Blog Post

Time Warner Cable Really Hates Online Video

Time Warner Cable (s TWC) subscribers won’t be able to watch premium cable services from Epix on its service anytime soon, as the cable provider has decided not to carry the network or its broadband and video on demand services. And at the heart of that decision is a recent deal by Epix to make its film catalog available through Netflix’s (s NFLX) broadband streaming service, according to multiple reports.

Epix, which is little more than a year old and has backing and content from Viacom, (s VIA) Lionsgate (s LGF) and MGM, recently signed a five-year deal with Netflix reportedly worth $1 billion. That deal gives Netflix subscribers access to 3,000 titles through its Watch Instantly service. The only catch is that new releases won’t appear on Netflix until 90 days after they’ve already been shown by Verizon, (s VZ) Dish Network (s DISH) and other Epix distribution partners.

But Time Warner Cable sees that deal as a reason not to strike a deal with the fledgling cable programmer. The LA Times reports Time Warner Cable CFO Rob Marcus said at a conference that Epix “didn’t do itself any favors” by striking the deal, and that the Netflix agreement “cheapened its brand.” And a spokesperson for Time Warner Cable told The Wrap that it isn’t interested in doing a deal with Epix “in large part” due to the Netflix deal.

This isn’t the first time that online video has been a thorny issue for Time Warner Cable. Online distribution of broadcast content was reportedly one reason why Time Warner and Disney (s DIS) entered a prolonged and public battle over carriage fees for multiple ESPN and Disney brand channels, as well as some local ABC affiliates. But that fight ended with Time Warner Cable and Disney announcing the first authenticated ESPN TV Everywhere service, making live sports content from the network available online to Time Warner Cable subscribers.

Of course, the new broadband ESPN service will only be available to cable subscribers who log in and prove that they pay for ESPN through their cable subscriptions. Epix content, on the other hand, is freely available to anyone who pays $8.99 a month for a Netflix subscription. The theme here seems to be that Time Warner Cable is ok with online video, but only if it can control who views it.

Of course, if cable subscribers begin to leave or switch to broadband-only plans, subscribing to services like Netflix or Hulu Plus for their content instead, companies like Time Warner Cable will have to find other ways to boost revenues. One possibility is rolling out tiered pricing plans for broadband — ensuring that those who use video sites as a cable substitute will pay more than those who just use broadband for email or other data-light applications.

Photo courtesy of Flickr user The Consumerist.

Related content on GigaOM Pro: How Online Video Is Shaping the Next Round of Retrans Fights (subscription required)

10 Responses to “Time Warner Cable Really Hates Online Video”

  1. I have already dumped all my service providers except cable for data. My phone is VoIP, my hd content is free to air freview digital, most of my movies are DVD rentals posted to me. We don’t have anything like netflix here in NZ but I would subscribe if one were available. My cable prices just came down this month, and 50% speed boost to 15Mb/sec

  2. Ryan, I believe that it’s just a matter of time — eventually, all MSOs will have a broadband-only video streaming (PPV or subscription) offering to retain price-sensitive customers that call them to disconnect traditional pay-TV services.

    Granted, few MSOs see themselves going in that direction currently, but remember that a retained customer that pays a lower monthly service fee is better than nothing at all.

    Also, if MSOs were armed with a better understanding of the evolving consumer market segmentation, then they would realign their business models (and associated cost structure) in anticipation of the apparent trend — and growing demand for lower-priced pay-TV offerings that don’t include ESPN, etc.

    My point: they can stop the defections to Netflix and others by simply moving beyond their denial that a market shift is already in motion.

  3. gonzo90017

    Does ESPN3 also fall into the “ESPN TV Everywhere” service? I just called Time Warner and was told by Customer Service that it would ONLY be available IF I also paid for cable. If this is the case i’ll be switching to AT&T’s internet service. If this is indeed true it doesn’t make any sense since other ISP’s don’t force you to have their Video package to have access to ESPN3.

    Well I was told it would launch on the 30th. I’ll have to wait till then to see if i’ll be keeping Time Warner’s Road Runner service.

    • Ryan Lawler

      ESPN3 should be available to broadband subscribers of Time Warner Cable, regardless of whether or not they are pay TV subscribers. That’s true of other affiliate deals ESPN has struck with cable companies.

      The ESPN TV Everywhere service will be authenticated, though.

  4. This is just more arrogance on the part of the cable companies. They think that if they refuse to carry the content that consumers will somehow ignore it. The reality is that they are cutting their nose to spite their face. By not offering the same programs to their customers, they are giving consumers a good reason to try Netflix instead of getting all of their programming from Time Warner. It’d be one thing to try and argue that they should pay Epix less for the content, but if they really plan on boycotting content that other people have licensed, then their company won’t be around for very long.

    • It is arrogance, but very smart. 4k and 3D is likely to break the backs of OTA and satellite. That leaves only wireless as competition to a fat landline like cable or Fios. Either wired or wireless pipe will then squeeze you for all its worth. AT&T and Verizon are well setup for that. You maybe right about Time Warner though.