Interviews with Digital Media Thought Leaders
Internet TV: The Empire Strikes Back!
Podcast Audio | Posted by Phil Leigh on March 31, 2009
What if popular TV shows are only permitted to be viewed over-the-Net by subscribers to conventional CATV, Satellite, and IPTV services?
Such a plan seems to be gaining momentum among companies such as Time Warner, Direct TV, and Verizon. They want to discourage subscribers from “cutting the cord” to conventional TV and alternately watching the shows via broadband ISP service at websites like Hulu, Joost, and TV.com. Simultaneously they reason the plan provides added value to conventional subscribers because it gives viewers an alternate way to watch the shows.
The answer to “what would happen?” depends upon a number of contingencies. The two most important are (1) whether it would be free or involve yet another monthly charge and (2) whether the broadcast networks would co-operate.”
As to the first point, it appears that a number of popular cable programmers want to be paid an additional fee thereby requiring the operators to pass along the costs to subscribers. Alternately the operators could “eat” the expense themselves, but there’s not a Saint’s chance at a political convention that they would do that.
Secondly, the broadcast networks (ABC, CBS, Fox, and NBC) are likely to be less co-operative because they generally don’t collect carriage fees from the operators as do the cable networks like ESPN. However, system operators may be able to “buy” broadcast network co-operation by paying them fees similar to those paid to the cable networks. The broadcast networks would argue, as a matter of parity with the cable networks, that such fees should be based upon the 80 million conventional TV subscribers instead of the nascent subscribers to a restricted “over-the-top” video service.
In short, it appears that getting everyone to agree is like herding cats. Furthermore, the incentives needed for such co-operation may require the operators to pass along the expense in the form of an incremental monthly subscriber fee.
Thus, we come to two conclusions.
First, we don’t think many subscribers will be willing to pay much extra for Internet access to shows that are already available on conventional TV. It is likely to be about as popular as paid online newspaper subscriptions.
Second, the initiative reminds us of the first alternative offerings to Shawn Fanning’s Napster offered by the record label industry, PressPlay and MusicNet. In retrospect it is clear that both were intentionally restrictive in order to minimize the potential adverse impact on CD sales. But the strategy backfired as illegal file sharing ran amok in the absence of a realistic legal alternative.
The situation could be much the same for video. If consumers are confronted with too many obstacles when attempting to watch TV shows and movies on the Internet, they may resort to piracy. Confessedly, the mainstream will be reluctant to access pirated sites as long as they are “geeky” and potential sources of malware. However, recent developments suggest that pirated content is available at websites providing streams as opposed to downloads.
This is important for two reasons. First, anyone skilled enough to watch a YouTube video will understand how to watch a video stream from most any website. Second, streams are less likely to infect the viewer’s computer than are downloads.
This is Third Generation Television.
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Categories: Podcast Audio
Tags: Cable Industry, CATV Industry, Direct TV, Future-of-Television, hulu, Internet-video, IPTV, Joost, Time Warner, TV.com, Verizon
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I think that some of these “pirate” streaming sites are actually one of the reasons why so many people have started hooking up their laptops to TVs. Restricting a service to just cable subscribers isn’t going to help the content companies get around this. If someone is geeky enough to connect their computer to a TV, finding these sites won’t be that difficult. They say about 1/3rd of high speed subscribers are using Bit-torrent to download, if the content owners create artificial scarcity by limiting who can have access, it will only drive more people to streaming solutions which are much more mainstream friendly.
I think that the solutions involves cable adoption an everything on demand at the set top box level or building some kind of sling functionality into their own DVRs. Echostar has done this already, but I’m not sure if they are paying a licensing fee or not. Seems to me that placeshifting has been established as a legal activity, if cable wants to charge extra to get at the same content, independent companies will be quick to offer this functionality for free. As is, I use Orb to watch business news at my office. The quality isn’t high def, but it sure beats paying $75 per month for work access and home.
Thanks for the comments, Davis.
Connecting a laptop computer to a flat-panel TV is not at all geeky if the laptop has an HDMI socket. One of our earlier videos demonstrated that connecting such a laptop is less complex than connecting my cable set-top box.