Launching a pay TV service has never been cheap. While telco companies like Verizon (s VZ) and AT&T (s T) recently diversified their businesses to provide some much-needed competition to local cable monopolies, it cost them tens of billions of dollars to do so, as they had to lay fiber and invest in expensive infrastructure to begin offering IPTV services to consumers. But with the proliferation of new connected TVs, Blu-ray players and other consumer electronics devices, it might not be as pricey for the next generation of TV distributors, who could deliver live video broadcasts through broadband networks.
My latest piece on GigaOM Pro, New Business Models For Pay TV Services (subscription required), considers the possible players that might soon jump at the opportunity to become virtual network operators that provide subscription TV packages over-the-top.
Broadband video companies like YouTube (s GOOG) and Netflix (s NFLX) might be obvious choices to begin delivering linear online TV programming, as both have amassed large audiences of users that are already watching their online video streams — many of them on TVs already connected to the Internet. While the majority of the video each serves is on-demand today, there’s little stopping them from adding live video to the mix.
Then there’s the consumer electronics manufacturers, whose connected TVs and Blu-ray players are bringing a wealth of new broadband video directly into customers’ living rooms. CE makers LG, Samsung, Sony (s SNE) and Vizio already have struck deals to bundle digital services like Vudu (s WMT) and Amazon (a AMZN) Video on Demand. But how long will it be before they try to cut out the middle man (i.e. the cable company) altogether and become service providers themselves?
And let’s not underestimate the cable companies and satellite TV providers, many of which have rolled out their own on-demand online video sites. While those services have been aimed at defending against likes of Hulu in the broadband video space, how long do you think it will be before cablecos like Comcast (s CMCSA) leverage their existing relationships with content owners to roll out live TV services online? By doing so they could create packages of channels that they could pitch not just to customers already served by their existing cable footprint, but also into markets they don’t already operate in.
There’s one big reason these services aren’t already available, which is that content providers — particularly cable networks — have been loathe to offer these rights to online distributors. However, in the coming years it will matter less and less whether a piece of content is transmitted over traditional cable coax or through an Ethernet or Wi-Fi connection. And when that happens, you can bet that some service providers might find it cheaper and easier to just deliver their content over-the-top.
Related content on GigaOM Pro: New Business Models For Pay TV Services (subscription required)