video offering from the Prime subscription.

If it ever does roll out a standalone service, Amazon’s quick addition of new content puts it in a position to be a real competitor to Netflix, which is slowly rebounding from last summer’s price increase and customer dissatisfaction around its plans to unbundle and rebrand its DVD-by-mail service. While Netflix’s domestic subscriptions have begun growing again after a down third quarter, the company is seeing increased competition from the likes of Amazon, Hulu Plus and will soon face a new streaming service from Redbox and Verizon.

New Viacom content on Amazon Prime Instant Videos includes:

• Comedy Central: Chappelle’s Show, The Sarah Silverman Program
• MTV: Jersey Shore, The Hard Times of RJ Berger, The Hills
• Nickelodeon: iCarly, Dora the Explorer, SpongeBob SquarePants, Yo Gabba Gabba
• Spike: Deadliest Warrior: The Show and the Aftermath
• TV Land: Hot in Cleveland
• VH1: Love & Hip Hop, Mob Wives

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Why drop the .tv from its name? “This was done to distinguish the network’s content from that of traditional TV,” the press release informs us. Because the worst thing that could happen to a web video site is of course that people assume you’re serving up TV content, right?

The move is a little baffling, especially because Blip has gone to great lengths to reinvent itself as a kind of “Hulu for web series” over the last couple of months, deemphasizing the video sharing part of its business and instead concentrating on becoming a distribution platform for web series makers. That being said, the transformation seems to work well for the site, which also said Wednesday that it doubled its revenue in 2011.

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At the core of the issue is whether cable companies should be allowed to encrypt their basic cable programming, something that existing regulation doesn’t allow. Unencrypted signals can be used by tuners built into most modern TV sets as well as equipment like Boxee’s live TV tuner to access these basic cable channels straight from the coax cable that comes out of your wall, without the need for any set-top box.

Cable companies have asked the FCC for waivers to these restrictions, arguing that encrypted channels would reduce piracy and that encrypted cable connections can be remotely serviced, eliminating the need for many service visits. The FCC is currently hearing all sides of the issue as it contemplates whether to do away with the restrictions and allow all cable companies to encrypt basic cable. Boxee has filed multiple letters with the commission and met with its staff last week.

On Wednesday, the startup wrote on its blog:

“[The cable companies’] real motivation is to prevent you from being able to connect the cable from the wall directly to your TV or Boxee Box. You will need to rent a set-top box from your cable provider, pay an extra $5–$15 per month and it will no longer work with your Boxee Box or similar devices. The cable companies are losing subscribers every quarter. If they want to reverse that trend they should look into building better products, reducing prices and improving customer service, not going to the government asking for rule changes to force consumers into spending more money and blocking start-ups from competing.”

Boxee’s position has been shared by Public Knowledge as well as the Consumer Electronics Association and consumer electronics manufacturers like Hauppauge, which makes the Boxee dongle. The cable companies, on the other hand, have been getting support from the Motion Picture Association of America (MPAA) as well as some municipalities, including Miami.

Altogether, more than 80 documents have been filed with the FCC on the issue. Many of these filings from both sides make it clear that this is about not only what is going to happen to those basic cable channels but also the role that consumer electronics manufacturers, cable companies and startups like Boxee will play in the future of pay TV.

Consumer electronics makers have long favored a new standard called AllVid that would provide a new interface among traditional pay-TV services, online competition and connected devices. Cable companies opposed the standard; Boxee, on the other hand, came out in favor of AllVid in the presentation to the FCC last week, stating on one of its slides that “AllVid holds exciting potential for development of new consumer devices delivering integrated entertainment experiences.”

Check out our video review below to see how Boxee’s live TV tuner works:

Image courtesy of Flickr user familymwr

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Show notes for this episode:

• All eight episodes of the first season of Lilyhammer are available on Netflix.com. You can find the trailer on YouTube as well.
• Battleground will debut on Hulu.com on February 14 and will be available to both Hulu Plus subscribers as well as users of the free web version of the service.
• The Tester’s season 3 launched on the PlayStation Network as well as Playstation.com on February 7. Check out our article about the show.
• Crash Course is available on YouTube.com. Check out our article about the show.

How do you like Lilyhammer? What are your thoughts about Battleground? Let us know in the comments, get in touch with us on Twitter (@cordcutters) or email us at cordcutters @ gigaom.com.

