From the Washington Post article:

“What Aereo is doing to bring broadcast signals to its customers is interesting,” Time Warner Cable chief executive Glenn Britt said in an interview with The Washington Post. “If it is found legal, we could conceivably use similar technology.”

That’s a big admission from Britt, and illustrates both how rapidly the internet is changing the television industry. But what would be an even bigger admission would be if Britt would consider delivering that public broadcast package beyond its existing subscriber base.

A modest proposal

In short, would Britt be willing to break the unspoken agreement that has kept the telcos and cable providers from infringing on each other’s turfs even as IP technology has made it possible for them to deliver their TV packages over the top?

If Time Warner Cable were to implement an Aereo-like business model and offer it to anyone, it might hurt Aereo but it would set off a war between the telcos and cable companies to deliver their services over the top. In many cases, the technology isn’t stopping this revolution, but the business implications would give them pause.

If Comcast’s Xfinity service were available everywhere and so were Verizon’s FiOS packages, then pay TV will have been decoupled from the entwork. All you would be left with are dumb pipes and whole lot of companies offering to provide the same channels of television. Would we need 20 “premium cable offerings?”

My hunch is no, which would have trickle down effects on the money the networks make as well as hasten the rise of a la carte pay TV packages, or even simply paying for a show. However, all of this speculation is premature as Britt cushioned his statements by telling the Washington Post that his company is only watching Aereo’s legal battle and that it doesn’t have concrete plans.

Taking action on this sort of talk would hugely piss off the broadcasters that own some of the channels that Time Warner Cable depends on to keep its subscribers happy, and may just be a feint in the ongoing fight between cable providers and content companies about retransmission fees.

Back in the real world

But Britt is clearly a fan of shaking things up. Unlike many ISPs that view Netflix as a threat to their triple play bundle, Time Warner Cable sends out advertisements touting Netflix as a reason to upgrade broadband speeds. He’s also letting consumers stream live TV to their Roku boxes with a Time Warner Subscription (that might come in handy should it elect to make an Aereo-style over the top offering). And he’s also been more vocal about the need for more flexible packages of channels for consumers.

He reiterated that to the Washington Post:

“The structure needs more flexibility,” Britt said. A customer shouldn’t have to pay for less popular channels like VH1 Honors in order to get Nick Jr. and MTV. “There are fellow citizens who are struggling financially and can’t afford large programming packages. We want the ability to offer those customers smaller, more affordable packages.”

It’s better to keep a customer paying you something, rather than decamping because they don’t want to pay for a $150 cable bill. Britt seems to get that, and wants to find a middle ground before the internet and over the top TV offerings take that ground out from under his feet. I wonder if he’s willing to take it even further.

Time Warner Cable will stream up to 300 channels to subscribers through the service. The actual channel line-up depends on where customers live, as well as their subscription package, but I’ve been told by Roku that this isn’t one of those “get all the major broadcasters, minus the two you actually watch” kind of deals: “All channels will be included,” a Roku spokesperson told me.

This is a significant win for Roku, and it foreshadows where the company is going: In the past, Roku has often advertised itself as a cord cutting solution, with Roku CEO Anthony Wood telling us back in 2010 that 12 percent of his customers had already given up on their pay TV subscription. But since then, Roku has put a bigger emphasis on authenticated offerings like HBO Go. The Time Warner Cable deal now marks the first time a pay TV operator is streaming live TV straight to Roku devices.

While Simon & Schuster has placed particular emphasis on online video, other publishers are also using it as a promotional tool. Reading community site Goodreads has its own video section, and website Book Riot has a separate section for book trailers. Readers and fans have come to expect “readily available and entertaining information both about their favorite authors and those they’re considering reading,” said Simon & Schuster EVP and chief digital officer Ellie Hirschhorn. “Video is now a critical part of that mix.”

Since many web users search for topics, not individual titles, Simon & Schuster has created three video channels that will appear on Roku and Blinkx. Two of the channels, “Tips on Healthy Living” and “Tips on Life and Love,” focus on videos from lifestyle and relationship authors (and have corresponding blogs), while “Book Stew” features author interviews for pop culture and general interest books.

