Comcast, Time Warner Team Up to Control TV on the Internet

66 Comments

Updated: Sometime tomorrow, Comcast and Time Warner will announce a partnership to promote the concept of TV Everywhere. Jeff Bewkes, chairman and CEO of Time Warner, and Brian Roberts, chairman and CEO of Comcast, will have a joint media conference tomorrow in New York. The deal makes it painfully obvious that everything cable companies do — including introducing the draconian metered broadband policies — is done to save their video franchises.

With the pervasiveness of broadband and easy availability of tools that allow web video to leap onto your television, cable companies see that their video distribution pipes are becoming less relevant. So they want to control how you watch premium content online and want to impose fees via an authentication system.  Time Warner and Bewkes have been championing this concept — essentially an authentication system that requires viewers to have cable, telco or satellite subscriptions in order to watch certain premium content online or on other platforms. Bewkes recently said he wanted to launch the system during the second half of 2009. (NewTeeVee has just published a great FAQ on TV Everywhere.) Time Warner spun out its cable business as a separate company. Time Warner owns premium services such as HBO. [digg=http://digg.com/tech_news/Comcast_Time_Warner_Team_Up_To_Control_TV_On_The_Internet]

This coming together of large media companies and cable companies over Internet video should put the anti-trust officers in Washington on red alert. They should be paying attention to not only these moves, but also the metered broadband efforts of cable companies. The cable industry and its large media partners form a cozy cabal, though on paper they dislike each other.

Cable operators need media companies’ channels to overcharge the working stiffs like you and me. Media companies need the cable operators to share subscription revenues to pay for their highly inefficient and archaic businesses.

“The majority of profits for the big entertainment companies is from cable programming,” Stephen Burke, president of Comcast, tells The New York Times. “That stream is so important to every entertainment company that everybody is looking at that and saying, if we are not careful we could start to harm that model.”

Here is the irony: If Comcast thinks it is keeping the status-quo go, Time Warner’s Bewkes thinks he is inventing the future. “We’re talking about taking the TV industry to a new era,” he tells the Times. When I read that, I LOL-ed. That is rich coming from a guy who runs a company that has proven to be the Internet equivalent of the village idiot. Anyway, here are some minor details about this system that is going to be TV’s future.

The first test of the new system, which will authenticate cable subscribers online and make available programs on the Web for no additional charge, will be announced Wednesday, between Comcast and Time Warner. The trial will involve about 5,000 Comcast subscribers, and television shows from the Time Warner networks TNT and TBS.

Comcast and others such as Viacom have been championing their own authentication systems. There is a massive battle brewing where content owners and cable operators will soon find themselves on opposing sides. Cable companies (and large media companies) are unwilling to come to terms with the fact that their brands don’t matter as much in this age of content atomization.

It is not clear if consumers are really willing to deal with these confusion authentication systems. When our sister site, NewTeeVee, asked its readers if they would pay $10 per month to Comcast, nearly 70 percent said, No!

The complete press release is here:

Time Warner Inc. (NYSE:TWX) announced today that it has partnered with Comcast Corporation (NASDAQ: CMCSA, CMCSK) to develop broad principles for the TV Everywhere model to guide the distribution of its television content online.  The agreement between the companies will make it possible for Comcast customers to access programming from Turner Broadcasting’s award-winning entertainment networks free online and on demand.  In addition, Comcast announced it will begin a national technical trial of its “On Demand Online” service in July carrying programming from Time Warner’s Turner networks TNT and TBS.

The companies endorsed a framework that would bring significantly more television content to customers online in a manner that is consumer-friendly, pro-competitive and non-exclusive.  To ensure rapid adoption and deployment of online television content across the industry, a set of principles for the TV Everywhere model was designed to be simple and attractive for any programmer and any video distributor to elect to adopt.