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• Managing infinite choice: the new era of TV user interfaces

Interestingly enough, I was discussing the possibility of Apple’s partnering with operators the other day at lunch, before the Bloomberg piece came out. That first piece might seem like a fluke, as it was written based on an analyst note. But with Tuesday’s Globe and Mail story, it seems more likely that the hardware giant is indeed considering some sort of partnership approach to tackling the TV market.

The move isn’t totally unprecedented: After all, Dish Network was one of Google TV’s launch partners, and Verizon has partnered with Microsoft to make its FiOS TV service accessible through the new Xbox Live user interface.

All the content, none of the fuss

By partnering with pay TV operators, Apple would immediately gain access to all the TV content that viewers have come to expect, without having to strike up carriage deals of its own. It is not alone in pursuing this strategy: Microsoft’s Xbox 360, for instance, can be used as a set-top box by AT&T U-Verse and Verizon FiOS subscribers.

In the FiOS case, the program data and channel lineup will be deeply integrated with the Xbox Live service and Bing search engine, which will let viewers discover live TV and video-on-demand content alongside streaming content from services like the Zune Marketplace, Netflix, Hulu Plus, Vudu and YouTube.

I could see Apple’s doing something similar by allowing operator partners to build integrated apps into the new device, which could be used to control channel lineups and program discovery. For Apple, such a move would give it the content it needs to be relevant but allow it to control the overall user experience of search, discovery and navigation.

But what would the operators get out of it? Well, for one thing, integration with the Apple iTV could potentially give them a competitive advantage over their peers. In the U.S., Apple already has relationships with AT&T and Verizon, both of whom could stand to benefit from having the best new iDevice available for customers as they pitch their IPTV services against the more traditional cable offerings. Those operators could be incentivized to push the iTV to their customers and could act as an additional distribution outlet, on top of Apple Stores and the company’s existing big box retail partnerships.

Could AT&T help you buy an iTV?

There is even the possibility that Apple could bring the same subsidy model that exists in the mobile space to TV operators. To a certain extent, carriers already subsidize TV hardware by making set-top boxes available to customers. Assuming an Apple TV product would enable those carriers to deliver cloud- and IP-based programming guides, it could act as a set-top box replacement. Whatever money was being put toward that hardware could be committed to reducing the cost of an Apple iTV purchased by subscribers.

A carrier subsidy could potentially boost adoption for an Apple device’s being launched in a market with traditionally long replacement cycles. Some believe that any introductory Apple TV product would be sold at a premium over existing smart TVs, and a recent Best Buy survey lends some credence to this belief, polling users if they would spend $1,499 for a 42-inch Apple TV device. I personally doubt that Apple would introduce a new product priced so far above existing products, but if there is any premium a subsidy could bring products within parity. And if there isn’t a premium, a subsidy could make the product all that more attractive.

ITV is not just for partners

I don’t believe that any operator partnerships Apple strikes would be exclusive. In the U.S., Apple would likely partner with multiple providers, since their services are only available in certain geographies. As noted above, AT&T and Verizon are the most likely partners in the U.S., but I don’t think Apple would shy away from the same type of deal with a company like Comcast.

Nor would the Apple TV be “broken” if purchased direct from a retailer or if a consumer doesn’t subscribe to an Apple partner. She will get all the same third-party apps and TV coming from her set-top box. There is even the possibility that non-partners could build their own apps for device search and navigation, in the same way that Comcast, Time Warner Cable and others have built iPad apps that can be used as remote controls. But it won’t have the same tight program guide integration. And if there are subsidies involved, it wouldn’t be as cheap as it would be from Apple’s partners.

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Flingo’s software is embedded on 7.8 million Smart TVs and other devices from manufacturers including Samsung, LG, Vizio, Sanyo, Insignia, Western Digital and Netgear. Its technology can be used for building apps that bring streaming Internet video to the TV, while also providing automatic content recognition that knows what program is playing when a viewer is watching live TV.

With that content recognition in place, Flingo can enable broadcasters to build second-screen applications that can send relevant content to a viewer’s TV, laptop, tablet or smartphone. It can also enable on-screen apps so viewers can share what they’re watching with friends and followers on social networks like Facebook and Twitter.

The company has been bootstrapped since being founded in 2008, but co-founder and CEO Ashwin Navin told me in a phone interview that Flingo had reached a point where it needed additional capital to invest in infrastructure, personnel and for international expansion.

On the infrastructure front, Flingo fingerprints live TV as part of its automatic content recognition scheme, and wants to drastically ramp up the number of channels it indexes. Navin said he wants to be able to fingerprint thousands of channels simultaneously, which will require a fair amount of new infrastructure.

