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Online Video for Cable Operators

cable-show-2009-online-on-demand-on-tv-session-john-burke-motorola

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.

9 Responses

  1. Ultimately, I don’t see the cable operators going in the direction that people want them to. Of course this is because part of the reason people love technology is because not only does it make life better, but it is at a better price.

    But while we’ve seen telecom prices get cheaper in the way no long distance charges and more minutes for less money, cable TV per subscriber is more expensive then ever.

    At this point in time, people don’t want more linear programming as much as they want better access to programming and at a lower price.

  2. Cable’s going to address the better access issue, but I agree that price is an ongoing problem that the industry doesn’t like to talk about. On the one hand I see a lot of value from cable services. On the other hand, the monthly expense is tough if you’re on any kind of budget. Internet access is clearly critical for every household, but TV is a luxury, and service providers are going to make good money from it.

  3. […] Online Video Opportunity”. Since the content ties in nicely with some of the content I’ve posted on this blog, I asked CED’s permission to publish an excerpt here. Below is a small section of the article […]

  4. […] Online Video for Cable Operators 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. […]

  5. I find this sentence ironic:

    “Rogers is in an unfortunate predicament because the combination of high broadband penetration in Canada and limited content availability has already made piracy popular.”

    Rogers is one of the primary forces in Canada that brought about their ‘unfortunate predicament’ by lobbying for and keeping in place a system that locks out foreign competition in Canada.

    And what have they, other cablecos and telco’s done with their Canadian duopolies. Virtually nothing in terms of bringing new content offerings to Canadians. Year after year passes and all of the myriad content choices available to Americans pass by Canadians while the cablecos and telcos suck every last penny they can out of Canadians as they stubbornly try to preserve their dying business models for as long as possible.

    …Dale

  6. Another ironic sentence:

    “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.”

    Interesting choice of words “tying’. Tying is generally illegal under the anti-trust laws of most nations. I understand that the idea has merit from a profit perspective, but from the consumer’s perspective, who the heck wants this? It’s like saying, if all I want to do is rent one video a month from a store like Blockbuster I must subscribe to Netflix account that I don’t want.

    I look forward to the day when the cable industry looses its monopoly power so they are forced for the first time to start thinking from the perspective of the clients they are serving, and serve them, and not just their bottom line.

    …Dale

  7. I think it’s pretty much a given that this is the model under which cable-network content makes its way online. As you point out, the finances just don’t make sense for content providers to forgo cable revenues for online content while at the same time undermining their revenues from cable for traditional linear access.

    The interesting question to me is whether the Comcast one-stop-shopping model leveraging a site like Fancast will provide a better experience or a more distributed model where content providers create their own video watching sites and cable cos just validate your subscription. Given that Comcast and Time Warner don’t really compete we’ll probably have both models for a while.

  8. […] down to how well the experience is delivered and how well cable companies and content producers can make their case to the public. Possibly related posts: (automatically generated)Cable Companies loosing customers […]

  9. cable tvs these days are rapidly being converted into a digital service which offers more value added services “:’

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