The companies agreed to the following principles:

  • Bring more TV content, more easily to more people across platforms.
  • Video subscribers can watch programming from their favorite TV networks online for no additional charge.
  • Video subscribers can access this content using any broadband connection.
  • Programmers should make their best and highest-rated programming available online.
  • Both networks and video distributors should provide high-quality, consumer-friendly sites for viewing broadband content with easy authentication.
  • A new process should be created to measure ratings for online viewing. The goal should be to extend the current viewer measurement system to include advertiser ratings for TV content viewed on all platforms.
  • TV Everywhere is open and non-exclusive; cable, satellite or telco video distributors can enter into similar agreements with other programmers.

Time Warner Chairman and Chief Executive Officer Jeff Bewkes said: “TV Everywhere is no longer just a concept, but a working model to deliver consumers more television content over broadband than ever before.  We consistently look to make our popular, branded content more accessible to consumers in order to grow our business.  This progressive approach to delivering television content online will enable the continued vibrancy and growth of distribution outlets, their content partners and advertising clients.”

Brian L. Roberts, Chairman and CEO of Comcast said, “Today’s announcement is all about giving our customers exponentially more free content, more choice and more HD programming online as well as on TV. We have been working for a year to bring more TV and movie content to our customers online and we are thrilled that Time Warner is joining us in our national technical trial. Ultimately, our goal is to make TV content available to our customers on all platforms.”

The innovative agreement for this national On Demand Online technical trial will deliver more TNT and TBS programming online, free of charge to Comcast video customers, than previously available.  Comcast customers in the trial will be able to access TNT’s award winning programming like The Closer and Saving Grace, as well as the TBS line-up including Tyler Perry’s Meet the Browns and My Boys. The shows will be initially accessible on Comcast.net, Fancast.com and will soon be available on TNT.tv and TBS.com.

The On Demand Online technical trial will involve premium long-form content with approximately 5,000 customers.  The trial period will be dedicated to testing the new authentication technology on a national basis that will enable secured access to the content. This national trial will give customers an opportunity to explore the service and provide feedback that will help to shape the service over time.  The initial trial is the first phase of a multi-phase rollout that will expand the amount of content, features and functionality of the service as subsequent iterations are implemented.

In the coming weeks, Comcast expects other programming networks to participate as the nationwide trial expands.  Time Warner expects to announce similar trials with other distributors.

66 Comments

skye

I just got this little “invitation” from Comcast, as though it was an exciting exclusive thing to agree to “test” the TV Everywhere program. I read the terms and it caught my eye the little statement about Comcast being able to start charging you anytime for the services. Don’t look a horse in the mouth. Nothing is ever free and particularly something offered by Comcast. Be suspicious of snake oil salesmen and the sneaky underhanded marketing techniques used today. Their intent is to steal away what freedom we have on the Internet and collect as many additional fees as suckers, I mean customers are going to fork over.

PT

Okay since some of you people don’t seem to get the point. This is not about giving people more choice. If it was, there would be a simple log in. This is about controlling you. It’s the same reason USA is pulling old episodes. If you get people into a show and then pull the old episodes so new people can’t get into the show. Great lack of a business model, if it’s working break it.

tom

i do not see this working. i have a small computer shop. lately i have a lot of customers talking about watching TV program over the net. not a single one is doing it for the convience; every seingle one is doing for one reason. it is free!!!
!

James

I like this idea, I am still trying to grasp the concept of whats involved though, so it means that they are improving the quality of tv watching online, well it makes sense nowdays everything is done online including tv watching people either miss there show or they dont have cable so they turn to online, i like it, hope it goes well cheers for the heads up TravelHQR and myself are appreciative.

Ashith Raj

you should check out the IPTV offerings from AT&T – UVerse. awesome bundling of HD channels, VOIP, DVR and Internet. Like AT&T, other operators in this area are RTC, nTelos, and CenturyTel.

Michael Steinbaugh

I’d much rather pay the networks directly a la carte for their content through the web, especially live sports, and bypass the cable companies all together. Consumers win, the content producers win, and the greedy cable middlemen are left out in the cold.

Mort

Toni:
He never said that the TVEverywhere was metered, that’s the broadband.. you know, the content delivery system that you could use anyway to watch TV from anywhere on the internet instead of TVEverywhere.

The combination of metered broadband PLUS offering TVEverywhere seems to be like closing lanes on the freeway to drive more traffic over to the toll-way. That’s the point he’s trying to make.