Hirschhorn said Simon & Schuster’s most popular videos have been Walter Isaacson speaking on his book Steve Jobs (13,562 views on YouTube) and a book trailer for Hunger Games parody The Hunger Pains (over 1.5 million views on YouTube). The most successful videos, she said, provide “entertainment that is not an advertisement,” and tend to be under two minutes long.

Miller, a former CEO of AOL, joined News Corp in 2009. He was tasked with developing a digital strategy for a diverse set of properties that included everything from MySpace to Photobucket at the time. He was also asked to make digital a priority across the company’s many news and entertainment divisions.

Miller’s parting was amiable, according to All Things Digital, which first reported the story. That sentiment was echoed in a News Corp announcement in which the company said he would stay on as an adviser and CEO Rupert Murdoch praised him as “a visionary in the digital media industry.”

The departure appears to be related to News Corp’s impending split. Lucrative entertainment assets like Fox and BSkyB will be spun off into one company and the publishing properties into another.

While presiding over News Corp’s far-flung digital assets, Miller made sensible moves such as offloading MySpace, which the company had acquired for $580 million in 2005. The divesture was consistent with a statement in News Corp’s 2012 annual report that its digital strategy is no longer acquisition-based.

Miller’s other activities included supervising News Corp’s $45 million investment in streaming device maker Roku and working with Hulu, where he was a bord member.

Miller is also an active angel investor with deep contacts in the media space. He joined us at the paidContent 2012 conference, and you can hear his thoughts on digital media here:

Roku had first told Reuters this spring that it needed more funding for further international expansion, and that it was looking to raise as much as $50 million. The company started selling its set-top box in Canada in April, and launched its international expansion with a market entry in the U.K. earlier this year.

UK pay-TV leader BSkyB’s new over-the-top internet TV service Now TV will be delivered over Roku and other boxes. Through this partnership, Sky may be replicating the model in which it currently has set-top boxes in subscribers’ homes, but over broadband rather than satellite.

We recently broke the news that an expansion to Germany and Spain seems to be imminent; Roku’s website briefly contained code that hinted at a presence in both countries, and the most recent firmware update supports both German and Spanish as user interface languages. Roku hasn’t officially commented on when it will enter either market, but it’s likely that the yet-unnamed strategic investor has a presence there.

The significant investment from News Corp. and BSkyB also signals that Roku is getting more serious about becoming a solution for pay TV operators interested in Internet-based video delivery. The company recently launched a cooperation with satellite provider Dish to carry the company’s DishWorld IPTV service. Roku hinted at the possibility of sealing similar TV subscription package deals in the future its funding press release, saying that it wants to use part of the funding to add more services to the platform, “including advertising, games, transactional and pay-per-view video as well as content packages.”

Roku’s 4.8 firmware, which started rolling out Thursday, comes with an interesting new feature. From the announcement blog post:

“Expanded language support, adding Spanish and German to the user interface (To change your language, just go to Settings from the Roku home screen.)”

Roku previously only supported English and French. We reported earlier this week that Roku’s website contained traces of an expansion to Spain and Germany. A company spokesperson didn’t want to comment on its plans for continental Europe at the time, but Roku definitely took notice: The revealing HTML code snippets have since disappeared.

“Will people use Blu-ray players in four years? I don’t think so,” he said, adding that the streaming performance on Blu-ray players doesn’t compare to the experience on a dedicated set-top-box like the ones his company sells. (Wood, however, didn’t rule out that there will be a Blu-ray player built into Roku’s platform at some point.)

Wood used his keynote to share his view of the future of the connected TV space, which has unsurprisingly put a big emphasis on streaming players. Wood admitted that today, most streaming happens on game consoles, but said that he doesn’t see much growth in that area. “New customers don’t go out and buy game consoles to stream video,” he said.

Instead, Wood sees momentum shifting to streaming players like the current-generation Roku boxes, as well as Smart TVs. “Our goal is to be the dominant platform in those two segments,” he said. Roku’s streaming stick, which is scheduled to go on sale later this year, would be a first step for the company into the Smart TV space, he said.

Wood also shared some new numbers about his company’s performance: He said that Roku made $100 million in sales last year, and that the number of devices sold tripled year-over-year. However, he didn’t mention that the company missed its projected sales goal by 500,000 units.

The data suggests that Netflix is further along on the path toward incorporating streaming web programming into the digital living room.