Part of the reason it’s looking to do thousands of channels is that it sees a large international opportunity. Flingo technology today is embedded on devices in 118 countries worldwide. The hope is that it will be able to leverage that footprint by striking deals in more countries. To that end, Navin is spending the next few weeks in Asia, looking to make key hires to expand the startup’s presence there.

Finally, there’s the possibility of some expansion through acquisition. Navin noted that there’s a large amount of talent in the social TV space, and that market segment in particular could see a shakeout soon. “I want to be able to acquire talent and teams” if that happens, he said.

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• Brightcove had 3,872 customers in over 50 countries by the end of 2011.
• The company’s 2011 revenue was $63.6 million, compared to $43.7 million in 2010. Its net loss in 2011 $17.8 million, compared to $17.3 million in 2010. It expects to continue to have losses in 2012.
• Brightcove employed 312 people in 9 different countries by the end of 2011.
• Brightcove generated 66 percent of its revenue in the U.S. in 2011.
• Brightcove’s customers served on average 743 million streams per month in 2011. More than half of those streams were delivered outside of the U.S..
• Most of the media is delivered through Akamai and Limelight, but the contract with Limelight is currently up for renewal.
• The New York Times is not only one of Brightcove’s biggest customers, but also a minority shareholder that owns less than 5 percent of the company’s stock.
• Brightcove doesn’t mention any of its direct competitors by name, but mentions YouTube three times in the filing.
• Brightcove will trade at NASDAQ under the stock symbol BCOV.
• The offering is led by Morgan Stanley and Stifel Nicolaus Weisel, and underwritten by RBC Capital Markets, Pacific Crest Securities and Raymond James.

What does the filing mean for the online video space in general? Our own Ryan Lawler summed it up best last August:

“Brightcove deserves kudos for making it this far while other online video companies have either been acquired at fire sale prices or bit the dust. But the modest revenues revealed by its IPO filing show just how hard it is to make money in online video, even while viewers are tuning in droves.”

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Details around the deal are limited, but here is what we know.

1. Verizon will own 65 percent of the joint venture while Coinstar, Redbox’s parent company, will own 35 percent.
2. The service will offer something Netflix currently doesn’t — a download option, which makes it more competitive with Amazon’s video offerings.
3. The offering will be available nationwide, not merely to Verizon customers.
4. Using Redbox helps the joint venture get access to new releases as content companies are trying to add more “windows” to the movie release process. Windowing is what content companies use to spread out the time between a movie released in theaters, when it hits rentals stores and when it makes its way to other services such as premium TV channels. The general thinking is this increases profits for each movie, but opinion is divided on that, and consumers hate it.
5. Verizon is counting on its existing relationship as a pay TV provider to get more content to the joint venture.
6. Whatever the end product looks like, it will launch in the second half of this year.

Given these facts, as scant as they are, it’s easy to see the threat to Netflix, as people could view the two offerings as fairly interchangeable as long as the pricing is competitive and the content is relatively equal. But without knowing about pricing or the content, the deal still has the potential to be a win for Verizon, given video is huge bandwidth suck on wireline and wireless networks. Netflix traffic was estimated to take up 20 percent of U.S. broadband traffic during peak hours according to Sandvine in the fall of 2010.

For Verizon, a streaming joint venture has three benefits. One, if it makes money from the service, that’s an additional revenue stream as well as a way to capture some value from its customers who cut the cord. Two, if the service can really deliver a video product that consumers love and will use, it will help drive traffic across Verizon’s networks. Customers in the FiOS areas will have a reason to sign up for the service if they haven’t already, while the joint venture will help drive traffic to mobile devices and other areas of the country. Verizon has a business selling bandwidth on 100 gigabit per second backbone pipes as well as leasing its fiber to cell phone providers to use as mobile backhaul.

Finally the joint venture gives Verizon a seat at the table with content companies as the industry tries to find new economic models based on the reality of an IP infrastructure that can deliver any content to anyone, anywhere. Sure, content companies are fighting the future with windowing and complicated rights agreements, while ISPs are trying to protect their business with broadband caps, but the future is coming, and Verizon is trying to get in on the ground floor rather than watch it pass it by.

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Now BTJunkie, another of the world’s largest filesharing sites, seems to have bitten the dust.