Dave

I think what’s important here is the future. They are absolutely not doing this to provide value for their customers… They’re scared to death that video via internet will replace the need for cable… and it very well could. They’re doing this to get a hold on this type of service now, so they keep the $$$ in the future.

You know 10 years ago analysts said that it was unlikely that people would get their news online instead of from the paper, but things changed and now the entire newspaper industry is hurting (or closing). You have to be forward-thinking in this, if online content distribution is king in 10 years, are cable providers really who should be running it?

Itamar

I’m sorry, but I don’t get it.
Authentication of what? The user? So what about family members – can they use the “service”?
Or maybe authentication of the device as in conditional-access or DRM? If so what happens if I use another device? Do I need to install something on all of them? Is there a Mac version yet? How about Palm Pre?
Can I access the content when I’m not connected to the Comcast network (e.g. at a hotel, coffee-shop etc.)? How about in another country?
The problem with such half-baked ideas is that they’re completely alien to the Internet and just don’t work. The Internet is all about equal access from anywhere and usage of open standards. All attempts to create walled-gardens and conditional access networks have failed. There’s no way to force the cable TV model onto the Internet.

PT

So let me get this straight, they are talking about potentially putting spyware on your computer and monitoring your internet habits and you aren’t worried about a privacy invasion? I for one am sick of paying exorbitant amounts of money for the 10 channels I watch(And that is REALLY stretching it) They have to pay for the line? You mean the tax write offs, public moneys and fact that the infrastructure is at least 25 years old haven’t been paid for yet? Really?? You haven’t gotten your act together in that long? Stop trying to tell me what to watch, when to watch it and how to watch it or you’re going to lose my business. For those of you who naively think that this won’t become a chargeable item pull your head out of the sand. These are the same companies that advertise unlimited usage a month at blazing fast speeds and then complain that you are using what you paid for. If you can’t provide the service why are you offering it? I’ve got the advertisements to prove what they offered. Aside from that why is it only corporations can alter contracts seemingly willy nilly. If I decided to say I was only going to pay 3 dollars less that what they ask every month they’d be pretty pissed.

blaze

this is wrong. you either have net neutrality or ‘all you can eat’ bandwidth. You can’t have both. personally, i much prefer net neutrality. let the market decide.

patricia

the thing is, the cable companies and telcos laid down the web. billions of dollars invested for its proliferation. in the end, i don’t know if they need to worry about the migration of broadcast/cable TV to internet as much as people may think. at least, not according to some pretty big traditional broadcast TV network engineers i know. it’s an interesting discussion.

great article om!!

Andy Freeman

> the thing is, the cable companies and telcos laid down the web. billions of dollars invested for its proliferation.

Oh really? Then where did the money that folks pay for DSL and cable internet access go?

AT&T currently charges $30+/month for DSL. They give away a DSL modem, which costs them maybe $60, and then they need a card in the DSLAM, which costs them maybe $10. There’s other stuff in the CO, so let’s call it $120 from the residence to the outside of the CO. Do you really think that they spend $240/year on infrastructure and DSL expenses? How about the second and subsequent year, at $360?

Proto doesn’t change the argument – it just lowers their expenses.

FIOS customer

WSJ had an article on something like this a month or so ago. Key point being cable content is not currently accessible via web today and they are attempting to provide more value to their subs as retention play. We’ll see what they actually announce tomorrow…

Om Malik

Hey …. I remember reading that article. The thing is that most of the stuff people watch is available on Hulu or via iTunes store. That is one of the reasons why I really don’t have cable TV anymore. I watch live baseball on MLB and watch OTA TV if I have to. I think they are trying to give a reason to take more money from you.

Harry R Strong

Om, do you have stats for that? Because if you look at the Nielsen data most of the eyeballs are moving OFF of broadcast during primetime and onto cable. And iTunes charges by the way. A lot! How would getting this at no additional cost with my cable subscription be worse than paying for it on iTunes?

I’m not going to cancel cable because of Hulu. I watch CNN, Daily Show, Maddow, Olberman, Stargate and Food Network. That stuff isn’t online free right now. NYT says it will be free…or it will come with my cable.