There is a general consensus that the ultimate goal for home media consumption is a connected environment in which the various pieces of the puzzle — internet, TV, gaming consoles, and media players — are integrated, enabling users to consume the content of their choice on their televisions. This would mark a significant shift from the existing model in which cable and fiber companies like Comcast (NSDQ: CMCSA) and Verizon maintain a stranglehold on content delivery to the living room. Major players like Apple (NSDQ: AAPL) and Google (NSDQ: GOOG) are pushing into this space by offering web-connected set-top devices that bypass the traditional incumbents, but neither of these services has made substantial inroads as of yet.

The Nielsen data shows how viewership patterns are evolving.

The vast majority of Hulu viewers — 89 percent — watch content on their computers, compared to 42 percent of Netflix users, who are more likely to watch content through third party devices. Sixty-one percent of Netflix viewers watch programming via connected devices like Nintendo’s Wii system (25 percent), Sony’s PS3 (13 percent), and Microsoft’s XBox Live (12 percent) and Blu-Ray players (11 percent.) Only 10 percent of Hulu viewers use such devices to watch content: Wii (3 percent), PS3 (3 percent), and XBox (2 percent) and Blu-Ray (2 percent.)

As for iPad viewing, three percent of Netflix users watch on Apple’s popular tablet, compared to one percent for Hulu. Only users of subscription Hulu Plus service can watch on the iPad, but Nielsen did not distinguish between the free and premium versions of Hulu in its study.

The data also shows how viewers are using the two platforms to consume different types of content. Seventy-three percent of Hulu viewers consumer TV shows on the service, while only nine percent watch movies (18 percent consume both equally.) Only 11 percent of Netflix users watch television shows, by contrast, while 53 percent view movies (36 percent consume both equally.) That may reflect the different emphasis each had at the start: Hulu’s draw has been TV while Netflix was seen as a movie service.

Methodology: Nielsen completed more than 12,000 online interviews in March 2011, focusing on usage and attitudes for over-the-top video, particularly Netflix and Hulu.

Roku XD player will start appearing in Best Buy stores nationwide and on the retailer’s website. The player has a list price of $79.99. In a statement, Anthony Wood, Roku’s founder and CEO, claims that the company has already sold one million boxes via online retailers.

In addition to stepping up its retail efforts, Roku, which has mainly been known for offering easy access to Netflix (NSDQ: NFLX) streams, is also working on the programming side as well. This week, Roku also said it was “upgraded” its ad-supported Crackle channel with fairly recent hit movies such as The Da Vinci Code and older ones like Ghostbusters. Crackle, which is only available in the U.S., will add about 20 new titles per month from Columbia Pictures, TriStar Pictures, Screen Gems and Sony (NYSE: SNE) Pictures Classics.

The ability to dynamically insert ads is something that could attract more programmers–not to mention, more prominent ones than WealthTV–who will want a dual revenue stream in place if they’re going to consider Roku as a distribution partner.

As it stands, the only advertising on Roku is from either Hulu Plus, which handles its own ad placement, or live-sports programmers like NHL Gamecenter that replicate whatever they’re doing on air. Otherwise, you have ad-free zones from channels that subsist entirely on subscriptions like Netflix (NSDQ: NFLX), or programmers who are just winging it for now.

But if mDialog is going to allow for programmers to insert more ads, it’s going to be interesting to see whether there’s any pushback from viewers. The answer here may not necessarily be a yes or no question to ads on Roku channels. It may take some experimentation with ad load and price point to get it right.

For instance, could a channel that charges a cheaper fee because it carries ads be an acceptable tradeoff to consumers? Possibly. Roku could potentially offer consumers two different channels priced differently depending on whether there are ads in-stream or not.

What may make all the difference here is what type of ads are inserted. If Roku can provide advertisers with demographic data, ads can be targeted to relevant IP addresses. There’s also potential for making “smart” ads that aren’t just 30-second videos, but interactive experiences that can culminate in actual transactions.

But even with the ability to add commercials, the bigger question is, will marketers care about a footprint of 1 million devices? That’s infinitesimal compared with most cable channels; most advertisers won’t roll out of bed in the TV sector unless there’s 20 million households in place. That said, programmers that have their channels on a number of platforms may just use Roku as padding for their total reach. Channels that exist on Roku and not much else won’t have that luxury.