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Online Video for Cable Operators

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Pretty much everyone agrees that one of the hottest topics out of The Cable Show this year was how to bring cable TV to the Web and vice versa. Depending on how you look at it, online video is both a threat to and an opportunity for traditional pay-TV providers. It has the potential to undercut subscription fees, and/or it offers a new medium for cable (and telecom) companies to expand their presence with consumers. One of the analogies that came up repeatedly in a well-attended panel last week – Online, On Demand & On TV – was a comparison of the TV business to the newspaper and music industries. Newspapers have suffered because they gave away content for free. The music industry has suffered because it tried to lock everything up, creating a “perfect storm” for piracy. Somehow the TV industry has to come up with a better solution.

Among the executives discussing online video at the panel mentioned above were representatives from content, cable, and technology companies. The content companies (Discovery and Scripps) were fairly adamant about preserving the current dual-revenue model that brings in income from both advertising and licensing fees. The cable companies (Comcast, Time Warner Cable, and Rogers) discussed current experiments with online video. And the technology companies (Motorola and Intel) talked about feasible ways to move content around, keeping it secure, easy to access, and measurable.

Among the cable companies, the approaches to online video were wide-ranging. Rogers is in an unfortunate predicament because the combination of high broadband penetration in Canada and limited content availability has already made piracy popular. Comcast, on the other hand, has had some success with Fancast – traffic continues to grow – though the Comcast representative admitted that initial expectations for the site were extremely (unreasonably) high. And finally the Time Warner exec on the panel talked about being more cautious with online video and referenced Internet trials with HBO. The general consensus among them seemed to be that Internet access to cable content should be tied to traditional cable TV subscriptions. Pay for the content once, get access to it anywhere.

Without going into the difficult details – like how to authenticate and authorize users online – the model of tying TV subscriptions to Internet access has merit. Still, it’s not going to be popular among the digerati, the folks today who want to cut the cord and rely solely on free Internet video. Motorola’s John Burke suggested an alternative: Could video targeting technologies and better data collection of user viewing habits  help fund online cable video? There are serious privacy implications of course, but no more so than with many other situations today where consumers trade their data for convenience and/or discounts. (EZPass, credit cards, vendor mailing lists, etc. ) At any rate, data monitoring and analysis technologies should be part of the discussion.

It comes down to this: consumers are anxious to get cable video online, and cable operators are anxious to give it to them, as long as it’s economically feasible. Will everyone end up completely satisfied? Probably not, but there’s still a lot too be gained for everyone involved. Content companies get better distribution, cable operators extend their reach, and consumers get access to premium content whenever, wherever, and however they want it.

Final note- There are many overlapping areas for disucssion here that don’t fit  into a single blog post, including the role of video on demand, the infrastructure required to support massive online video distribution, and the controversial topic of consumption-based billing for Internet use. Another time, another blog post.