I will admit that I have a bone in this fight. I have family in film production. My brother does scoring for TV and film. But this strikes me as a really off target.

Ok, bed time.

Om Malik

I pay for TV I watch, thanks to Amazon/Netflix and iTunes. I don’t pay a bundled fee to Comcast because I don’t much care for the content they shovel down the pipe. I would happily pay for what matters to me. I think the problem i have with this authentication system is that it keeps the current status quo and requiring the end consumer to keep paying a monthly subscription.

PS: The content that comes for “free” isn’t actually free. You are still paying for it with your monthly subscription fee.

Bed time for me too….

Alok

Hi Om,

While I agree that the shoving off content that you wouldn’t want to see is a big issue but the real expectation from the people on the internet is FREE CONTENT. Content is as much an IP as the code that went into making Facebook or Itunes or a drug by Pfizer etc. It is an economic activity and a money transaction has to happen here (either through advertisers or directly from consumers)

I am sure you would appreciate the effort that goes into creating content- written, video, audio or anything else.

Thanks- A Media Worker.

RonF

Alok,

while i agree someone has to pay for content, aren’t you forgetting the model prior to cable being no.1? OTA (over the air broadcast tv) they made their money from advertisements broadcast withe the IP content.
Cable when it first was released advertised NO COMMERCIAL ADVERTISING WITH BROADCASTS that was one of the reasons many people saw no issue with paying for it.
How long did that last? My cable channel are as full of advertising as OTA now.
Hulu has advertisements built into their free broadcast content and all concerned seem to be making money.
Why does the cable service conglomerate think they get to get paid for the same content multiple times with in content advertising AND subscription fees?
Give me a break they will make their money on ads if the content is worthwhile.

The ONLY potential downside to the shakeout that will inevitably happen is why PBS was created cable content that is not watch will not continue to be produced, what has merit may appear on a PBS type internet channel supported by believers in that content type. That’s the way it should be, has been and frankly i don’t really see a downside to it.
Cable companies are being greedy.
Internet is now a public utility like gas or electric, we need it and the government needs to step up and control internet cost and service levels.
Obama put a tech czar in place to handle just these types of issues.

pl

RonF,

Hulu is not making any money. Aggregating free content is not a sustainable revenue model. Yes, they sell advertising, but we all know that internet advertising is nowhere near the revenue impact of traditional television spots (they themselves advertise on TV).

In my opinion, this is simply a means of allowing you to view content *you are already paying for* in more places — online, etc. The cable companies need a way to ensure it’s you viewing it, hence the reason for authentication. They do this (and capture all viewing metrics) now through your cable box — so you aren’t at any additional risk in that respect — you just gain the convenience of watching your premium stuff (HBO and the like) when and WHERE you want.

Alok

@RonF

Advertisers are not really paying for the entire content. They pick and choose and for all the content that is created.. the advertising money is not enough.

As consumers we would ideally like to have everything free but there is an economic activity the loop of which needs to be closed with the money coming to the owners of the content.

Also, even with the advertisement led model, the consumers are still paying for it. Companies mark up the end product post their considering their marketing spends.

Alok

Harry R Strong

Om, OK, “no additional cost” instead of “free.” But Amazon, Netflix and iTunes all have NEW fees for a household like mine. What is going on is that different companies are selling different digital rights packages and they are competing with each other. This is Apples competing with Oranges here. Not Apples competing with Apples.

What I hope they do here is let me have my nice, big 40″ TV AND let me watch my shows on my laptop. At no additional cost. I don’t want to pay iTunes for every show that I’m already paying for on cable. That is fricking absurd. I don’t have $20,000 to fill my iPod. I want to pay once and get what I want for my entire family. I guess you want to pay show by show. OK, you can do that with iTunes and Netflix.

But I share the television in my house with two other people who each have their own shows they like, am I supposed to pay three times for a different set of show? Having cable with a DVR is a way that we negotiate all the competing tastes in the house. Now that it is going online that means we don’t have to pay more and we have more of our screens usable for TV in the house.

