Blog Post

Can Online Video Save Cable?

Faced with the prospect of people cutting their cords in favor of watching programs online for free, cable operators like Comcast (s CMCSK) and Time Warner (s TWC) are reportedly in talks with cable networks to provide subscribers access to programming online.

Web-streaming sites are a bit of a double whammy for cable operators. They pay billions in subscription fees to cable networks for programming, only to watch as the networks then put that content online for free, giving people a reason to dump cable.

Sources tell The Wall Street Journal:

The operators hope the new Web services, which could launch this year, will attract new subscribers — even given the popularity of free-to-watch Web sites such as hulu.com — by offering a wealth of previously unavailable video.

The Journal writes that under the proposed plan, there would be more content available online than what can currently be found, it would be streamed with ads, and it would be available “without any additional charge to cable-TV subscribers.”

Viacom (s VIA) and NBC (s GE) are reportedly interested in this type of arrangement, but we’re wary, especially about that no extra charges part. The cable companies never met a fee they didn’t like, and we’re not fans of them extending their control beyond the TV set and into online video (they’ve already implemented bandwidth caps and metered access, isn’t that enough?).

Comcast already offers premium content for free through its Fancast site, which distributes content from partners like Hulu and CBS (s cbs).

The whole TV industry is going through growing pains right now and no one is sure what’s going to happen next. Just this week, Hulu and rival TV.com got into a spat over content, and under pressure from its content partners, Hulu asked to be removed from the Boxee platform. The once-wide open world of newteevee is quickly grinding to a halt under territorial arguments from oldteevee companies.

On a side note, if this online video proposal from the cable companies does happen, thePlatform (and parent company Comcast) could be the big winner as it provides the video publishing services for four out of the five largest cable companies in the U.S..

9 Responses to “Can Online Video Save Cable?”

  1. While the cable companies will push hard in this direction, I find it hard to believe they will be able to accomplish this in the short term. I see three possibilities, with only the third as being of any success:
    1.) Extra content for hit shows. Akin to what Heroes Evolutions is for the NBC show Heroes. Comcast could try to buy exclusive rights to add-on shows of this nature. Other than a small percentage of diehard Heroes fans, I doubt many viewers will feel compelled to buy or upgrade their cable subscription solely to watch this additional content.
    2.) New content. New web series pop up all the time (and I learn most of them from NewTeeVee). Cable companies could buy exclusives to these shows also, but without significant traction, they are placing lots of little bets.
    3.) Already proven hit content. Similar to what DirectTV did with Friday Night Lights. To me this is the strongest scenario. Essentially the cable companies will look to create an HBO-like experience but over the top. Other than a few hits, and without collusion among their and the content owner ranks, I doubt they will have much success in pulling everything offline and into subscription-land.

    That third scenario will also require branding, marketing, and a really solid (Hulu-esque) user experience to make it worthwhile. It will also require tie-ins between watching that content online and through your cable box for consumers to really feel like its worth it. Yes, their VOD platforms are a good start, but they’ve been “a good start” for many many years now. Fancast is also good start, but to hit this level of change and begin to show consumer acceptance, I believe we are talking years for cable operators to really succeed. And in this rapidly evolving space, years is an incredibly long period of time.

  2. Here comes the “cableazation” of the internet
    – ESPN360 deal with ISP’s
    – Hulu taken from Boxee
    – Comcast now online

    As an entrepreneur, I like it because non-ad revenue models are taking flight and that’s EXACTLY what small to mid-level publishers needs.

    As a internet user, this sucks!

    Comcast and other cable operators that OWN our bandwidth will own entertainment on all platforms, IMHO. I guess the billions invested in fiber is paying off in the new digital age, as well.

    That is until someone figures out how to write the major owners bigger checks than the cable companies do now.

    Online advertising is only one part of the answer.

    Chris McCoy
    YourSports Network
    http://www.yoursports.com