The site — a torrent search engine which seems to have been based in Europe — has been running for the past seven years, and at one point boasted at least 80 million users. But over the weekend its pages were replaced by a single blue screen marking its lifespan and a simple message:

“This is the end of the line my friends. The decision does not come easy, but we’ve decided to voluntarily shut down. We’ve been fighting for years for your right to communicate, but it’s time to move on. It’s been an experience of a lifetime, we wish you all the best!”

Although not as well known as some others, BTJunkie was one of the world’s most active torrent search engines, linking to millions of active torrents. That catalog which made it a big deal: in fact, according to data from Compete, it was the 3rd largest site of its kind in 2011.

But unlike Megaupload, which only shut when the police raided the company’s HQ, this closure seems to be proactive on the part of the BTJunkie’s owners. The site was never the target of any direct legal action, but it has been in the crosshairs of entertainment industry for some time: searches for the site are generally blocked by Google, and it became a thorn in the side of the MPAA when a BTJunkie admin was the first to spot that the MPAA was uploading fake torrents back in 2007.

It appears that mounting pressure from recent events has finally broken the resolve of the site’s anonymous owners, with Torrentfreak claiming that one of the site’s owners said the stress and trouble wasn’t worth the effort:

Talking to TorrentFreak, BTjunkie’s founder said that the legal actions against other file-sharing sites such as MegaUpload and The Pirate Bay played an important role in making the difficult decision. Witnessing all the trouble colleagues got into was cause for a lot of worry and stress, and those will now belong to the past.
That said, BTjunkie’s owner still thinks there might be a future for other BitTorrent sites.
“I really do hope so, the war is far from over for sure,” he told TorrentFreak.

That certainly makes this move closer to recent changes by The Pirate Bay, which closed down its .org domain in order to prevent seizure by the American authorities, than a move caused by a direct threat.

In the short term this will certainly be seen as a victory for the content lobby, though in a way it really proves that they don’t necessarily need more legislation to get what they want. But will it make a significant difference to the amount of filesharing in the long term? That seems less straightforward.

It’s unlikely that BTJunkie’s users will simply disappear or stop torrenting: they’ll just move off to other services, or start replacements that take the process back towards square one. But however you spin it, this could be an important moment in the arguments about whether the carrot of better service provision is more effective than the stick of legal threat.

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The company’s chief content officer Ted Sarandos announced the release on the company’s blog with the following words:

“Do you love the indulgence of watching episode after episode of your favorite shows on Netflix? Have you ever wished you could do the same with new shows when they premiere on TV?”

He went on to say:

“Unlike any major TV premiere before it, we are debuting all eight episodes of the first season at the same time today. Conventional TV strategy would be to stretch out the show to keep you coming back every week. We are trying to give our members what they want; Choice and control. If you want to watch one episode a week, you can. If you want to watch the whole season this week, you can do that too.”

Netflix CEO Reed Hastings echoed a similar sentiment when asked about the unusual move during the company’s most recent earnings call:

“Netflix’s brand for TV shows is really about binge viewing. It’s the ability to just get hooked and watch episode after episode. It’s addictive. It’s exciting. It’s different. And our release strategy for original content emphasizes that brand strength, which is to be able to get hooked and pour through those episodes rather than get strung out.”

It’s a remarkable move, and it shows how different Netflix is from the traditional TV world, despite the company’s repeated insistence that it’s just like HBO. Netflix’s subscribers are not used to any schedule, and the company wisely chose not to break with those expectations.

But it’s also a gamble on a different kind of buzz. Traditional TV networks try to generate as much word of mouth excitement as possible within the first few weeks to get enough people hooked on a new show to keep it going. Netflix, on the other hand, can be perfectly happy if the majority of its customers watch something else on the service in the next few weeks, as long as it gets a core fan audience hooked on the show  - at which point they’re going to talk about it, much in the same way you’d recommend a show like Arrested Development or Breaking Bad to a friend who hasn’t seen it.

Finally, the binge viewing approach also tells us something about how Netflix views its online competition. Hastings has long said that he is not interested in catch-up TV, and the fact that Netflix hasn’t been offering current-season TV shows the day after they air on TV has been the biggest difference between it and Hulu.

Of course, Hulu has recently been struggling with broadcaster’s demands to protect the next-day window. Fox shows are now only available to paying Hulu Plus subscribers or viewers who authenticate as Dish subscribers, and other networks may follow suit sooner or later. With Lilyhammer, Netflix seems to tell Hulu: Look, we can get new content too – and we’re not slave to anyone’s schedule.

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