Am I missing something? I hear your point on the caps. I guess it matters if it is streaming or download. Do you know that yet?

LHenryJr

I completely agree with what your saying. Between Comcast and Time Warner Cable they’re trying to suck every dime they can out of their customers. They put channels on your subscription that you don’t want, they place caps on your Internet service so you can’t outsource to places like Netflix [download movies] or to use another phone provider [VOIP] they want to control everything.

They run around spouting how great VOD is, but they won’t let you just pay for the channels you want. The whole process sickens me.

Good article.

Thanks,
LHenryJr.
http://www.lehsys.com

Robert

You complain about having to pay fees to watch what should be free, and yet you are OK paying the MLB for the live streaming of baseball.

The way I see it, this is a way for subscribers paying for, say an MLB sports teir, to also get that content online for free. Maybe not initially, but that is certainly the direction this could head. I for one would welcome such a service. As for the 10$ thing, even if it were true, I could not see myself paying 10$ for such a service, but 5$ definitely. For the conveinence of being able to watch the Dodger game if I am on vacation out of state, or streaming over my phone if I am not at home. Sign me up.

Harry R Strong

Um, the reporting on this in other places has said the service would be free…as in, not $10 a month. Where are you getting your facts?

And isn’t this an alliance between a content company and a cable company? Time Warner INC and Comcast. Bewkes is the programming guy, not the cable company. Doesn’t that undermine your point about, “massive battle brewing where content owners and cable operators will soon find themselves on the opposing sides?”

Om Malik

Harry

Time Warner still owns a substantial portion of the cable company even if it has been spun out. I think these guys are all coming from all angles — The fight you see is emerging between the guys without carriage (viacom etc) and cable guys. I think tomorrow we will get more details.

PS: on the $10 number, it was a number that was reported earlier this year in many different places. Anyway people aren’t ready to pay so they have to make it free.

Harry R Strong

New York Times reporting right now that it is at no additional cost. Not sure where you get the $10 thing from.

Interesting about TW and the TW cable company. I didn’t realize that. I had TW cable once. SOBs.

But if you look at things like EpixHD I still think you’re wrong about content owners and cable operators. Hollywood wants to protect both advertising and cable subscriptions. That is how they pay for long-form stuff. That’s real money.

Also, don’t you have a fee-service on GigaOm? I call BS here. You know there has to be a revenue model for content to continue to be created. Even your content.

Om Malik

Harry

Never said that there shouldn’t be a revenue model for content. Before you call the BS, I think you need to actually pause and see what my problem is with this authentication system: it is a combination of limiting access to content and at the same time imposing metered broadband. I think what it is a blatant attempt to shovel down an antiquated biz model our throats.

Toni

Om,

I thought the authentication system only makes sure that if you are a subscriber, you can access the content. Where is that you’re getting that TVEverywhere is also metered ?

Phillip Dampier

There is a running debate over whether TV Everywhere will ultimately be “free” or will carry some add-on charge depending on the level of cable-TV service you select (have a robust package, get it free… basic only and pay a fee, etc.) Additionally, whether the service will offer more content for extra fees is yet to be determined.

Should your cable company impose Internet Overcharging schemes like usage caps and meters, this won’t be “free” at all, especially if it eats into your allowance and subjects you to overlimit penalties and fees.

This is about cable becoming the gatekeeper of mainstream online video entertainment not already controlled by Hulu or Joost (or the provider’s own website). By establishing authentication protocols, they decide who gets in and who stays out. If you’re a customer without a video package from your provider, you stay out.

That prevents erosion from broadband customers dropping video packages to watch everything online.

Benevolence this is not. We are particularly concerned about potential collusion and antitrust violations and have called on Congress and regulatory agencies to carefully review this concept to make sure it doesn’t strong arm programmers into participating, and doesn’t represent an anti-competitive tactic, especially considering the limitations this scheme seeks to impose on broadband users and the incestuous relationship between the content owners/distributors and the broadband platform owners that will deliver it.

Television Spy

Thinks like this make me sick.

Such tactics to keep their bottomline, at the expense of their customers and others is just sickening.

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